Guardian

THE Associated Gas Gathering projects being undertaken by the Nigerian National Petroleum Corporation (NNPC) and Shell petroleum Development Company (SPDC) joint venture have been estimated to gulp about $6 billion (N900 billion) on completion.

The project lunched in 2000 is an ongoing multi-year programme aimed at installing equipment that would capture gas from the Shell operated joint venture facilities in order to reduce gas flaring in the country.

According to the 2011 edition of the Shell in Nigeria briefing notes obtained by The Guardian on Monday, the gas gathering projects may have suffered setback in the past due to fund paucity and insecurity in the Niger Delta region.

This, it said had grossly slowed down the installation process, which just picked up in 2010 due to improved funding and the relative peace in the Niger Delta.

“Despite the delays, between 2000 and 2009, Shell installed associated gas gathering infrastructure at 33 sites, covering over 60 per cent of its associated gas production. Unfortunately, 18 of these facilities were either vandalised or not commissioned because of the crisis in the delta in recent years,” it stated.

Shell said the facilities have helped to reduce gas flaring from its production process by more than half between 2002 and 2010 from over 0.6 billion cubic feet per day (bcfpd) to less than 0.3 bcfpd, although production losses was said to have contributed to the decline.

The oil multinational continued: “In 2010, security improved in the delta and funding became available. This allowed the Shell, NNPC joint venture to resume work on many delayed projects and start new ones. By mid January 2011, three of these additional sites had been completed, (bringing the total number of SPDC sites with AGG facilities to 36).

“When completed, these projects will extend AGG coverage to more than 90 per cent of the associated gas produced in our operations. SPDC estimates the entire associated gas gathering programme will cost around $6 billion (about N900 billion) when completed”.

However, Shell further said it was working to find alternative solutions for the remaining facilities, which represent less than 10 per cent of its associated gas production potential.

In view of this, it said, a partnership arrangement had been entered with the Federal government and the World Bank to identify suitable Nigerian investors that would collect associated gas from flare sites for small-scale local projects.