Linking oilfields with efficiency

Nigeria

Emeka Ene, managing director of Oildata Energy Group, talks to The Energy Year about the Kwale Gas Gathering (KGG) project, which the company is currently helping to develop, and the role of innovation in its operations. Oildata Energy Group is a marginal and brownfield development specialist and well-intervention service company.

What insights can you give us into the KGG project?
The Kwale Gas Gathering facility is an innovative modular gas processing infrastructure which will link six OML 56 fields together in order to bring their associated gas resources to the market.
This modular plant is critical for suppliers; the closest facility was 55 kilometres away. Now, we can reduce capex for maintenance operations by decreasing the distance to 6 kilometres for producers to efficiently access the supply chain.

What future opportunities will the KGG project bring about?
The KGG is done under an SPV called Nedogas Development Company (NDC) as a joint venture between Xenergi, the NCDMB [Nigerian Content Development and Monitoring Board] and NGC [Nigerian Gas Company], which have been very supportive. This highlights the private-public dynamics that can develop further in the future.
This initiative has already secured over 600 mcf [17 mcm] of demand for the distribution of gas. The project is an opportunity to increase the volume capacity of the OB3 pipeline, which it will be supplying together with the AKK pipeline.
A key aspect of the KGG project is the catalysing power it has for further growth. With the Niger Delta region having around 150 flaring sites, the replicability of such modular plants will have a tremendous impact on the potential supply of gas to the market. It also shows the potential for collaboration among industry players as well as between private and public institutions, as is currently happening with NNPC and the NCDMB on the KGG.

How is the current policy framework fostering growth in the Nigerian gas sector?
There have been improvements within the regulatory frameworks that have now allowed gas projects to receive better support. One aspect is the PIA [Petroleum Industry Act], which puts more emphasis on the divide between oil and gas and has also separated the upstream sector from the midstream and downstream.
Designing regulations for a specific sector allows the gas industry to have more efficient communication and feedback between the different stakeholders.
A second aspect is the emergence of the network code, which enables greater legal and commercial relationships between actors from different states. Now, a client in Lagos can buy gas from our distribution network and pay the NGC for the transportation costs. That will have a strong impact on the dynamics of competition in the gas sector.
These aspects have led to an increase in the number of possible commercial interactions between players and have thus resulted in greater competition throughout the market, ultimately translating into better price security.

What are your expectations regarding the potential of LPG in the market?
The Nigerian population is big, but its consumption of LPG is still not high and compares to that of Ghana in per capita measurement. However, there has been a greater demand for LPG throughout the past years.
With greater urbanisation and the doubling of Nigeria’s GDP since the 2000s, we will witness greater regional demand for energy. The population is shifting from using biomass energy to LPG-based power. That is why projects such as the Dangote Refinery have been on the rise and are crucial for our self-sufficiency.

What main challenges have been impacting the energy industry and how have you overcome them?
The industry has faced many challenges over the past few years due to the falling oil prices throughout the Covid-19 pandemic, which led to an overreaction from the markets and a lot of divestment from Nigerian projects. In addition, the swift international push for the transition to renewable energy has increased pressure on the oil and gas sector in Nigeria. Now that global demand has greatly increased, our industry has not been capable of meeting that demand and investments remain low.
To address that issue, there is a need to increase our value proposition and diminish the perception of risk throughout the international investment community. There is a risk premium for Nigeria, and our role is to showcase that our operations and projects manage to produce revenues while also being traceable and time-efficient.
Some aspects we implement for our projects are thinking in a modular fashion, demonstrating strong proof of concept and implementing incremental growth step-by-step.

What is the role of innovation in Oildata’s operations?
Innovation has always played a crucial role for Oildata. We have managed to demonstrate our capabilities on that end by taking five nonoperating marginal fields to production. Using our innovative techniques, we have helped producers to continue operating at low costs. The market will be needing such processes as oil prices will not stay up indefinitely. Thus, technology is a way for us to increase value for our clients.
Throughout the pandemic, digitalisation has played a crucial role in keeping our operations going and finding the best solutions to do so.
There is now also a technology which is a fibre-optic pipeline link protection system. It detects any sort of intrusion in real time throughout the pipeline and is helpful in combating the current safety and theft challenges we face.

Where would you like to see Oildata in two to three years?
Our growth trajectory will include further fossil energy development. However, we strongly believe that it is most responsible to focus on the types of energy that are more sustainable. We are looking to expand our offering to the energy transition and become leaders in that space.
We see gas not only as fuel or a commodity, but rather as an enabler. We want to expand the value chain of gas and process it into methanol, ethanol and different oils, which will unlock further economic potential.

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