GTL Plus Power Generation: The Optimal Alternative for Natural Gas Exploitation in Nigeria

Abstract

Abstract Nigeria has an estimated 187 trillion cubic feet (Tcf) of proven natural gas reserves, which is about 4% of the world proven reserves. About 60% of this reserve is associated gas and over 50% is either being flared or re-injected for enhanced oil recovery. The government just introduced a policy to stop gas flaring by 2008, hence energy companies have to develop new strategies of utilizing the stranded gas reserves especially the associated gas. Liquefied Natural Gas (LNG) is the country's cutting-edge technology in the exploitation of stranded gas reserves. With a projected increase in world market share to 13%; the country ranks as one of the highest producers of LNG in the world. However, while LNG accounts for 27% of all traded natural gas the hydrocarbons used for LNG are dwarfed by the size of liquid middle distillates such as diesel and naptha. Furthermore, LNG as traded today is strongly driven by long-term and high risk contractual agreements. A re-visited way for natural gas exploitation is the Gas to Liquids (GTL) technology, with most end products being useful in transportation fuels and base chemical feedstock. An often overlooked issue, which could be decisive in Nigeria, is the use of GTL ancillary products with no commercial value. The underlying objective of this study is to build a business case for GTL as an alternative marketing strategy to LNG for stranded gas reserves in Nigeria, with the utilization of by-product streams for commercial power generation. This analysis will present a robust and economic solution to natural gas exploitation in terms of the technological and environmental factors scalable to supply and demand constraints. Justifying the technology and economics involved in the utilization of the by-product streams for commercial power generation may possibly increase the net revenue and profitability of the GTL projects. This technology may be transferable to other GTL projects in the world wherever there is a market for power generation. Introduction The World Bank estimates Nigeria alone accounts for 12.5% of the world's annual gas flared though the Nigerian government has enacted a policy of "Zero-Gas Flare" by 2008. This translates to about 800 Bcf of natural gas flared annually. Hence, energy companies have to develop strategies to utilize the "stranded" gas produced.