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Gas: not the main meal but a useful side dish

A gas flare

A gas flare. Government policy can decide whether natural gas will be a nuisance and health hazard, or a useful resource .

Close to 100 billion cubic feet of natural gas is thought to lie trapped in a reservoir under Uganda’s Albertine Graben in addition to the 3.5 billion barrels of oil that have so far been discovered.

This sounds like a lot but it is chicken feed compared to the huge gas fields that have been discovered off the coast of South East Africa.  Tanzania has found 40 trillion cubic feet.  Mozambique has 100 trillion—1,000 times as much as Uganda.

Nevertheless, government officials say that Uganda’s gas reserves are enough to put to good use in generating power.  They also insist that the country will not resort to ‘flaring’ (burning) the gas that is ‘associated’ with wells whose main product is crude oil.

‘Associated’ and ‘non-associated’

Gas occurs naturally in two ways, according to Bernard Ongodia, a senior geophysicist with the Petroleum Exploration and Production Department (PEPD).

Relatively small quantities of ‘associated gas’ are found dissolved in oil reservoirs. “Every well has associated gas, which ultimately contributes to the total amount of gas we have in Uganda,” says Mr. Ongodia. “This gas can only be extracted after removing the oil.”

But gas can also occur without oil, trapped by itself in underground reservoirs, such as those that lie off the shores of Tanzania and Mozambique.  So far, the Albertine Graben has proved much richer in oil than gas, but one gas reservoir of this kind has been found—the Nzizi-3 well in the Kaiso-Tonya area.

Gas economics

Natural gas can be processed and compressed to produce Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG), which may be used for cooking, heating and automobile fuel.

However, PEPD Commissioner Ernest Rubondo points out that “The economics of cleaning up and compressing the gas for domestic use such as cooking are very sensitive not only to volumes in place but also the size of the market volumes.”

It is very costly to build the kind of processing plant that is needed, and this is only economically viable if the discovery of gas is large, and if there is a large market for it. Uganda’s gas reserves are not large enough to make such investment worthwhile.

Instead, therefore, the Ministry of Energy plans to use to Nzizi gas to generate electricity to add to Uganda’s current power output of 504 megawatts.

According to junior Energy Minister Simon D’Ujang, a power station will be built with a 50 to 80 MW capacity, fuelled by the Nzizi gas field and the Mputa oil field.

“By the time oil production starts, thermal production will also be set,” the minister told Oil in Uganda. “A plant for gas will be ready by then. The plant will be able to use both gas and diesel; it will be a convertible plant and it will remain operational even when the gas runs out.”

The ‘associated’ headache

‘Associated gas’ is the same substance that is found in the large gas reservoirs, but usually occurs in relatively small quantities.  In the past it was not considered worthwhile to capture and use this gas, which was considered more of a nuisance than an asset, and it was commonly ‘flared’ – simply burned off.   This was not only wasteful, it was also very harmful to the environment.

Flaring has been reduced in most countries by technological advances, but is still common in some major oil producing countries, notably Russia and Nigeria.

Ghana, as a new oil producer, is leading the way in a determined effort to avoid flaring.  It is investing US$ 700 million in a gas infrastructure project that will process 150 million cubic of gas per day from the offshore Jubilee oilfield for power generation.

Uganda hopes to follow this example.  The National Environmental Management Authority has repeatedly denounced flaring and this is confirmed in Section 39 (2) of Uganda’s midstream Petroleum Bill, now passed by parliament and awaiting presidential approval.  This states that “All facilities shall be planned and constructed so as to avoid any gas flaring or venting under normal operating conditions.”

Flaring

Flaring has in fact already occurred during oil exploration in Uganda, as it is necessary to control well pressure and equipment is not yet in place to capture and store the gas.  Local communities have complained about this practice, reporting that it has caused them health problems.

However, flaring during exploration does not appear to count as “normal operating conditions” and the government does appear committed to avoiding it once production actually begins.

Commissioner Rubondo points out that, even before processing, “the associated gas can be re-injected into the oil reservoirs to maintain pressure to support production of crude oil.”  This supports one of PEPD’s key priorities—making sure that as much oil as possible is recovered from productive wells.

‘Associated gas’ may also be used, the Commissioner adds “for on-site electricity generation.”  The plan appears to be to install small power plants close to main production centres.

In addition, Ministry of Energy sources have told Oil in Uganda that the ministry is considering the feasibility of using power generated from associated gas to heat an oil export pipeline.

Uganda, Kenya and South Sudan now appear to have reached agreement on such a pipeline, but the thick, waxy nature of Uganda’s oil means that it will have to be heated in order to flow to the coast.

 

Report by FN and NY