Technological options for monetising stranded natural gas in Ghana

Author: Gyeyir Denis Mwinkpeng
Email: gdenismwin@hotmail.com
INTRODUCTION
Ghana gas resources are at the pivot of its developmental agenda of structural transformation through agriculture and industry. The country’s natural gas reserves estimated in excess of 6TCF are a cheap source for powering the existing and planned thermal plants to fuel industrial growth and for the petrochemical industry (production of fertilizer, ammonia, methanol, etc) upon which agricultural production is heavily dependent.

Natural gas is a hydrocarbon resource composed of mainly methane formed by the decomposition of organic matter engulfed in a source rock over a long period of time. Natural gas is found either in combination with crude oil (associated gas) or in separate reservoir rocks (non-associated gas). Natural gas occurs in varying quantities and qualities in different areas of the globe with some referred to as ‘’stranded’’ natural gas. Dong et al. (2008) describes stranded natural gas as gas reserves remotely located from market sources or scattered in regions where any single reserve is considered small.

The scope of the above definition of stranded natural gas could however be widened to include gas reserves deemed less useful given the current technology available for its monetisation and the cost-benefit analysis of the gas relative to accompanying resources. Gas flared for these or other reasons may also be classified as stranded gas. Any means that provides an ease of transport, transmission and/or transformation of these stranded gas resources to yield economic returns can be termed as a gas monetising technology. For stranded natural gas, the conventional means of transport via pipelines is usually uneconomical and impracticable due to geo-political reasons (Patel 2005, Dong et al. 2008). Some of the major technologies employed in monetising stranded gas include Pipelines, Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG) and Gas-to-Liquid (GTL). Other means of monetising stranded natural gas in review include Gas-to-Solids (hydrates), Gas-to-Wire (Power/electricity).The proliferation of these technologies has been necessitated by the depletion of onshore conventional oil reserves and the ever increasing demand for more alternatives to augment the existing energy sources. Some of these technologies have become increasingly relevant as a result of economic and environmental merits over other energy sources such as oil and coal (Economides et al. 2006, Woodet al.2012).

This article seeks to review the technologies available for monetising stranded natural gas which otherwise would be flared. These resources present cheap and clean source of power and revenue for the country and are also environmentally friendly.
REVIEW OF TECHNOLOGIES FOR MONETISING STRANDED NATURAL GAS
The common technologies employed in monetising stranded natural gas are summarised in Fig. 1 and discussed subsequently.

SOURCE TECHNOLOGY CUSTOMER














Pipelines
Pipelines are transport infrastructure of various dimensions used in carrying oil and natural gas to various destinations such as compressor stations, refineries and homes. Pipelines are most useful in the transport of natural gas where gas reserves are large to less distant markets (Onaiwu 2010). However, Patel (2005) indicates that the use of pipelines for transporting stranded gas is impractical. This may be attributed to location, distance and volumes of stranded natural gas available. Distribution pipelines could however be useful in monetising natural gas for domestic and commercial use.
Compressed Natural Gas (CNG)
Compressed Natural Gas (CNG) refers to natural gas (mainly composed of methane) reduced in volume through compression in specially designed containment systems and mostly used to fuel engines.The technique could be a useful means of transport of gas to fuel various power plants in Ghana which suffer during periods of reduced gas inflows from Nigeria. CNG could also be used for the export of gas to earn foreign exchange and curtail the depreciating cedi. According to Deshpande and Economides (2004), the CNG technology is divided into three phases namely compression, refrigeration and transportation. Natural gas is compressed to pressure ranges of between 1500 to 3000 psi (depending on whether the gas is rich or lean) and cooled to temperatures up to 40ºF (Marongiu-Porcu et al.2008).CNG offers a number of advantages relative to other gas monetisation techniques. Particularly notable are its suitability for the needs of smaller markets, monetising isolated reserves, very low environmental impacts at compression stations and offloading sites, flexibility and simplicity. In the view of Thomas and Dawe (2004), CNG systems make possible the transport of stranded gas to existing markets and small quantities of associated gas which cannot be flared or re-injected. The flexibility of CNG in capturing and delivering stranded and associated gas to smaller markets is further emphasised.

