Date

Monday 10-06-2019

Location

Delta State, Nigeria

Technical Start Up & Unveiling Of 3 Completed Projects / Ovade-Ogharefe Gas Processing Plant || Amukpe Escravos Pipeline || OML 147, Owa-Alidinma Flow Station (PSC)

The success story of Pan Ocean Oil Corporation (Nigeria) Limited, and indeed of the indigenous oil company’s three oil and gas projects, is a story of the doggedness and resilience of the Nigerian spirit against daunting challenges.

Pan Ocean was incorporated in 1973 and was the first indigenous company in Joint Venture with the Nigerian National Petroleum Corporation (NNPC). It commenced crude oil production in August 1976 at the Ogharefe field of OML 98.

Since 1984, Pan Ocean has gone ahead with its initiative on gas utilization despite the challenges of an under-developed gas market in Nigeria.

In 2007, Pan Ocean acquired the Oil Prospecting License 275 as part of the company’s drive to increase domestic gas consumption and to support the gas flare out objectives of the Federal Government.

Pan Ocean’s is the story of an oil and gas company committed to providing opportunities for indigenous capacity development and utilization according to the provisions of the Nigerian Oil and Gas Industry Content Development Act.

The three projects, namely, the Amukpe-Escravos Pipeline Project (AEPP), Ovade-Ogharefe Gas Processing Plant (Phases I & II) and OML 147 Early Production Facility at Owa-Alidinma, were conceptualised and developed by the NNPC/Pan Ocean JV to improve the fortunes of the Nigerian oil and gas industry and, by extension, the Nigerian economy.

The projects will not only improve crude oil output in the country but will also contribute immensely to enhancing national power generation through increased gas supply.

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Amukpe-Escravos Pipeline

The Amukpe-Escravos Pipeline Project (AEPP) is a 20” X 67km peggable crude oil pipeline stretching from Amukpe to Escravos that will serve as an alternative to the existing Trans Forcados export pipeline. The AEPP has been described as “a viable and more secured export trunk line”.

The pipeline project was conceptualized as a game-changer that will reduce losses arising from pipeline vandalism, thereby boosting revenues to the Nigerian government. The main objectives of the project include: to provide a reliable/efficient speed to the market transport system for crude evacuation; increase export capacity in the region and opportunities for tie in; provide a guaranteed revenue stream for the operator and government; demonstrate a viable alternative to surface export pipeline to tackle intractable oil theft in the region; and provide a secure and uninterrupted production for companies in Western Niger Delta.

“The primary objective of AEPP is to ensure that there is no disruption to crude oil export like the scenario we experienced on the TFP in the past where there was a total collapse of crude export. Nigeria’s experience and history has shown that it is not wise to be highly dependent on a particular source and that is why we have AEPP as an alternative to TFP which has been our major means of exporting crude oil as a joint venture (JV) partner,” said John Okusolubo, Senior Pipeline Engineer and Project Lead, AEPP. Before now, the major evacuation pipeline available to crude oil producers was the Trans Forcados Pipeline. The TFP has a daily capacity of 240,000 bpd, with average daily flows ranging between 200,000 bpd and 240,000 bpd. But it has been plagued by outages and disruptions, making the pipeline unreliable, especially in the creeks and swamps.

The frequent ruptures and disruptions in the TFP owing to the activities of vandals forced oil producers to lock in output. This led to shutdown of the TFP for 305 days in 2016, 182 days in 2017, and more than 60 days in 2018.
Amid its shutdown, Nigeria’s crude oil production fell from 2 million bpd to as low as 1.27 million bpd, costing the country its position as Africa’s number one crude oil producer as it fell behind Angola several times between 2015 and 2017.

The unavailability of the pipeline led to the deferment of an equivalent of $188 million of revenue estimated at $50 per barrel between 2016 and 2017 only, resulting in huge revenue loss for the country, which translated to considerable budgetary strain on the Nigerian government.

In the 2006-2007 and 2009 periods, total crude deferred due to downtime of the Trans Forcados Pipeline by Pan Ocean alone was 16.2mmbbls, an equivalent of $812 million (assuming a price of $50/bbl). The losses applied to most of the crude producers. These crude oil producers are now expected to use the Amukpe-Escravos Pipeline. The contract for the construction of the AEPP was awarded to Fenog Nigeria limited, an indigenous company, by the NNPC/Pan Ocean JV in 2011. The project was initially scheduled to come on stream by early 2018.

