Shell threatens further shut down of gas plants

2010-03-02
THISDAY Newspaper-Onyebuchi Ezigbo

The increase of 3,362mw of electricity generation recorded by the Power Holding Company of Nigeria (PHCN) last weekend may be short-lived as Shell Petroleum Development Company (SPDC) has again threatened to shut down its Sapele Gas Plant.
However, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Sanusi Mohammed Barkindo, yesterday evening warned that the corporation would not accept any further shut down of gas production facilities on any flimsy excuse.

The previous shut down of the gas plant, which had affected the supply of about 50mscf of gas per day had also led to a shut down of the Sapele Power Station.
Also affected in the fresh hiccup in gas supply chain is the gas plant in Oben, which resumed operation barely a week ago.
According to the Special Assistant to the Minister of Power, Mr. Yakubu Lawal, the development, based on report he got from the PHCN at the Ministry, said the threat to shut down Oben gas plant would mean a loss of 90mscf of gas translating to 1,360mw of electricity.

He said Shell had written to PHCN complaining of another accumulation of 500,000 barrels of condensate by the Warri Refinery, which may force it to shut down operations of the Sapele plant.
"There is still accumulation of condensate estimated at 500,000 barrels at WRPC yet to be evacuated by NNPC, what NNPC has evacuated so far is just 140,000 barrels which is about 10 days ago.
“If the current stock level persists or increases without evacuation, then Oben gas plant will be shut down in the next six days, that means 90mscf of gas will be shut out and translating to 1,360mw of electricity," he said.

He said Shell had already contacted PHCN/Nigeria Gas Company (NGC) on this development, adding that Egbin that generated about 800mw Sunday dropped to 200mw yesterday as a result of the shut down of the Sapele gas plant.
Lawal said if there is no consistent evacuation of this condensate, then five thermal power plants at Geregu, Omotosho, Olorunsogo, Egbin, Sapele and Delta would also face complete shut down.
“When about 140,000 barrels of condensate was evacuated by NNPC 10 days ago, we raised generation to 3,362mw but we have to drop the level because the gas producer said they can not continue to give us gas if condensate or wet gas currently stocked in WRPC is not evacuated to create room for further production that will give us dry gas for the power plants,” he said .

However, the NNPC yesterday came down heavily on the Joint Venture oil companies over the vexed issue of gas availability to power stations in the country, warning that it would no longer accept frequent shut down of gas production facilities.
“Shell has the responsibility to evacuate what they produce, be it crude, condensate or gas. We have no agreement whatsover to evacuate such products for the oil companies," he said.
"We have proffered to Shell to blend their Forcados blend with condensate so that we can refine in Warri as well as Kaduna. We are not folding our arms and we will not allow them to shut any gas plant, we are the majority shareholder in the joint ventures and the senior partner in the JVs.

"And I speak for the industry, it is unacceptable for NNPC, for Shell or any producer to shut down any gas plant on any spurious excuse," he said.
He said what NNPC did regarding the complaint by Shell over its gas plant at Utorugo and Oben was to arrange for the evacuation of the accumulated condensate to the Warri Refinery and provide tanks to store it as part of a temporary measure pending the restoration of the Trans Forcados pipeline.
“It is the duty of operators to evacuate their crude, gas or condensate. We have no agreement whatsoever with them to evacuate their production. We have a system through the Trans-Forcados network through which the condensate they produce at Oben, Sapele, Utorogu and Ughelli are supposed to be passed through,” he said.

But this pipeline network has been vandalised since May 2009 during the insurgency and it has become almost impossible to repair and sustain the operations of this pipeline. The number of leaks since last year to now, even the latest after they had completed the repairs in February.
“As an alternative, NNPC offered that instead of them shutting those gas plants because of non-evacuation of condensate through the Trans-Forcados pipeline network, that pending the time the pipeline is completely repaired, we can evacuate some of the condensate through Warri refinery.

"We provided them with two tanks that we normally give them based on the average production of three weeks of hullage which we pump to Kaduna and refine some in Warri and evacuate some for export. This was supposed to be a temporary arrangement. But it has been going on since May last year because the pipeline has continued to come under attack," he said.
Lawal said NNPC had been able to repair the pipeline from Escravos across to the Warri Refinery, adding that it could now receive crude in Warri Refinery.
He said the repair of the pipeline had enabled the corporation to re-stream Warri Refinery.

"At the moment, we are producing gasoline from Warri and we are ramping up. I think we are getting nearly 2 million litres of PMS today from Warri and hopefully next week, we ramp it up to 3.5m and then we are pumping and re-streaming the units in Kaduna one after the other.
"To expect to make this temporary arrangement permanent would mean we have to continuously shut down Warri refinery in order to evacuate their own condensate since they cannot get their own pipeline back," he said.
Barkindo said the main reponsibility of NNPC under the circumstance was to ensure the refineries are working to be able to refine crude oil for domestic use.

According to him, "For us, our primary responsibility is to refine the crude we buy from the Federal Government at international price for domestic consumption and you all know the difficulties we have been facing for some time importing massively while these refineries remained prostrate.
"Now that we have been able to repair our own 2C pipeline, coming from Escravos to Warri and Kaduna, we cannot again face you and say sorry we have to shut Warri down because we have to evacuate condensate for Shell to keep Utorogu going."
He, however, said NNPC as part of its corporate social responsibilities, would continue to provide necessary assistance to enable oil company operations.

"We will continue to provide the tankage and we will continue to assist them because I have just been informed that evacuation is ongoing, but in the long run it is not sustainable," he said.
He said NNPC was pushing for sustainable measures to implement the repairs of the Trans-Forcados Pipeline Amaokpe down to Rakpele, closing to the Trans-Forcados network to the Trans-Forcados terminal and ensure that they are well policed.
"It must be policed 24 hours, seven days a week because it is the main artery for the country. If you tamper with that artery, then you send this country into darkness, all other major gas pipelines pour into that pipeline network.

"On the medium term, some of the pipeline has aged and technology has advanced; there is an urgent need for us to replace some of these segments. From Escravos to Warri, 74 line breaks for a distance of 60 kilometres.
“It means the integrity of that pipeline is questionable and this line has continuously come under these attacks. Such segments in the medium term, there is an absolute necessity to replace them and we are on that," he said.


 

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