Sustainable Energy Development, Transportation and Gas Flaring in the Niger Delta, Nigeria - Research Paper Example

Sustainable Energy Development, Transportation and Gas Flaring in the Niger Delta, Nigeria Nigeria is ranks among the top 10 countries globally with the largest deposits of natural gas. However, much of this gas is flared off , and the volume of the gas flared in a single day is more than the combined energy needs of the entire sub-Saharan Africa. This phenomenon has resulted to socioeconomic losses and health problems to the Niger- Delta region, its people and entire Nigeria. Estimates from the World Bank reveal that each year, Nigeria burns natural gas amounting to more than 100 billion cubic meters. Although the world is shifting towards green technologies, there is still a high need for natural gas both for domestic and industrial use. In addition, energy prices are escalating every now and then indicating a global energy shortage. The burning of gas is, therefore, a colossal waste of resources, and especially, in Nigeria where there are huge energy shortages. This paper gives an overview of energy development in Nigeria, especially the Niger- Delta and its transportation and gives a special attention to the gas flaring process. The paper then makes a review of the effects of gas flaring in the Niger-Delta from an economic view and assesses the commitments placed by the country to end the practice. Finally, the paper makes explores the local and international market opportunities for the various projects of liquefied natural gas (LNG) in Nigeria. The findings of this paper will be helpful in formulating important policies that will work towards resolving the problem of gas flaring, and providing energy to Nigeria’s fast growing population as well as the global population in a sustainable manner. This is expected to manifest as the development of NLG as a viable energy form locally and the opening of new international markets for NLG. 1.0 Overview of energy development in the Niger- Delta The main types of energy that Nigeria develops both for its ocal and export markets are gas oil and gas. Estimates by the US United States Energy Information Administration (EIA) (1) suggest that Nigeria’s oil reserves are about 16-22 billion barrels (3.5×109 m3) but other sources suggest a higher figure of 35.3 billion barrels (5.61×109 m3). These oil reserves make Nigeria the 10th largest petroleum-rich country and the leading in Africa. This oil is located in 159 oil fields and 1481 wells are already in operation (Environmental Resources Managers 1997). The most productive oil producing region in Nigeria is the southern region or the Niger Delta, specifically the Niger Delta basin. Khan (27) states that this region has 78 of the 159 oil fields. Nigeria’s oil is classified as “light and “sweet” because it is largely free of sulphur. Nigeria’s proven gas reserves are over 187 trillion ft³ (2,800 km³) and the substantiality of these gas reserves is three times that of the crude oil reserves (U.S. Energy Information Administration 8). The exploration of oil and gas in Nigeria is undertaken through joint ventures between the Nigerian federal government and foreign multi-national corporations. These companies and their countries are Shell Petroleum Development Company of Nigeria Limited (SPDC)/ Shell Nigeria (British) , Chevron Nigeria Limited (CNL) (American), Exxon-Mobil (American), Agip (Italian), total (French), Texacco (American). These joint ventures manifest as a nationalised state corporation called the Nigerian National Petroleum Corporation (NNPC). This state corporation nationalised oil and gas production in Nigeria. Production through joint ventures account for 95% of Nigeria’s the total crude oil output and the highest percentage of NLG. Local independent companies account for the remaining 5% of crude oil, and a small percentage of gas production (Human Rights Watch. 1). The largest natural gas initiative in the Niger Delta is the Nigerian Liquified Natural Gas Company, a company operated jointly by the state and several companies. The development of oil and gas are of special importance to Nigeria because their exports account for over 90% of the total export earnings, government revenue and DGP. Most of the oil and gas produced is exported and in 2000, for example, oil and gas accounted for 98% of the total export earnings, 83% of the government revenues and 40% of the GDP. Oil and gas exports also account 95% of the total foreign exchange and 65% of the government’s. In mid-2001, the daily average crude oil production in Nigeria’s about 2.2 million barrels (350,000 m³). The US is the largest importer of crude oil from Nigeria and its imports account for 40% of the Nigeria’s total oil exports. However, this provides only approximately 10% of total US oil imports and positions Nigeria as the 5th largest source US oil imports. 