Despite increasing concerns, pipeline vandalism constitutes a major problem in Nigeria’s oil and gas industry.
In this interview with Udeme Akpan, the chief technical officer, Nestoil and Neconde Energy Limited, urges oil companies to embrace Alternative Evacuation Technology, AET, to enable them sustain operations.
How did you arrive at the Alternative Evacuation Technology?
In February 2016, we had a trajectory to growing our production from 50,000 barrels per day, bpd to 60,000 bpd and we were excited. The next thing we heard was that the pipeline had been vandalised and we thought it was a regular Trans Forcados high-flying stunt that went down. After inspection, however, we understood it was the export line from the Forcados Terminal that was affected.
A close assessment showed that it would take a while before they fixed it because of a lot issues, especially technical and social. It eventually took about 60 months before that pipeline could come on stream.
Who mooted the idea?
The great idea did not come from me. In one of our operations meetings, a member of our team reported that a company was using barges to move its crude oil about 200 kilometres away. So we thought we could learn something from them by taking crude through barges, no matter how small. Like the Biblical lepers, the question was, should we venture or remain at one spot? We decided to venture instead of dying.
It took about four months of planning and working with many stakeholders, especially our petroleum, marine and other engineers, apparently because we wanted to understand that space and play well, too.
How were you able to face the challenge of developing the technology?
It took a combination of technology, logistics and then resilience to achieve the feat. It should be noted that science and engineering are very basic across board. So, as engineers, we looked at the fundamentals of what was required to be able to carry it out.
We also considered the type of barges required, depth of the river, types of terminals around and distance. We considered the kind of regulatory approvals required before engaging with all kinds of people and institutions, including the Department of Petroleum Resources (DPR), Nigeria Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA).
We also engaged the communities because we needed to become a good corporate citizen in our area of operation. In doing these, some key agencies such as the Navy and the army needed to be carried along. In other words, they needed to know that we were not one of the bunkerers and that we were working to move crude oil from one point to another legitimately.
Can you comment on the capacity of your team members?
We have a competent and agile team. We ensured that competent persons with the required agility were engaged. We are not disappointed because everyone is working to deliver value.
How does it work?
This AET has a combination of technical and logistical issues. In Nigeria, we have the Forcados, Bonny, Brass and Escravos terminals, where crude oil is exported. Over the years, the pipelines that take oil to these terminals have become targets for vandals. Sometimes, the pipelines become targets whenever there are social and other issues with stakeholders, especially the government and communities, thus affecting operations. But with this system, we can now have control over the value chain.
It should also be noted that when we bought the asset from Shell, the mechanism in use was only able to separate oil from gas. But we had to put in place a mechanism to separate oil, gas and water before transporting it through barges. In other words, we had to convert our facilities to have the capability to separate water and provide dry oil that meet export quality.
Were all these facilities built by your engineers?
In the Nestoil Group, we have companies that fabricate these vessels as well as companies that did engineering. Specifically, Impac Engineering did the detailed engineering and then handed it over to our fabrication company, known as Energy Works Technology (EWT). EWT fabricated the systems and then we transported everything to the field base for installation and integration. We also got one equipment – the crude oil dehydrators – from the United States for installation before the commissioning process started.
What are the major benefits of this technology?
The new technology comes with a lot of benefits. The usual losses or leakages associated with pipeline issues are eliminated, meaning that we have control of the complete value chain to deliver specific volumes from the well-head to the terminal. Also, bankers now take us serious than before because they know and appreciate the certainty of our operations. There is also a significant drop in redundancy.
Has the system been fully deployed and what is your experience?
Yes! We have been at full deployment since June, July last year. It has been great, everyone is happy because production has been stable. From all indications, we will be able to pay back borrowed funds. It can only get better.
Are you in a position to assist others who may need your services?
We are ready and currently discussing with some organisations. We look forward to delivering the AES, which includes the crew dehydration, the loading platforms, the vessels, and all the controls that are required within 14 to 18 months. This is because we have integrated companies that provide complementary services, thus enabling us to deliver value on record time.
Are you going to share this with people in the industry?
We have started sharing the success of this feat with others. Indeed, the new system is beneficial and we do not intend to go back to the pipelines at this time. Consequently, we are doing a paper to enable us make presentations to others.
What are the challenges?
Ordinarily, it could have been easier to put crude oil through the pipelines. But under this arrangement, we must run a continuous logistics operation. So you have to be alert. You have to put a framework for security and maintenance of vessels because they are moving continuously back and forth. You have to have a good supply chain for your fuel.
What about the cost?
We don’t have a fixed cost for executing the project. Total cost depends on many factors, including the distance to be covered and volume of oil to be transported.