An Evaluation of the Potentials of Natural Gas in the Economic Development of Nigeria

An Evaluation of the Potentials of Natural Gas in the Economic Development of Nigeria

Chapter One

Justification for the current work

Look critically at the problems associated with natural gas exploration/production in Nigeria/faring.
The huge investment requirements are considerably high, ranging from exploitation, transmission and
The high percentage of gas still being flared is so high that it can generate the electric power requirement for all West African Countries (Natural Energy policy publication)
The absence of a comprehensive natural gas transportation grid to link supply points with potential demand
The social, community, and environmental issues have created a potential open-ended liability for effective gas production and private
look at the problems associated with domestic natural gas utilization in Nigeria.
A major problem exists with natural gas utilization due to the inability of the gas Companies to produce the gas requirement to satisfy the domestic market and the nonexistence of a comprehensive gas pipeline network to link the commodity to the
The present gas production level channeled for domestic use is grossly inadequate 80 billion cubic feet per annum, which is not adequate for the power sector Hence, the existing gas flow station requires expansion and if possible building more flow stations to meet the ever-increasing demand for gas. Linking to West African Countries, Algeria, and Tunisia, plans are underway to extend and incorporate a legal and regulatory framework that is attractive to private investors, beneficial to Nigerians, and stimulates the natural gas expansion program.
The government should provide a comprehensive framework to tackle the problem of Youth restiveness in the Delta Region and encourage effective exploration and exploration of gas.
The government should look into the integration problems in some extension infrastructure hampering direct extension or spurring of pipelines, for example, Oben- Ajaokuta line.
No deliberate effort to exploit for gas in Nigeria to date –gas found is incidental to oil exploration activities.
Most of the existing gas facilities in the country are owned by the Nigerian gas company which is empowered by the government.

CHAPTER TWO

LITERATURE REVIEW

Historical Development of Natural Gas

Natural gas, in itself, might be considered a very uninteresting gas-it is colourless, shapeless, ad odorless in its pure form. Quite uninteresting-except that natural gas is combustible, and when burned it gives off a great deal of energy. Unlike other fossil fuels, however, natural gas is clean burning and emits lower levels of potentially harmful by products into the air. We require energy constantly, to heat our homes, cook our food, and generate our electricity. It is this need for energy that has elevated natural gas to such a level of importance in our society, and in our lives.

Natural gas is a combustible mixture of hydrocarbon gases. While natural gas is formed primarily of methane, it can also include ethane, propane, butane and pentane. The composition of natural gas can vary widely, but below is a chart outlining the typical makeup of natural gas before it is refined.

In its purest form, such as the natural gas that is delivered to your home, it is almost pure methane. Methane is a molecule made up one carbon atom and four hydrogen atoms and is referred to as CH_4.

Natural gas has for a long time been associated with the United States where it was first used as a source of energy. The development of the gas industry was initially very slow with large quantities of natural gas produced in association with crude oil flared in many areas.

Gas flaring, then was inevitable due to inadequate technology and skilled manpower needed for effective gas exploitation. Natural gas was usually found at locations quite distance from the centres of population. So, it was not until the development of steel pipes capable of transporting natural gas at high pressure and over considerable distance that the industry really began to make appreciable impacts. By 1931, steel pipes capable of withstanding high pressure under varying operating conditions were constructed. This development was possible due to the technology innovations, not only in steel pipe design and fabrication, but also in electrical welding, corrosion protection and mechanical pipe laying. This led to the emergence of a dynamic natural gas industry (Peter B.C, industrial fuels, New York; Macmillan Press Ltd 1971, p79).

World Natural Gas Reserves

Global natural gas reserves estimated based on data from various world regimes, though helpful to some extent in energy analysis, quickly become out-dated and hence unreliable. In most instances, gas data are based on different interpretations of such terminologies as proven reserves, probable reserves, and possible reserves. Some reserves either offshore or on shore are located in areas which based on existing technical and economic criteria cannot be partially or wholly exploited. Examples are the huge gas reserves in the North Sea and the seberian region in the US and USSR respectively as well as enormous reserves in hydrocarbon producing developing countries. Also, proven world natural gas reserves are subject to the fluctuations of the oil industry as most gas reserves are associated gas. Consequently, natural gas reserves often increases with oil production and vice versa. It is because of these factors that proven natural gas reserves estimated, even within a given period of survey, from various sources vary. These variations not withstanding, gas reserves estimates are indispensable in analyzing the past and present role of gas in the world energy scene and its relation to other alternative energy sources.

The world proven natural gas reserves stood at 95 billion m³ while potential recoverable resources amounted to over 191,000 billion m³ Figure (2.1.1) shows the contribution of the first ten countries with the largest natural gas reserves.

CHAPTER THREE

NIGERIAN NATURAL GAS POTENTIALS

Review of Energy Resources in Nigeria

Nigerian is richly endured with vast natural resources. These natural resources include Coal, Lignite, Gas, Crude oil, Tar, Rivers, Gold, Tin etc. Many of the natural deposits in Nigeria till date are still untapped.