2.0 Energy Transportation in Nigeria Gas is transported through pipeline called the West African Gas Pipeline. This pipeline is operational but it has been encountering many setbacks. This pipeline allows Nigeria to transport its gas to Ghana, Benin, Cote d’idvore and Togo. A greater percentage of Nigeria’s oil fields, 143 of them, are scattered and small, and they accounted for 62.1% of the total oil produced in Nigeria. The remaining 16 oil fields alone account for 37.9% of the total oil produce. This geographic arrangement of Nigeria’s oil fields has led to the development of a well developed and extensive pipeline network in the country. This has specifically been engineered to transport crude oil. There are a total of six terminals for exporting petroleum in the country, two owned by Shell. Chevron, Mobil, Agip and Texaco each own one terminal. 3.0 Gas Flaring Gas flaring refers to the process by which natural gas is released into the atmosphere through a flare stack /gas flare, which is an elevated vertical conveyance/chimney, and is burnt safely away from structures. This process is used as a safe way of disposing natural waste gas that is otherwise not feasible to transport or use. In this manner, nobody benefits from the energy contained in this gas. According to Beychok (105) and Shore (9), gas flaring also provides a safety system of non-waste gas and for this situation, the gas is released through a pressure relief valve whenever there is a need to reduce pressure strain on equipment. Through this, gas flares helps to avoid excessive and damaging pressure on gas processing equipment. In the event of an emergency, gas flaring system helps to avoid hazardous situations by burning the total gas reserve. From this brief explanation on the reasons for conducting gas flaring, Nigeria’s massive gas flaring cannot be classified as risk reduction practice but a waste of precious resource. The country burns huge amounts of its natural gas simply because it is not willing to harness and liquefy this gas for use as LNG. Madueme (611) states that the gas is directly burned on oil rigs or oil wells as they exist the gas flare. Just like in any other country that burns its unprocessed natural gas, gas flaring in Nigeria is a practice that is associated with crude oil exploration. Oil production in the Niger Delta began about 45 years ago and so did the flaring associated gas (AG) (Friends of the Earth 1). According to Shell in Nigeria (1) gas flaring in Nigeria takes place in large scale because in most of the oil fields, large amounts of natural gas are produced alongside crude oil as it oil is being brought to the surface. This explanation is particularly true of the southern region or Niger Delta where much of the oil brought to the surface has a much greater proportion of the AG compared to oil from other regions. According to The Economist (2), the amounts of natural gas burnet daily in the Delta region alone is 2 million cubic feet. This is more than the volumes of natural gas flared anywhere else globally. Gas flaring in Nigeria has been encouraged by poor energy policies. Campaigning from the view point of many who see or hear about the gas flaring in Nigeria, the Friends of the Earth (2) believe and campaign for an immediate ending of the gas wastage in Nigeria on the grounds that it violates the human rights of the people living nearby. However, such efforts are not as fruitful as expected because oil exploration companies that are flaring gas in Nigeria have ministerial certificates showing that under the existing regulations, they are entitled to continue flaring gas. This gas flaring was also encouraged by the lack of sufficient market for LNG in Nigeria when most of the oil producing companies were establishing in Nigeria. For example, the most of the production facilities of Shell Nigeria were first built in the 1950s and during this time, there was a little market or demand for gas in Nigeria and many parts of the world. This became the reason for burning AG off safely or gas flaring. It also made the practice of gas flaring An acceptable practice in the oil production industry as Shell Development Company of Nigeria Limited (SPDC) begun a major oil operation in the Niger Delta. In agreement, Osuoka and Roderick (6) state “the first field was found in 1956 and the first export was made in 1958. Flaring of AG began right at the onset of oil production and so did the recognition of the unacceptability of this practice.” This statement suggests that the government of Nigeria has been slow and seemingly