Hydrocarbons A rounded contribution

Gas challenges
The government has pledged to make maximum use of its hydrocarbon resources and that no natural gas would be flared. Gas is still routinely flared in Nigeria, where Abuja maintains low regulated gas prices, so upstream operators burn off associated gas because of the lack of a commercial outlet.

This practice is widely criticised on environmental grounds and also because it wastes a valuable natural resource. Ghana has proven gas reserves of 1.5–1.7 trillion cubic feet but this figure is likely to increase as exploration efforts continue. About $750m out of a total loan of $3bn from the China Development Bank (CDB) was earmarked to fund the construction of the Atuabo plant. The facility has processing capacity of 150m cubic feet of gas a day and will initially deal with about 40m cubic feet of gas a day.

The government originally stated that the GNPC would develop the country’s gas sector but has now set up dedicated gas parastatal, the Ghana National Gas Company (Ghana Gas), to construct, own and operate gathering, processing, transporting and marketing of gas in the country. It has listed likely outlets as power generation, petrochemical facilities and fertiliser production.

The new company has already signed an agreement with the Tullow consortium to construct the Ghana Gas Deep Water Pipeline to connect Kwame Nkrumah with the Atuabo facility. It had been hoped that Atuabo would be operational by the end of 2012 but the project has been repeatedly delayed, partly because of further negotiations over funding between the CDB and the Ghanaian government. Construction costs may also have risen in the meantime.

In early February, the chief executive of the Ghana Gas Company, George Sipa-Adjah Yankey, announced that the plant was 85% complete and due to come on stream in May but other reports, including from Tullow, suggest that it will not process its first feedstock until the second half of this year.

Until that happens, the development consortium is re-injecting associated gas back into the hydrocarbon reservoir and is reported to be in talks with the government over other methods of managing the gas in the meantime.

The country’s Environmental Protection Agency (EPA) has even suggested that gas could be flared as a temporary measure while the Atuabo plant is completed but this would be politically unpopular. Contrary to some reports, routine gas flaring did not begin in 2013. There has been some flaring on safety grounds and for testing but this is usual in the oil and gas officials. Gas cannot indefinitely be reinjected into hydrocarbon reservoirs and the government may be faced with a tough choice over sanctioning flaring and halting oil production.

Tullow revealed: “With resolution of these issues, Tullow estimates that Jubilee field production will average 100,000 b/d for 2014. These delays, which are not within Tullow’s control, do not affect the recoverable reserves of the field. Furthermore, Tullow is confident that, once the gas processing facilities onshore are completed, the Jubilee field will be able to produce to its full potential given the field’s well capacity and the strong performance of both the reservoir and the FPSO to date.”

Gas will be supplied to thermal power plants, which the government hopes will encourage both industrialisation and rural electrification. At present, just over half of the population currently has access to electricity at home, which is better than in most other African countries but far below the 100% rate common in North Africa.

It seems clear that Ghana will soon have more natural gas production capacity than the Atuabo plant can deal with. It remains to be seen whether Atuabo will be expanded, or whether a new processing plant will be needed in the longer term.

Much depends on how quickly the domestic gas sector develops. Substantial investment in fertiliser production, for instance, and perhaps another gas-fired power plant would indicate that the wholesale gas market is working well. This would encourage increased production of associated reserves and could also trigger the development of non-associated gas fields.

First gas from the OCTP fields is expected in 2017, one year after oil comes on stream, but it remains to be seen whether delays to the development of the Atuabo project will have a knock on effect on other gas projects.