Comment: Gas flaring illegal globally

Gas flaring has been outlawed globally as a result of its environmental implications. Therefore, “zero flaring policy” has been adopted by oil producing companies and host nations. It also impacts grossly on the economics of a nation in terms of loss of funds and revenue.

For example, Ghana is estimated to lose 1.2 million daily in revenue for either flaring the gas or delay in utilising the associated natural gas by the Ghana Gas Company.

Conversely, according to the CEO of the Ghana Gas, Dr. Sipa Yankey, the country stands to save more than US$500 million per annum after the successful completion of the project. This in no doubt will ease the burden on the country’s foreign exchange and improve the economy in the long run.

Subsequently, the successful completion of Gas Infrastructure plant would enhance the country’s energy security. One of the disincentives to attracting Independent Power Producers to the power sector is unavailability of gas.

Many investors in the power sector are waiting patiently to see how the country would resolve the erratic supply of gas.

However, due to the completion of the gas infrastructure, more thermal plants may be constructed by the IPPs to bridge the generation deficit in the country.

This will fast track the government’s vision towards increasing the generation capacity to 5,000MW by 2016, thereby making Ghana net exporter of power in the West African Sub Region.

Due to its environmental soundness and economic competitiveness, the gas has become transitional energy source in many countries.

Economically, it costs 11 cent to produce 1 killo watt per hour of electricity using gas in electricity production as compare to 33 cent using oil. The utilisation of the gas has therefore, been considered as affordable and sustainable source of energy in the world.

At the time of the soaring electricity tariffs in Ghana, the least we could do to ameliorate its impact on Ghanaians was to waste this precious but non-renewable resources. Lean gas has a potential of making electricity generation in Ghana affordable.

The light crude oil used by the Volta River Authority and the IPPs is quite expensive. The huge savings as alluded to from the utilisation of the lean gas in electricity generation by Volta River Authority would be a mirage if the gas was allowed to flare.

Therefore, Ghanaians are upbeat about the flow of the gas from the Ghana Gas Company due to its capacity to drive down the electricity bills. According to the PURC, the completion of the gas project is set to change the electricity tariff regime in the country.

However, it important to put on record that harnessing the associated gas is only a half way through the full story. Marketing has been a major problem in the gas industry. The locations of the natural gas are normally far from the market centres.

Until now where it is commercially viable through pipelines, it was regarded dangerous to handle and difficult to get to the markets. Piping the gas a long distance to the point of consumption is a preferred mode of reaching the market, hence the construction of the pipeline from Atuabo to the point of consumption at Aboadze.

The refreshing news is that the demand of gas in Ghana abounds in the areas of the electricity generation, transportation sector and domestic usage for cooking as well as industrial utilisation.

The expressions of interest by TAQA Group and other companies to partner Ghana in the power sector as independent power producers to operate over 1,000 megawatts of electricity all together at Aboadze will provide additional impetus for the gas demand.

The benefits of the gas are enormous to the socio-economic development of Ghana. The processed lean gas can be used for power generation at Aboadze Thermal Plant, while the LPG aspects will satisfy the domestic and transportation needs.

Finally, the natural gasoline can also be used by the Tema Oil Refinery as raw material. Excess gas will be used for the intended Fertilizer Factory in Shama District.

These by no means, will help addressed the high cost of electricity generation in Ghana and the perennial shortages of LPG meant for cooking in various homes as well as the addressing the high cost of fertiliser for our farmers.

However, the sad news is that the local demand for gas in Ghana will exceed all the supply sources combined including the West African Gas Pipeline by 2018. This, therefore, indicates that the demand side in Ghana will not be the major problem, but the supply side management should be considered seriously in order to avoid supply deficit in the near future.

The Ghana Gas Company’s mandate should, therefore, be extended to explore and import gas from other countries to augment the future deficit the country is likely to face.

The country’s gas source from Nigeria is said to fluctuate from 80 million standard cubic feet daily to as low as 30 million affecting the VRA’s capacity to generate electricity at the Aboadze Thermal Plant. The projection is that thermal electricity generation will exceed hydro generation in the next ten years.

Therefore, alternative sources of gas have to be explored in order to augment the ever increasing demand for the gas to generate more electricity.

These latest developments may put the intended establishment of the fertilizer factory in the Shama District on the back burner since its success depends on excess gas.

All the stakeholders (the Minister of Energy, the Ghana Gas Company, the jubilee partners, Sinopec, etc) who were involved in bringing this noble project to successful completion deserve our commendation.

It must be emphasised that the associated gas is the single resources that will benefit the country most since its processes and consumptions will take place in Ghana.

As we inch towards the commissioning of the project in October, 2014, I implore all the engineers to take safety concerns seriously. Turn key contracts of this nature are capital intensive and highly risky.

Therefore, the maxim that it is better late than never holds sway. It is my hope that the concerns for compensation as requested by the local communities in the catchment area will be addressed as soon as practicable to pave way for it smooth takeoff.

By Mustapha Iddrisu