unwilling to respond adequately to the problem of gas flaring. From the above explanations, it is evident that concerns on gas flaring have existed since 1950s due to its adverse effects and the need for lager energy supplies. Since 1950s, the demand of NLG both in Nigeria and other parts of the globe has increased necessitating the development of LNG as an important energy option in Nigeria and other oil producing countries. This has called for harnessing, liquefaction and sell of natural gas for domestic and industrial use both in local and international markets. Concerns over gas flaring have also been escalated by the issue of global warming. The gas that is burned releases green house gases (GHGs) especially carbondioxide (CO2). These are the gases that are responsible for global warming. Gas flaring in Nigeria has also aroused national and global concerns because of the associated impacts on the people living around it. Looking at the non-economic side effects of gas flaring, this procedure has been associated with health issues. Gas flaring has been found to increase the risk of diseases. According to the Friends of the Earth (2), the flares contain widely-known toxins like benzene that pollute the air. The continual gas flaring and accumulation of these toxins have resulted to health problems among the populations living near the gas flaring sites. These people complain of respiratory diseases like chronic bronchitis, aggravated asthma, decreased lung function and, respiratory symptoms like difficult or painful breathing and coughing. The region has also recorded a high number of disease-related premature deaths. Cancer is among the diseases because some of the pollutants like benzene are carcinogenic substances. Other effects include noise and heat (thermal pollution) where the people have to bear with intense heat from the flames and roaring noise from the gas flaring process. They have to work and live alongside these flames without protection. In addition, they have to bear with increased cost of house maintenance because the gas flaring process has resulted to acid rain which corrodes buildings (Friends of the Earth (2). The people of the Niger Delta are therefore in a continuous battle for existence as the gas burning process continues to rip them of their fundamental human rights (Amnesty International 5). The economic perspective of the health impact is that it increases the cost of delivering health care to the people and it unnecessarily diverts personal money from development projects into healthcare. For example, a family that spends a large amount of money treating their person suffering from a gas flaring-related sickness instead of using it to enhance their economic condition. 4.0 Economic review of the gas flaring process/Economic implications When gas flaring is reviewed from an economic perspective, it is largely viewed as a colossal waste of a precious natural resource, especially the community where the gas exploitation is done and the entire nation which continues to face a severe energy crisis. The flared gas could have been used to tackle energy crisis in Nigeria by increasing energy supplies and reducing the price of gas. Alakpodia (6) makes an observation that the average Nigerian citizen cannot afford cooking gas and many industries operating in the country continue to lack the amounts of energy they require to operate at full capacity. Gas flaring has not therefore contributed to energy shortage in the country but also insufficient industrial production. The saddest part of the story is that a majority of the natural gas produced in Nigeria is flared off than is used locally or exported. This accounts for 75% of all gas produced (Madueme 616). It is estimated that each day, Nigeria incurs a loss of 18.2 million US$ as a result of gas flaring (www.onlineNigeria.com 1). Osunde (1) states that the annual loss from this is $1.46 billion. These figures point to a huge loss of money that could have been used to facilitate major development projects in the country and enhance poverty reduction strategies in the country. Although Nigeria owns the largest oil and gas reservoirs in Africa, majority of its citizens are living in poverty. The flaring of gas violates the principles of sustainable development. According to a study by Nwanya (198), an average of 2040 MJ of woodfuel is consumed in Nigeria annually. When this is compared alongside the 2.5 billion cubic metres of gas flared daily, it indicates a high need to save this gas to eliminate the existing energy inefficiencies arising from wood fuel use. Agriculture is an important economic activity and anything affecting it directly impacts on the economic status of a nation and its people, especially