By Macson Obojemuinmoin
“Engaging with operators on the need to drill below the conventional oil window to target gas rich zones”
The Nigerian Upstream Petroleum Regulatory Commission says it is pulling out all the stops to increase the rate of natural gas utilization, expand the country’s gas market (both domestic and export) and thus encourage producers to commit to further exploration for gas.
“We are encouraging investors to leverage on the generous gas fiscal incentives in the Petroleum Industry Act (PIA) such as zero hydrocarbon tax, reduced royalty rates, tax consolidation provisions amongst others to take Final Investment Decisions on their proposed upstream projects”, says Gbenga Komolafe, the commission’s Chief Executive.
“Based on the provisions of the PIA, the Commission has issued the annual Domestic Gas Delivery Obligation (DGDO) to all lessees. This allows the Commission to drive gas production growth as operators are made to balance the export appetite with increasing domestic supply of gas”, Komolafe explains.
Nigeria produces about Eight (8)Billion standard cubic feet of gas 8Bscf/d, out of which about 20% is delivered to the domestic market, approximately 40% is exported to international markets, 30% is utilised for producer’s internal consumption and the excess gas is flared, the commission maintains.
“With a proven gas reserve base of 208.62Trillion Cubic Feet (Tcf) (as at 1st January 2022), we are on track to increase our reserves volumes to 220Tcf in less than 10 years and 250Tcf thereafter”, the CE declares in a report sheet of his six months in office.
One initiative that the Commission is implementing to improve finding success for gas, is “constant engagement with operators on the need to drill below the conventional oil window to target gas rich zones for production and increase the nation’s gas reserves”, the CE explains. Another initiative is to “steer operators with saturated reservoirs to ensure their well placements drive optimal exploitation of oil and gas resources”, Komolafe remarks.
A career public servant, Mr. Komolafe was appointed in September 2021, less than month after the PIA became the new, overarching petroleum law of the country.
He says the report of his six months stewardship is in accordance with the promise to be open. “We told Nigerians we will tell them everything”, he contends.
His report lists other initiatives that he says are being implemented by the Commission to increase gas production and utilisation:
Commencement of mandatory conduct of gas well deliverability tests for all gas producers to establish operating limits. This enables the Commission determine production potentials and guides the industry towards its maximum optimum capacity.
Revising the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 and its associated Guidelines to incorporate methane emissions capture, to ensure the elimination of gas flaring/venting and monetisation of gas resources in the country.
Implementation of the provisions of the PIA 2021 on Gas Flare Elimination and Monetisation, as a means of unlocking more gas availability to the market. Companies are made to commit to a robust plan that eliminates gas flaring by bringing them to the market.
Accelerating the facility development and debottlenecking projects as a tool to incentivise gas production projects from the upstream sector to meet midstream and downstream demands.
Enforcement of approved associated gas development solution in all applicable oil development.