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NIGERIA - Big Gas Projects.

With Chevron estimating associated and free gas reserves in its 2.2m acre areas at 17 TCF, the $569m Phase-I of the Escravos gas gathering project (EGP-1) came on stream in late April 1997. This has put out three flares at the offshore Okan and Mefa fields, reducing the amount of flared gas by 40%. It has materialised after three decades of study, negotiations and arguments. Now Chevron is proud of its good environmental impact on the Niger Delta. The system includes offshore gathering and compression facilities, a gas pipeline to onshore power plants, and a floating LPG storage/offloading vessel which is the first of its kind in the world. About 150 MCF/d of associated gas is compressed and piped to an onshore fractionation plant on stream since 1998 near the Escravos terminal, where a pipeline reaches the Lagos market. The Escravos-Lagos pipeline, through which Shell has raised sales considerably, has a capacity of 600 MCF/d.

The system's output consists of 7,000 b/d of LPG, 12,000 b/d of oil and condensate, and about 130 MCF/d of methane. The LPG has been exported directly since July 1997. The condensate and oil are blended with the Escravos crudes. The methane is bought by NNPC's Nigerian Gas Co. (NGC), which supplies it to power and industrial plants in Lagos. Chevron's system has spare capacity which could be used to reduce gas flaring at other nearby fields and to increase supplies to NGC. Chevron is committed to end flaring in 2006, but this will require a major investment and NNPC has had problems in meeting its share of the funding.

Phase-2 of the EGP (EGP-2), which processes an additional 135 MCF/d of natural gas, began operations in late 2000. The gas is currently used domestically. Gas from EGP-2 also will be exported to Benin, Togo and Ghana through the West African Gas Pipeline (see Gas Market Trends No. 7 of next week).

Phase-3 (EGP-3) will increase gas processing to 400 MCF/d. Gas from EGP-3 will feed an Escravos gas-to-liquid (EGTL) plant. The EGTL will use technologies developed by Chevron and South Africa's Sasol, and will produce nearly 35,000 b/d of synthetic fuels (diesel, kerosene, jetfuel & naphtha) which are sulphur and particulate-free. EGTL's capacity can be expanded to 120,000 b/d.

The Agbami Project: On Feb. 25, 2003, the NNPC/Chevron JV announced plans to invest about $4 bn in three years on three oil and gas projects: completion of the Escravos gas-gathering programme, the EGTL plant, and development of the Agbami deep-water oilfield on OPL 216 block based on a PSC. Delayed since late 2001, when the 30-year PSC was signed, the Agbami project was finally given the go ahead in July 2003.

Because of the delay, the $2.5 bn Agbami project's first oil will be on stream in 2008. Peak oil production will be 250,000 b/d, 450 MCF/d of gas and 450,000 b/d of injected water. The field has about 1 bn barrels of recoverable oil. Its offshore prospecting licence (OPL) has been converted into an offshore mining licence (OML). Agbami covers 45,000 acres and is 110 km off Nigeria in 1,500 meters of water.

Technip of France recently secured formal notification that it had been awarded an $800m contract by Chevron for Agbami. The contract covers installation of manifolds and the design, manufacture and installation of umbilicals, risers and flexible flowlines (URF). Technip's engineering centre in Paris will be in charge of the project's management and will do the engineering and design of the flowlines and risers, which will be manufactured by Flexi France, one of the group's flexible pipe plants in Le Trait. Logistics and pre-commissioning services will be subcontracted to companies in Nigeria with Nigerian engineers, who will receive training in deep-water construction technology and flexible flowline termination. The installation programme is to take place in two phases starting in mid-2007 and ending in the second quarter of 2008. The URF hardware will be linked to a subsea production system provided by FMC Technologies of the US under a $276m contract awarded last April. Daewoo of South Korea is to supply the large FPSO vessel under a $1.1 bn contract.

Statoil in 2004 got 18.85% in a unitized development of Agbami, which will give the Norwegian firm about 40,000 b/d of equity crude at the field's plateau level. Agbami was proven in Block 216 by Texaco in 1998. In 2000, Statoil's Ekoli-1 well confirmed that the find extended into its Block 217. Development of the field was later unitised between these two blocks. Chevron is operator with 68.15%, while Petrobras holds the remaining 13%. Statoil plays an active role in the development, with dedicated personnel seconded to the project team (see background in Vol. 61, No. 6).

Texaco Nigeria Outer Shelf (Chevron) has a stake in Statoil's adjacent OPL 218, where the Norwegian operator has found the big Nnwa gas field.

In early 2001 Chevron won OPL 250 deep-water block, the most sought-after tract close to offshore acreage in which billions of barrels of oil have been found. Abuja gave the 10% share of Ocean Energy of Houston half to Shell and half to Petrobras. So the JV, which has a PSC with NNPC, now is held 50% by Chevron (operator), 35% by Shell and 15% by Petrobras. (Petrobras has considerable expertise in deep-water E&P gained from its Campos Basin operations in Brazil).

Texaco Operations: Texaco (Chevron) operates several fields, mostly offshore, grouped in the name of its first discovery in 1965, Pennington, which is also the name of its terminal and of its export blend.

Texaco's capacity is 70,000 b/d, down from 90,000 in 1999. Pennington Blend is 38[degrees] API with 0.1% S (see Vol. 57, No. 6).
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Publication:APS Review Gas Market Trends
Date:Aug 8, 2005
Previous Article:NIGERIA - Chevron Operations.
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