The Amukpe-Escravos Pipeline, which comes as a rescue, comprises a 20-inch pipeline covering 67-kilometres route with capacity to handle 160,000 barrels of crude oil per day and with remote manifolds to accommodate third parties’ crude oil evacuation to the Escravos Tank Farm.

In installing the Amukpe-Escravos Pipeline Project, the company used the Continuous Horizontal Directional Drilling (CHDD) method to discourage vandalism and community restiveness along its ROW (Right of Way).
To further forestall the sort of frequent vandalism of the Trans Forcados Pipeline which was laid on the surface, the Amukpe-Escravos Pipeline Project was carefully installed 6m-45m underground to transport crude oil to the export terminal.

Since the AEPP is not prone to high-security risk (vandalism) owing to the pipeline system compared to the TFP, which is exposed on the surface, the pipeline would significantly mitigate loss of revenue to the Nigerian government and oil and gas companies. This is largely because the deep underground installation of the pipeline provides additional protection of the pipeline from other activities including dredging, ecological erosion, farming, among others. Although AEPP is designed to transport crude for Pan Ocean, the plan is to accommodate other neighbouring producers on tariff. This means that third parties, particularly oil companies operating in the Western Niger Delta, will be allowed to convey their crude oil to Escravos through AEPP.

“If you consider the fact that the Trans Focardos Pipeline has suffered so much outages, you will know that an alternative is a welcome development. This pipeline will serve companies including Seplat, NPDC, Enageed, Summit, Newcross Petroleum, Continental Oil & Gas and boost government revenue,” Stanley Mudjere, an energy analyst and lawyer, said in a report.

With the technical start up and unveiling, Pan Ocean now has an alternative line to export its crude and has also created an opportunity for other oil companies operating in the western Niger Delta to export their crude without disruption. This project will help the country to continue to flow its crude and drive the economy forward.

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Ovade-Ogharefe Gas and LPG-Propane Plants Phases 1 and 2

The Ovade-Ogharefe Gas Processing/LPG Propane Plant, located at Ogharefe in Delta State, is one of the three major projects of Pan Ocean Oil aimed at achieving the Federal Government’s vision of eliminating gas flaring and improving volume of gas available for power generation and domestic consumption.

The Plant is designed to expand gas processing capacity to 200 million standard cubic feet per day. It incorporates a cryogenic process to deliver bone-dry gas streams, LPG and other natural gas liquid streams for domestic and international use.
Although there has been an improvement in the Liquefied Petroleum Gas (LPG) sector i Nigeria, supply gaps and volatility in the market have not ceased. In 2007, the LPG supplied to the Nigerian market was 70,000 tonnes. Although the volume has increased to 300,000 tones, the country still grapples with supply deficit. In order to satisfy the market, experts say Nigeria will require at least 5 million tonnes of LPG per annum. The newly developed gas plant is aimed at contributing to bridging the supply gap in the sector.

The facility, which is designed to increase gas processing capacity from 130 mmscfpd to 200 mmscfpd, will supply lean gas of 180 million standard cubic feet per day (mmscfpd) at peak to the National Independent Power Project (NIPP) plant situated at Ihobbor, Edo State, for electricity generation, as well as Liquefied Petroleum Gas (LPG) to households across the country.
The plant has the capacity to deliver 250m tonnes/day of LPG for domestic market (about 5,000 of 50kg cylinders per day at peak) and 200m tonnes/day of propane for domestic market at peak.

Pan Ocean was the first company to sign the Gas Sales Aggregation Agreement (GSAA) with the Federal Government of Nigeria and is also the first company to start supply of gas to Nigerian Gas Company (NGC) for use by the defunct Power Holding Company of Nigeria (PHCN). The Ovade-Ogharefe Gas Processing Plant/LPG Propane Plant would help Nigeria to further drive her vision of higher LPG penetration, which is an integral part of the World
Bank’s Sustainable Development Goals.