those who depend entirely or majorly in agriculture. Gas flaring in Niger Delta has had a major impact on agricultural production in the area and consequently a direct effect on its agricultural output. The particles released from the flares remain within the immediate atmosphere and cover everything, including crops, with a fine layer of soot. This automatically impairs with the ability of the plants to receive sufficient light which is required for the food manufacturing process of the plant, also known as photosynthesis. Apart from polluting the air and interfering with the process of photosynthesis, pollutants from gas flaring have been found to get back to the vegetation and soil in the area through the mechanisms of the water cycle. The result of this is deterioration in soil quality. Opukri and Ibaba (182) classified the impact of gas flaring on agriculture as percentage loss of crop yield in relation to the distance of the farm from the gas flaring site. At a distance of 200 metres and below, the percentage loss of crop yield is 100%. For a distance of 200-600 metres, the percentage loss of crop yield is 45% and that of 600 metres-1 km is 10% (Opukri and Ibaba 182). The effect of this is food insecurity in the Niger Delta as one of the costs of climate change or extreme weather damage. Aghalino (143) states that when soil degradation is coupled with the intense heat coming from these flames, the cumulative effect is the deforestation of the once luxuriant rain and mangrove forests. Such destroyed ecosystems cause an imbalance in various processes including agriculture. Their recovery will be costly as well. Oil and gas production and gas flaring has led to the socioeconomic marginalization of the people living in Niger Delta. This is evidenced by their poor living conditions including their inability to afford the gas being burned before their very eyes. Baird (12)confirms that nany people living in villages that are close the oil production sites rely on candles and wood for fuel light. Such a situation pulls down the overall economic development of the country because it increases the number of people living below the poverty line and those depending on government aid. Poverty reduces literacy rates which is a powerful tool of achieving socioeconomic advancement of every community in a country. 5.0 Potential Benefits of stopping gas flaring in Niger Delta There are several benefits that will accompany an ending of gas flaring in Niger Delta and a shift from this practice into collecting the AG and using it for electricity generation or as gaseous fuel. The most significant among them is that the harnessing, liquefaction and sell of the natural gas will increase the country’s export earnings. This will impact on its GDP as well. Secondly, it will help to resolve the energy crisis experienced in the country both by individuals and industries. This in turn will enable industries to produce to their maximum potential capacity. The immediate communities will benefit as well. Ishisone (23) states that if gas flaring is stopped, the livelihood of the people living around the Niger Delta will be improved significantly. The prices of gas are likely to come down and the community will no longer depend on firewood and candle but will have chance to use gas for cooking and electricity for lighting. Adverse climate effects will slowly fade away and agricultural production in the region will be restored. And so will their health status because of reduced air, noise and thermal pollution. 6.0 Commitments for ending gas flaring Although the federal government has shown no substantial commitment, there is need to acknowledge the existing efforts by some oil companies. Shell produces 50% of Nigeria’s oil and it has led by example in reducing oil flaring. In 2000 the SPDC/Shell Nigeria began a multiyear program that would see the installation of equipment for capturing natural gas from its facilities. The program experienced delayed by events beyond its control like security funding and delays in contract approval processes by the NNPC. Despite the delays, SPDC installed infrastructure for associated gas gathering (AGG) at 33 sites between 2000 and 2009 , covering over 60% of its AG production. In 2010, security in the Delta improved and funding became available. This allowed SPDC to continue with its delayed projects and initiate new ones (Shell in Nigeria 1). When complete, these SPDC projects will increase AGG coverage to over 90% of the AG produced during petroleum extraction. In 2010, SPDC started producing oil and gas from its integrated oil and gas plant in Gbaran Ubie and this reduced continuous AG flaring in nearby fields. SPDC is also looking for alternative solutions