The production of natural gas in Nigeria is associated with crude oil (petroleum) production. The exploitation of crude petroleum inevitably involves the extraction of natural gas. Such gas produced can either be utilised or flared. Gas flaring involves the burning of unwanted gas. Such activities apart from being a waste of a resource which could otherwise have generate billions of naira for the nation if utilized, generate serious environmental consequence. The utilisation of ANG in Nigeria has been in
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various ways. Some of the natural gas utilised is consumed as fuel by the oil companies, some are sold to industries while some are converted into Liquid (LNG).
An average of 50% of the natural gas utilised in the country (about 12.5% of total production) has been for industrial use. Natural Gas is infact a significant source of energy in Nigeria. Some major industrial users are the Power Holding Company of Nigeria (PHCN), National Fertilizer Company of Nigeria (NAFCON), The Obigbo Gas plant, Delta Glass, etc. Of these, NEPA account for an average of over 75% of total industrial purchase and act as the major determinant of the changes in the level of industry consumption of natural gas in the country.
About 30% (on the average) of natural gas utilised (almost 8.5% of total gas produced) are reinjected while an average of 13% of utilised gas (about 2.5% of total gas produced) are used by oil companies. The proportion of utilised gas converted into liquid form (for domestic use among others) has been negligible and declining over time from 7.8% of utilised gas (or 1.9% of total gas produced) in 1985 to 1.8% (or 0.5% of total gas produced) in 1986 and 0.34% (0.08% of total production) in 1992, only in 1993, did the percentage share of LNG in gas utilisation rose to 13.3% (almost 4% of totally produced gas). This corresponded to a decline of 15% in gas flared during the same year.
Nigeria had an estimated 187 trillion cubic feet (Tcf) of proven natural gas reserves as of December 2010 according to the BP Statistical Review of World Energy, which makes Nigeria the ninth largest natural gas reserve holder in the world and the largest in Africa. The majority of the natural gas reserves are located in the Niger Delta and the sector is also impacted by the security and regulatory issues affecting the oil industry.
In 2009, Nigeria produced about 820 Bcf of marketed natural gas and consumed about 255, mostly for electricity generation where, according to the International Energy Agency (IEA) natural gas accounts for about 60 percent of generated electricity.
The greater bulk of natural gas produced in Nigeria are flared. Gas flaring account for an average of over 75% of total gas produced (the lowest percentage recorded so far given available statistics was the 69.9% for 1987 which amounted to 11,768.6 million
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cubic meter).The economics of gas flaring in Nigeria is a simple one. Gas is inevitable extracted, in oil production, and, usually, the more oil (petroleum) is exploited, the more the natural gas extracted. The utilisation of natural gas for each of the four purposes above involves some cost. Thus, after selling to industries, oil companies find it economically convenient to flare the excess than to reject or convert to liquid gas, especially when the former has no apparent cost. The first attempt by the Nigerian government to discourage and perhaps eliminate gas flaring in Nigeria was made in 1979 via Decree 99. The decree was aimed at stopping gas flaring in the country by January 1985. In December 1985 however, a modification was made to the decree stipulating a fine of 2kobo payable in foreign exchange for every thousand cubic metre of gas flared. An exception was however given to some 86 of the155 oil fields where 75% of gas produced was effectively utilised or where the gas contained 15%
of impurities which considerable render the gas unsuitable for industrial purposes (CBN, 1983). The decree (with its modification) had a pronounced effect during the subsequent two to three years as the percentage of gas flared to total output fell from 79.2 in 1984 to 75.2 in 1985, 75.0 in 1986, 69.9 in 1987 and 72.8 in 1988. Thereafter however, gas flaring went on the increase. True to economic rationality, the oil companies found it cheaper to pay the prescribed fine than to inject excess natural gas.
In 1992, the Nigerian National Petroleum Company (NNPC) represented by the National Engineer and Technical Company (one of its subsidiaries) signed an agreement with Chevron Nigeria Ltd. (a major oil producing company in Nigeria) and Bechtel ltd, to process gas for the domestic market. The agreement involved engineering designs needed by Chevron Nigeria Ltd. to install gas gathering and extraction facilities on the Escravos coast in Delta State. The gas process contract was to cost $450 million (CBN, 1992). In addition, by 1993, concrete arrangements had been made for the establishment of the Nigerian Liquified Natural Gas (NLNG) company. The company was to be a joint venture between NNPC and three other major oil and gas producing companies in Nigeria (Shell, Elf and Agip). Its mission is “to acquire and ensure a growing share of the international market for Nigeria‟s abundant natural gas resources by the promotion and sustained implementation of a competitive LNG project” (NNPC, 1993).
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SELF-ASSESMENT EXERCISE 3
What are the demerits of gas flaring in Nigeria?
4.0 CONCLUSION
The production of solid mineral in Nigeria has overtime been on a fluctuating trend but increased in aggregate terms. Limestone has been the major solid mineral produce in Nigeria accounting on the average for over 90% of total output. This is followed by coal while other minerals that contributed significantly to solid minerals output are marble, caseterite and columbite. Others produced in minor quantities include lead, Zinc, gold, Zicron, wolfram (a byproduct of tin mining) and radio-active minerals (uranium, thlorite etc.) while many more have been identified but yet to be mined.
Associated natural gas accompanied crude oil production and is considered significant for their variety of uses and conversion into liquefied natural gas. However, large quantities of these gases are still being flared.
5.0 SUMMARY
In this unit, you have been opportune to trace the general production and performance of the solid minerals subsector of the mining industry in Nigeria. You have also study the production of specific solid minerals while a discussion on associated natural gas was equally rendered in the unit. You have finally come to the end of the discussion on the solid mineral subsector. You are left with only one unit in this module where the challenges of various industries in the mining subsectors will be discussed and remedies proffered.
6.0 TUTOR-MARKED ASSIGNMENT
Discuss the steps to improve the performance of the Mining Sector in Nigeria.
7.0 REFERENCES/FURTHER READING
Anyanwu, J.C., A. Oyefusi, H. Oaikhenan and F.A. Dimowo (1997). The Structure of the Nigerian Economy (1960-1997). Joanee Educational Publishers Ltd.
Anambra, Nigeria. 661pp.
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Central Bank of Nigeria. Annual Report and Statement of Accounts. Various Years Central Bank of Nigeria (2008). Statistical Bulletin. Golden Jubile Edition, 2008 FGN (2007a). Nigerian Minerals and Mining Act. 2007.
FGN (2007b). The Nigerian National Minerals and Metals Policy. 2007
Ishola, S.T (2008). Ministerial Press Briefing by Honourable Minister of Mines and Steel Development. September 2008
National Bureau of Statistics (2011). Annual Abstract of Statistics, Compilled Edition, 2010
NNPC. The Nigeria Oil Industry, the Babangida Era (August 1985 to January 1993).
Tanns Comma Ltd, Lagos Marina
Olalokun et al (1979). Structure of The Nigerian Economy. Macmillian Press Ltd.
and University of Lagos press, Lagos.
Olayide S.O. (1979). Economic Survey of Nigeria (1960-1975). Aromolaran Publishing Company Ltd. Ibadan
Wikipedia (2012). Mining industry of Nigeria. Wikipedia, http://en.wikipedia.org/w/index.php?title=Mining_industry_of_Nigeria&oldid=
501226069
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UNIT 17 THE CHALLENGES AND PROSPECTS OF THE MINING