Shell prepares to end flaring in some oil fields

The Shell Petroleum Development Company of Nigeria Limited, says it has taken delivery of detailed engineering design for a gas equipment that will put out gas flares in three of its oil fields in western Niger Delta.

The Nigeria Technical Company (NETCO), the engineering arm of the Nigerian National Petroleum Corporation (NNPC), won the contract in December 2007, for the design of the Associated Gas Solution project for Otumara node, which covers Otumara, Saghara and Opuama oil fields.

Project Manager, Toyin Olagunju, said the award of the contract to NETCO was aimed at improving the capability of local companies. “We are pleased that the job was done in-country with Nigerian engineers gaining valuable skills and experience,” he added.

Gas flaring in Nigeria

Nigeria’s total annual crude oil production is accompanied by associated gas of about 40 billion cubic metre per annum, of which 80 per cent is flared; this accounts for 12.5 per cent of the global total. Only Russia flares more gas than Nigeria.

In the past, the oil companies have been able to influence the Federal Government to push back gas flare-out deadlines; the latest was the December 31, 2008 that was pushed back a year further. The operators prefer to pay the paltry gas flare fine of $10 per cubic feet. As a result, Nigeria loses about $2 billion annually in gas flared by producing companies.

However, as part of wider industry reform, the Federal Government, through the Gas Master Plan, is taking steps to increase the local gas utilisation as a way of reducing gas flared by the oil companies. This initiative includes encouraging oil companies to harness the gas flared by building gas facilities to supply the domestic market.

Shell’s project

The project involves the collection of gas from the three fields to a central processing facility at Otumara. The facility will treat and send it for domestic use through the Escravos-Lagos Pipeline System. The detailed design will form the basis for construction of the central processing facility, associated pipelines, booster stations as well as instrumentation and control.

NETCO executed the detailed design with the support of their technical consultants, IMPaC, at a cost of over N900 million. Under the terms of the contract, NETCO handled the piping, civil, electrical, mechanical, corrosion and health, safety, and environment/quality assurance–quality control aspects of the job from their office in Lagos. Another indigenous oil services firm, IMPaC, worked on process, instrumentation and telecommunication in Port Harcourt.

Samuel Babatunde, executive director of NETCO, said, “This is the first time we are handling design on a large scale for Shell. The skills we have acquired will equip us better to serve the oil and gas industry in Nigeria.”

Christian Obot, deputy project manager of IMPaC, commended Shell for the confidence in the collaboration between NETCO and IMPaC, “as this was largely responsible for the successful completion of the design”.

The completion of the detailed design paves the way for the construction, procurement and installation of facilities. The Otumara project is part of Shell’s effort to harness Nigeria’s huge gas resources for profitable use, and end flaring of gas in its operations.