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After decades of
being challenged by local and foreign industry watchers, the Shell
Petroleum Development Company (SPDC) of Nigeria Limited yesterday
announced that it has signed a contract with Saipem Contracting Nigeria
Limited for a pipeline system that will gather associated gas from
being flared, thus utilising it for use in the domestic gas market.

According to the
firm, some 30MMscf/d of gas from Otumara and Saghara fields in Western
Niger Delta will be gathered, processed, and channelled through the
Escravos – Lagos Pipeline System (ELPS).

“This is an
extremely important project for SPDC in terms of our commitment to
ending routine gas flaring, and consolidating our leadership position
in the domestic gas market. Security and funding permitting, we will
continue to make good progress in bringing on the projects that will
reduce flares and boost gas supply to the domestic market,” the company
said in a statement yesterday.

However, Phillip
Jakpor, media officer of Environmental Rights Action/ Friends of the
Earth Nigeria, doubts the sincerity of the oil company to end gas
flaring.

“Shell cannot be
trusted to tell the truth on matters of flare out. We have heard over
and over again about gas gathering infrastructure that they have been
constructing to harness wasted gas while spokespersons continue to
justify why gas flare cannot stop.

“They have
consistently breached our deadlines since 1984 and even their self
imposed deadlines with impunity, so we do not believe their lies on
ending flares,” Mr. Jakpor said.

The project cost
$101million. In January, the Dutch parliament questioned Shell because
of its activities in Nigeria. A lot of criticism was voiced about the
company’s lack of transparency in its activities in Nigeria, and about
the major pollution in the Niger Delta.

Groups such as
Milieudefensie, Friends of the Earth International, and other
non-governmental organisations want Shell to clean the hundreds of oil
leaks it causes each year and to stop flaring gas, which has been
prohibited by Nigerian law since 1984. The associated gas now simply
burned off emits poisonous gasses and CO2, whereas it could be put to
good use, such as to generate electricity.

Deputy managing
director, Saipem Contracting Nigeria Limited, Davide Rossi, said, “We
are committed to executing the contract job and ensure timely delivery
of the project.”

The 42-kilometre
pipeline is of various sizes, ranging from 2” to 12”, passing through a
swampy terrain with a major river crossing.

Late last year,
SPDC Joint Venture awarded a contract for engineering, procurement, and
construction of the gas compression and processing plant to Daewoo
Nigeria Ltd. and it says this work is progressing.

SPDC Joint Venture
has already invested some $3 billion in Associated Gas Gathering (AGG)
facilities which helped it reduce its flaring significantly between
2002 and 2010.

It said militant
activity and funding issues brought many projects to a halt, but it is
now investing more than $2 billion in completing these projects,
repairing damaged equipment, and building new AGG facilities.

The firm says when
completed, these projects will extend AGG coverage to more than 90 per
cent of the associated gas produced in the Joint Venture operations.
The remaining 10 per cent will be covered by Nigerian investors who
would collect associated gas from flare sites for small-scale local
projects.

Ending gas flaring

Last month, the
Federal Government launched a ‘gas revolution’ project which it says
would, among other benefits, put paid to gas flaring in the country and
utilise natural gas reserves aimed at attracting foreign direct
investment worth $25 billion.

Fola Onasanya, oil
and gas analyst, Ciuci Consulting, a management consultancy firm, said
the gas revolution launched by President Goodluck Jonathan holds the
promise of inducing further development and growth in the country’s
domestic gas market.

“With the $3
billion Central Gas Processing Facility (CPF) by Nigerian Agip Oil
Company (NAOC) and Oando Nigeria Plc, a huge sink will be created for
storing and utilising natural gas resources which otherwise could have
been flared, thus providing a boost to the economy both in terms of
value generation and job creation,” Mr. Onasanya said.

Nigeria’s oil
assets have been exploited for more than 50 years. However, while oil
companies have profited from the resource, local communities in the oil
rich but conflict ridden areas live with the daily pollution caused by
non-stop gas flaring.

The country has
lost billions of naira on gas flaring, a process of burning off into
the atmosphere, surplus combustible vapours from oil wells, either as a
means of disposal or as a security measure to relieve well pressure.

Inability to solve the lingering problem has been increasingly
recognised as a huge environmental problem in the Niger Delta region of
the nation.