From table 3.1.1 above, the energy resources data in Nigeria with each resource estimated in terms of reserves, average energy content per unit, total resources energy content and their percentage energy ratio to oil.

The National energy policy journal estimated that the crude oil reserve in Nigeria is the 6^th largest in the world, while natural gas is the 9^th largest. Tar sands and coal reserves are quite significant by world standards.

(Source: Natural Energy policy provision for oil, gas and solid energy minerals July 2003)

Energy Sources

Oil

Crude Oil was discovered in commercial quantities in Nigeria in 1956 while oil production started in 1958. The nation had a proven reserve estimate of about 32 billion barrels of predominantly low sulphur light crude as at January 2002. The annual oil production peaked at about 845 million barrels in 1979. There was a decline in production to 451 million barrels in 1983 after a major market collapse that began in 1981 and lasted till 1987. Thereafter it rose again to 776 million barrels in 1998.

CHAPTER FOUR

THE ECONOMIC PARAMETERS THAT EFFECT ECONOMIC DEVELOPMENT

The impact of Natural Gas development ultimately must be assessed in economic terms; given performance, we need methods for making economic evaluation. Several economic criteria have been proposed and used for evaluating and optimizing various energy resources. Though, the increasing size of government expenditure and lack of competitive pressure, for the more efficient use of government resources calls for an increased need to understand the economic desirability of using these resources.

The general decision problem is to use the available resources for meaningful development and to maximize the general welfare of the ordinary citizen. To accomplish this objective, a measure of the benefits occurring from each resource is desirable.

CHAPTER FIVE

APPLICATIONS OF NATURAL GAS

Industrial application of natural gas

Natural gas as a fuel for power generation

Natural gas is used extensively in steam and gas turbines as a fuel for power generation. The gas turbines is designed to extract as much as possible the energy released by the combustion of natural gas and to deliver it in a useable form of a rotating output shaft. But in the case of the steam turbines, natural gas serves as boiler fuel for stesam generation. The arrangement of a simple gas and steam turbines are shown.

CHAPTER SIX

DEVELOPMENT OF A MODEL FOR EVALUATING THE ECONOMIC DEVELOPMENT OF NATURAL GAS IN NIGERIA

In terms of Effectiveness of use

Natural gas has played and continue to play an important role in the various sectors of the economy. In terms of effectiveness of use, gas have impacted positively in the following areas of economic development:-

Industrial Development

In the area of industrial development, petrochemical industries have done reasonable well. Nigeria’s petrochemical project is presently in three different phases in three different location. Phase I of the petrochemical project is attached to both Warri and Kaduna refineries. The aim is to use the bye-products of these refineries namely liquefied petroleum gas (LPG) and gasoline for the production of plastics, fibres, carbon black for tyres detergents and solvents for paints. About 35,000 metric tons of propylene, 25,000 metric tons of berizene 15,000 metric tons of solvent would be produced annually. Phase II of the petrochemical project – the olefin based complex, derives its raw materials mainly from natural gas and other petroleum products. The olefin complex produces about 300,000 metric tons of ethylene, 145,000 metric tons of vinyl chloride 100,000 metric tons of soda and 30,000 metric tons of ethylene oxide and ellylene glycol per year. Phase III – the aromatic based complex produces mainly aromatic petrochemical such as benzene, toluene, xylenes, paraxylene, phenol and styrene

Petrochemical production in Nigeria have not only enhanced industrial development, but also manufacturing and communication sectors.

RECOMMENDATION AND CONCLUSION

Having considered the fast glowing global awareness of natural gas as an important energy resource; the development of Nigerian gas potentials in relation to the world’s proven reserves, the various industrial and domestic applications of natural gas and its abundant economic benefits. The following recommendations are made;

At the current production and utilization level, Nigerian gas reserves could last for more than 100years. These follows from researches, from available data from the ultimate recoverable gas of 235 trillion standard cubic
Although at present, the domestic gas market is low; there is high potential for increased capacity utilization because of the federal government various economic reforms. i.e. the on going independent power
The growth of natural gas in Nigeria has facilitated the springing of more industries. This is due to its low cost and its availability as raw material in producing other
Due to increasing energy demand in the global market, Nigerianeconomy is now heavily dependent on gas in both domestic and export market and thereby generating as much revenue as oil within the
Gas being cheap and a clean source of energy have found its way in the domestic market through pipeline distribution networks.

The work concludes that lack of national macro-economic planning and management, stable energy policy, corruption, and backed by an unavailing peace environment for more gas production have significantly implication for the overall performance of natural gas in the economic development of Nigeria.

REFERENCES

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Harman, C. Gas Turbine Engineering, London Macmillan’s press Ltd, 1991.26 March 22, P.15.1988
Nwachuknn J. C., Introduction to Engineering Economics and Administration: Human Resource, Time and Money Ambik press, Benin 1999. pg 436 – 440, 398 – 402
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