for the other facilities which account for less than 10% of SPDC’s AG potential and is partnering with the World Bank and Nigerian government to identify suitable local investors who can collect AG from flare sites for use in local small scale projects. Chevron is also making efforts to create its AG project, the Escravos Gas Utilization which will have a daily production capacity of 160 million standard ft³ of gas (www.onlineNigeria.com 1). Local and international market opportunities for Nigeria’s LNG projects There are enough local and international market opportunities for Nigeria’s LNG projects. First, domestic demand is high as many people seek to use energy sources that are less cumbersome unlike wood fuel or paraffin. This is especially true of urban areas. There is also a high demand from industries in the country who are seeking to meet their energy requirements so as to produce maximally. Thirdly, there is an apparent energy shortage globally and thus gas and oil cannot miss to find a market in any country. 7.0 Conclusion and Recommendations Gas flaring is a blatant waste of a precious resource. An analysis of the findings of this paper reveals that the gas flaring in the Nigeria’s Niger-Delta remains and continues unabated. Companies have a certification that defends their wasteful actions and there exists no legislation banning this practice. This shows a weakness on the part of the government in dealing with this problem. The result of this practice is un-maximized export earnings from oil and gas, insufficient economic development, reduced agricultural production in the Niger Delta, escalation of health related problems especially respiratory diseases among its the people, environmental and soil degradation and ecological imbalances and, socioeconomic marginalization of the inhabitants of Niger Delta. In order to resolve this problem once and for all, the Nigerian federal government must encourage and fund initiatives that aim at tapping into the natural gas produced alongside petroleum. This LNG obtained will be used to meet the ever increasing energy demand in the industrial sector. Part of it could also be used to generate electricity to be supplied to industries and households for cooking and lighting. Currently, there is a strong market for NLG from countries trying to satisfy their energy demands and the country should take advantage of through self-determination and realization by stakeholders in the Oil and Gas industry, the government being on the lead. In addition, the federal government must formulate and introduce new energy policies and legislations. One of them is mandatory reporting where all oil producing companies should annually report on the impact of their policies, products and operations on people and the environment. This will encourage directors to assume the legal duty of taking steps to significantly reduce any negative environmental, economic and social effects of their production processes. The next is compulsory foreign direct liability where the affected communities can seek redress from oil producing companies flaring gas in their environs. It should also be mandated that such cases be done in Nigeria. The government should also declare a gas-flare out date to all oil producing companies. Works Cited Aghalino, Samwel. Petroleum Exploitation and Environmental Degradation in Nigeria. In: HI Jimoh, IP Ifabiyi (Eds.): Contemporary Issues in Environmental Studies. Ilorin. Haytee Press. 2000. Print. Journal Alakpodia, Jhulyette. “Soil Characteristics Under Gas Flares in the Niger-Delta, Southern Nigeria.” Geo-Studies Forum. (1 and 2), pp 1-9. 2000. Print. Journal Amnesty International. Nigeria: Oil, Poverty and Violence. 2006. Web. 26 April, 2012 http://www.amnesty.org/en/library/asset/AFR44/017/2006/en/6b4634ba-d409-11dd-8743-d305bea2b2c7/afr440172006en.htmlWebsite Baird, Julia. "Oil's Shame in Africa". Newsweek. 26th July, 2010. Print. Beychok, Milton. 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Website U.S. Energy Information Administration (U.S. EIA), “Nigeria Country Analysis Brief,” U.S. EIA. 1997. Print. www.onlineNigeria.com. “Natural Osuoka Asume and Roderick Peter. 2005. Gas Flaring in Nigeria: A Human Rights, Environmental and Economic Monstrosity. Environmental Rights Action/ Friends of the Earth, Nigeria and l Gas.” 2012. Web. 26 April, 2012http://www.onlineNigeria.com/links/petradv.asp?blurb=486 Website Osunde, Adesubwa (2009). Gas Flaring Cost Nigeria $1.46bn Annually.Reuters, March 11. 2009. Print. Periodical. Madueme, Stella ( 2010). Gas flaring activities of major oil companies in Nigeria: An economic investigation. International Journal of Engineering and Technology, 2(4): 610-617. Print. Journal Read More