September 5, 2022

FG to install flow meters to determine accuracy in oil production, losses

Oil theft

By Ediri Ejoh, at GASTECH, Milan, Italy

The Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), yesterday announced plans to commence the installation of its flow meters on oil production facilities and pipelines in the upstream sector.

This move is in a bid to curb the under-reporting of the country’s crude production volume and retrieve more revenues for the economy.

The move, according to the Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Mr. Gbenga Komolafe, at the ongoing GASTECH Exhibition and Conference, Milan, Italy, has been approved by President Muhammadu Buhari, and is expected to save the nation billions of dollars lost through inaccurate meters and dependence on oil companies for data.

“By depending on operators’ data, Nigeria does not only know how much is being produced from its reserves, but it has also lost billions of dollars in potential revenue from under-reported volumes. It is unfortunate and by the conscious movement of the President, we are fast-tracking the process to get these metering done fast.

“On assumption of office, contrary to best practices in the developed society, I found out that it is the operators that are in charge of metering. I found it unacceptable. After analyzing the situation it makes it clear that there is no way we can have absolute metrics around our production. So many unaccounted volumes is been lost in that respect and when you put numbers to that it is mind bugling. 

“As far as I am concerned that is a huge task for me to achieve. There are political bottlenecks but we are very positive about achieving that purpose.”

Over 2million bpd to be realized if…

Besides, the regulator noted that talks are underway with operators of shut-in wells to bring back on stream at least 800,000 barrels a day shut-in from the wells before the end of this quarter.

The NUPRC had expressed concerns about the country’s production capacity, citing cases of the deliberate shut-in of oil wells and pipelines by operators who are trying to deal with theft. “Investors are not charity organization as profitability is key. The moment they find out they are losing production the only thing resorted to is to Shut-in. Mind you they are not only shutting the crude but the associated gas, so we lose both volumes of oil and gas production.

“Consciously we are collaborating with the security agencies. The unfortunate thing is that it is coming on the hills of the energy transition. I set up a committee within the commission that tries to identify the operators’ strengths to put numbers and values to the shut-in volumes to be able to focus on those wells and have conversations with the investors to ascertain how soon can we have the production on stream because we know what we are talking about.

“When we put the total number together, we found out that If we succeed in what we are trying to do, we could re-stream as much as 800,000 barrels per day from the shut-in. It is pathetic that we are talking about producing between 1.2and 1.3 mbpd against OPEC’s quota of 1.8 mbpd.

“If we succeed and the operators come on stream, we could have over 2 mbpd of production, which is huge and essential to our economic recovery.”

However, Komolafe insisted that the effect of the level of theft has resulted in the declaration of force majeure at Bonny Oil & Gas Terminal (BOGT) and the shut-in of wells from fields evacuating through the Nembe Creek Trunk Line (NCTL) and the Trans Niger Pipeline (TNP), noting that similar trend has continued in 2022.

The upstream regulator added that the procurement process has almost been concluded as original equipment manufacturers (OEMs) have been engaged while a forensic audit of all flow stations and production volume is underway.

At a time the country is suffering from several blows on all fronts, especially in the areas of oil theft, under-production and heavy subsidy burden, the regulator is exploring all options to generate revenue and ensure the oil sector becomes viable for investment.

Nigeria needs to tackle security, sustainability others

Speaking on the sidelines of Nigeria, Chairman, CEO, Baker Hughes, Lorenzo Simonelli, called for more proactive measures to tackle the crisis rocking the energy industry.

“The important thing is that we collectively walk together around the sustainability, security and affordability for everybody that needs the energy as we go forward. Nigeria which has a great resource base needs to tackle its challenges regards to affordability, security and sustainability.

“Right policy is essential in driving energy security.

“Putting National Security aside at the moment, there is an aspect of how do we not have energy poverty and that addresses National Security, and they go hand in hand.” 

On energy transitioning, he said, “There is a need for more triangulating policies and investment as well as pragmatic approach to them. However, there would be short time pain, but If we make the right choices and investments we can have a much more diversified energy mix which is more affordable. 

Gas yet to be fully harnessed

Speaking also, Chairman, Lee Engineering and Construction Company, Dr. Leemon Ikpea, noted that Nigeria was yet to optimize the full potential of its enormous gas reserves, saying “We are blessed with unlimited gas reserves and there is a need to harness this resource for our economic development.

“For us, we have seen this opportunity and we are ready to invest in that sector.

“Currently, we are very close to finishing the construction of Gbaran- Ubie integrated oil and gas development Phase 2 project which has an additional capacity to produce 400million scuf of gas per day when it comes on stream. Note that it is an addition to the original capacity of 1 million which would then amount to a total of 1.4million scuf of gas per day. We have that of Assa North/ Ohaji Egbema project which can produce 600milion scuf of gas per day. 

“Also, we are building an interpreted manufacturing plant that will take the woods off our kitchen and save deforestation by producing and canning affordable cooking gas. It is at our Warri based factory.”

“These are projects of national strategic importance and we are proud to be identified in them. 

For CEO, MD Woodside Energy, Meg O’Neill, “the Russian and Ukraine crisis has shown the relevance of fossil fuel. The world cannot exist without fossil fuel and the Russian/Ukraine war has made a revelation of that. What we should be looking at critically is the global population and demand which can impact the volatility in the sector.