Targeted to start running by the end of 2014, the Atuabo gas processing plant (GPP) is arguably Ghana’s most anticipated energy project. Once up and running, the project will provide a much-needed source of natural gas feedstock for the country’s power plants – a requirement thrown into relief following the disruptions experienced by the West African Gas Pipeline (WAGP) in 2013. The Atuabo GPP will also potentially allow for improved efficiency at the Jubilee field, where gas has until now been re-injected or, to a more limited extent, flared.
Local content has also become a hot topic for energy-related industries around the world, and Ghana is no exception; indeed, the extent to which local enterprises are involved in the production and processing of raw commodities has been subject to discussion in the country’s mining sector as well as in the hydrocarbons sector. “You are dealing with a geological commodity that takes tens of millions of years to mature yet has a production life of around 60 years. A country has no moral right to consume in one or two generations something that has taken millions of years to form without leaving a developmental legacy for future generations,” said Theophilus Ahwireng, acting CEO of Ghana’s Petroleum Commission.
The government must also consider cost-related challenges. Ghana relies on thermal power for around half of its generation capacity, most of which is run on machines that can switch between oil and gas as a feedstock. At the moment, all of the gas used at stations is supplied by the WAGP, for which current delivery quantities are far below initially contracted levels. To cover the shortfall, it is estimated that the government is spending $1.1bn per year to purchase light crude oil (LCO) on the spot market. “The GPP is essential for the economy, especially on the cost-saving side, as the government is spending a lot to import LCO that it then subsidises to the end user,” Sampson Akligoh, head of research at Databank Financial Services, told OBG.
The $850m Atuabo project is spearheaded by the Ghana National Gas Company, which in a March 2014 press release announced that the first phase of processing would commence in the second half of the year at an initial production level of 70m standard cubic feet per day (scfd), which would then increase further to 120m scfd by the fourth quarter. Various reports state that the plant’s ultimate capacity is expected to be 150m scfd. After numerous delays, the Ghana National Gas Company announced that the GPP was 99.7% completed in early August 2014 and local press reported the project was due to open in December of that year.
Impact On Oil
Gas is slated to reach Atuabo via an offshore pipeline originating at the Jubilee field, and once processed, it will then flow through a 111-km pipeline to the Volta River Authority’s Aboadze Thermal Plant, the current destination for much of the gas arriving from Nigeria through the WAGP.
For Jubilee’s operators, the delays are not only resulting in lost revenue potential associated with supplying the plant with gas of up to 120m scfd, but are also impeding their ability to reach oil production targets. Unused gas needs to be re-injected into the reservoirs, resulting in current production levels of 105,000 barrels of oil per day as opposed to the targeted 120,000. Given the negative impact of the limitations on flaring, in June 2014 Ghana’s Environmental Protection Agency announced that the operators of the Jubilee field would be granted permission to conduct some flaring until October 2014. Jubilee’s partners have tabled the idea of constructing, as a temporary measure, a pipeline that would feed directly into Abaodze for power generation and bypass the processing plant altogether. Walter Perez, the WAGP’s managing director, agrees that further routing options are required, telling OBG that the WAGP and the planned new pipelines should work together to allow more flexibility so that Abaodze and other plants can shift between gas and crude.
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