Since the 1960s, attempts to commercialise CNG have been fairly unsuccessful and this has limited the competitiveness of the technology. Dunlop and White (2003) identified technical challenges, huge investment requirements and low prices of natural gas as contributory factors to the failure of these early attempts. Distance to market and the needs of largely developed markets limit the use of CNG for gas transport. There has, however, been a significant change in trends within the energy market resulting from recent dynamics in the world economy and the accompanied soaring of prices of natural gas. As a result, industry players such as Knutsen OAS Shipping, Sea NG, EnerSea Transport L.L.C., have been instrumental in developing various CNG concepts well suited to the monetisation of stranded natural gas resources.Some of these technologies are illustrated below.
Source: Gupta and Prasad (n. d.)
Fig.2: Sample CNG Technologies

Sea NG’s Cosselle CNG carries 3 mmscf of natural gas pressurised up to 3,000 psi in six inch coils of pipe and is a novel CNG concept in the industry. The company is also credited with the patented Volume Optimised Transportation and Storage (VOTRANS) concept. Knutsen OAS Pressurised Natural Gas (PNG) was developed with cylindrical containers employing similar technology (Oyetunde, 2009, Economideset al., 2006). These developments will facilitate the commercialisation and monetisation of stranded gas, promote competition and hence efficiency which industry players in Ghana can take advantage of.
Liquefied Natural Gas (LNG)

The business of monetising stranded natural gas has been dominated by LNG technology, one of the oldest and a reliable option within the industry. LNG is natural gas which has undergone gas sweetening (removal of contaminants) and liquefaction by cooling to temperatures of about -162º C, reduced to 600 times its volume in the gaseous state and shipped in specially designed tankers
According to Perez and Diez (2009), initial development in LNG was focused on large natural gas fields aimed at recovering capital invested. This was the result of the high cost associated with project engineering, construction and materials such as cement and steel. It could be inferred that this apparent lack of consideration wittingly or unwittingly for isolated and stranded gas reserves offered a window of opportunity for the CNG technology to penetrate. These developments awakened innovators within the LNG sub sector such as Russia’s Gazprom, Chevron, Sinopec and its LNG partner Conoco Philips among others, who over the past decade began massive investments in LNG projects. Currently, BP (2012) reports that LNG trade accounted for about 32.3% of global gas trade with LNG shipment growth of 10% in 2011. This is as a result of the huge investments in LNG in countries such as Australia, Qatar, Iran, Russia etcetera as illustrated in Fig 3. Statistics are obtained from Ernst and Young (2012).


Fig.3: Current Trends in LNG Export Capacity of Selected Countries

South Korea for example finalised a 22 year agreement with Royal Dutch Shell and Total to purchase over 5.64 million metric tonnes of gas per year from LNG projects in Australia (Ernst and Young, 2012). There are other small and medium LNG and liquefaction facilities in countries like China, USA, Norway and Brazil some completed and others under construction. Majority of these facilities would play a significant role in exploiting gas reserves which hitherto were not economically producible (stranded).

Gas-To-Liquids (GTL)

GTL involves chemical reactions unlike CNG and LNG and represents a major technological breakthrough in an attempt to monetise natural gas reserves and particularly stranded gas.This has even become more relevant given the recent upsurge in vehicular use and industrialisation.

Fischer (2001) traces the origins of gas-to-liquid conversion to the creation of methane from hydrogen and carbon monoxide by Paul Sabatier and Jean Senderens in 1902. The technology is, however, often credited to the Nobel Peace Laureates, Franz Fischer and Hans Tropsch who in 1923 actually developed GTL to produce fuel from coal using the three steps in the Fischer-Tropsch (FT) process illustrated in Fig. 5.