Nigeria can gain a lot from increased consumption of LPG. Experts say that 19 states in the country’s North are suffering from desertification partly as a result of use of firewood for cooking. Increased use of LPG would help tackle the challenge of desertification and the attendant environmental and health risks. It is also more beneficial to use LPG. It can be used in many ways such as power generation, producing cosmetics, paints, pesticides and for glass production, among others.

The gas processing plant, among other things, will ensure zero routine flaring in all areas of its operation due to the modularised plant concept which makes the plant expandable for additional gas finds in its concession areas.
Pan Ocean remains supportive of the Federal Government’s plan to end gas flaring in Nigeria and it is also supportive of Nigeria’s effort to attain stable power supply through the efficient delivery of gas for power generation.
The Ovade-Ogharefe Gas Processing Plant is registered under the United Nations Clean Development Mechanism (CDM) of the Kyoto Protocol. Besides this, the plant is eco- friendly as it would help to reduce gas flaring and greenhouse gas emission by more than 2 million tonnes of carbon dioxide annually.

CDM allows for greenhouse gas emission reduction from projects in developing countries to be registered and monitored under the UN so that these reductions can be sold to developed countries that have emission limits. Pan Ocean is the first company to secure CDM carbon credit on such facilities in the country. The plant is the largest operational carbon emission reduction plant to be recognized in sub-Saharan Africa.

The LPG loading and dispensing facility that will handle the LPG and propane produced from the plant is equipped with 29 storage tanks built to store approximately 194,400 gallons of propane and 244,640 gallons of propane/butane mix (LPG) from an in-feed gas of 200mmscfpd.
When the Senate Committee on Gas (the 8th National Assembly) led by its Chairman, Senator Albert Bassey Akpan, visited the Ovade-Ogharefe Gas Plant in Delta State to ascertain the level of work done, the committee commended Pan Ocean for the progress made on the project.
Senator Akpan said that the plant was of significant importance to domestic gas utilization and as such, the committee would pay attention and monitor the project closely.

“Ovade-Ogharefe Gas Processing Plant is a huge investment and we are looking forward to the benefits Nigeria will derive from the company by the time the gas processing and all the other aspects like the liquefied petroleum gas (LPG) and Propane come online. We are passionate about gas. It’s time to domesticate all the advantages that can accrue through ramping up utilization in the country,” Senator Akpan said.

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OML 147, Owa-Alidinma Flow Station (PSC)

The Owa-Alidimma Flow Station was built following the conversion of Oil Prospecting Lease (OPL) 275 to Oil Mining Lease (OML) 147 in 2014.

The development of the Owa-Alidimma Flow Station faced a lot of challenges. The question of where to site the project, for instance, raised a lot of controversy. For a large part of 2012 and 2013, there was a contest over where to site the Owa-Alidimma Flow Station between Abavo in Ika South Local Government Area and Owa-Alidinma in Ika North-East Local Government Area.

Following series of meetings and engagement with the leadership of the two communities as well as the Delta State Government, the matter was amicably resolved, culminating in the successful completion of the project.

The Owa-Alidinma Flow Station is expected to process 11,000 barrels of crude oil and 90 million standard cubic feet of gas daily when fully operational.

The Flow Station is equipped with a Motor Control Centre (MCC), which is mostly used in large industrial buildings such as water pumping, treatment plants or even flow stations. MCC is the electrical powerhouse of the Owa-Alidimma Flow Station and it provides a central control unit for multiple electric motors.

In addition to this, 5 export compressors have been stationed within the flow station with two air compressors. The air compressors are used for the operation of both utility and the process instrument system.

Other equipment put in place for the smooth take-off of the flow station include process area separator and pumps with arrays of interconnecting piping, two 20,000 barrels of crude oil storage tanks, canteen building and accommodation.

Industry experts say that the project would have positive multiplier effect on the Nigerian economy.

Luqman Agboola, head of energy infrastructure at Sofidam Capital, said: “The investment on this project is quite commendable and we hope it has a multiplier effect on the Nigerian economy because in the past, these were issues left in the hands of expatriates.”

The multimillion-dollar Flow Station was financed by a consortium of banks led by Polaris Bank Limited (formerly Skye Bank Plc).

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