Source: Fischer(2001).
Fig.5: Schema of the Fischer-Tropsch Process

The technology as shown above involves first reforming methane into synthetic gas (syngas), reaction of the clean syngas in the presence of a catalyst and upgrading and separation into various middle distillate products such as diesel, gasoline, kerosene and petrochemicals such as naphtha, alcohol and dimethyl ether. The products are sulphur and nitrogen free, cleaner and non-aromatic (Fischer 2001).The technology has undergone significant modification over the years. For example in Texas, Carthage Hydrocol embarked on research between 1948 and 1953 to build a GTL plant capable of converting natural gas into 365,000bbl of distillate fuel a year though this was short-lived. From the 1950s, South African based Sasol and Mossgas, Shell in Bintulu (Malaysia) and Mobil in New Zealand have developed various GTL plants aimed at converting natural gas and stranded reserves into useful fuel products (Ahmed et al. 2012). The technology continues to witness tremendous development all around the world. It is worth mentioning that Pearl GTL project in Qatar currently under construction would be the world’s largest integrated GTL plant when completed (Ahmed et al.2012). Other projects under construction or in completion stages such as Escravos in the Niger Delta, Syntroleum’s Sweetwater plant at Burrup Peninsula and Australia’s Sasol Chevron and Shell’s specialty plants are examples of GTL projects aimed at monetising stranded natural gas resources (Fischer 2001). Given these trends in the development of GTL technology and its numerous associated advantages, it is evident that GTL is poised for further growth which will boost the monetisation of stranded natural gas reserves. Companies such as Ghana Gas Company (Ghanagas), West African Gas Pipeline Company (WAPCO) can tap from the experiences of these companies to monetize Ghana’s gas reserves.
Gas-Fired Power (GFP) or Gas-to-Power (GTP)

The technology is sometimes referred to as Gas-to-Wire (GTW). The use of gas to generate electricity is growing steadily. Ghana’s quest to add to the national grid, meet the growing domestic and industrial demand for electricity and broaden the rural electrification programme can be derived from currently flared and untapped gas resources. Seebregts (2010), posits approximately 21% of electricity worldwide is generated from natural gas amounting to a capacity of 1,168 GWe in 2007. He identified Open-Cycle Gas Turbine (OCGT) and Combined-Cycle Gas Turbine (CCGT) as the two techniques in generating electricity. The two are akin in design only that the heat generated in a CCGT is tapped in a Heat Recovery Steam Generator (HRSG) and used to produce extra power. The technology can be very successfully applied to generate electricity from stranded, offshore, isolated, flared and associated gas with its major advantages being flexibility and low emissions. GTW has been considered in transmitting power from the Alaskan gas field to California (Thomas and Dawe 2002). The U.K in 2010 generated 46% of its thermal electricity requirements from natural gas according to U.K. Department of Energy and Climate Change (2011). With the numerous innovations and investment, the hurdles of cost, efficiency and environmental specifications would be surpassed in the near future to propel the technology to greater heights.

TECHNO-ECONOMIC AND ENVIRONMENTAL COMPARISON OF TECHNOLOGIES FOR MONETISING STRANDED NATURAL GAS

Economic analysis which integrates technical evaluations in decision making is vital in the choice of a technology for monetising stranded gas. Global warming has ignited legitimate environmental concerns. It is against this background that this article seeks to highlight a few issues regarding these concerns in Table 1 which may be useful in the selection of a particular technology.


Table 1: Comparison of CNG, LNG and GTL Technologies
Criteria CNG LNG GTL
Technical
Construction (months) 30-36 36-38 38-48
Conversion Efficiency 75% 88% 60%
Av. Carriage capacity 1.2 Bcf 2.9Bcf Varies
Economic
OPEX ($/bbl) 0.2 to 0.3 3 to 4 6 to 8
CAPEX ($/bbl) 1 to 2 8 to 12 9 to 14
Transport cost
(2500 miles) 3.60/MMBtu $3.95/MMBtu Varies
Environment
Emission of GHGs lowest emissions lowest emissions low emissions

All the technologies discussed offer various advantages from different standpoints as summarised in the table above. Gas-to-hydrates and Gas-Fired Power are still in the development stages; hence little data are available for comparison.

Conclusion
From the review of the technologies above, enormous opportunities exist and several more to be developed for stranded natural gas reserves to be monetised. The particular technology best suited for a given stranded gas reserve will depend on a number of considerations. These include but are not limited to availability of the technology and its cost, ability to generate returns to offset the cost, volume and diversity of final products, environmental friendliness, location of the stranded reserve, distance to market and price of the final product. Peculiar circumstances of the stranded reserve would therefore set the bases for economic analyses and subsequent decision to utilise a particular technology. With the current trends in these technologies, it is hoped that most of the challenges associated with stranded and most especially, flared gas would be transformed to opportunities for the socio-economic wellbeing of stakeholders and promoting a safer environment to sustain lives.