ECONOMIC VIABILITY OF UNDERGROUND NATURAL GAS STORAGE CASE STUDY: NIGER DELTA

BY

NWACHUKWU KELECHI .C.

(20061516763)
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELORS OF ENGINEERING (B.ENG) IN PETROLEUM ENGINEERING.

SUBMITTED TO

THE DEPARTMENT OF PETROLEUM ENGINEERING SCHOOL OF ENGINEERING AND ENGINEERING TECHNOLOGY FEDERAL UNIVERSITY OF TECHNOLOGY, OWERRI.

OCTOBER, 2011.
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CERTIFICATION
This is to certify that this work titled Economic Viability of Underground Natural Gas Storage; Case Study: Niger Delta was done by Nwachukwu

Kelechi .C. (20061516763) a final year student of the department of Petroleum

Engineering, School of Engineering and Engineering Technology, Federal University of Technology Owerri and was duly approved by the following;

.. Engr. B. Nzeribe (Project Supervisor) Date

. Engr. Dr M.S Nwakaudu (Head of Department) Date

..

.. External Supervisor Date

DEDICATION
This work is dedicated to God all mighty for his love, guidance, protection and divine enablement throughout this work. This work is also dedicated to my dearest family for their immense support in making sure this work was done well. This work is also dedicated to Engr. B. Nzeribe, sir your immense support and trust during the period of this work, may God repay you in full.

ACKNOWLEDGMENT
It seems impossible to accomplish an academic task of this nature without experience in some intellectual depths, in recognition of this fact therefore, I acknowledge all those group or persons whose moral support had assisted me to a maximum extent in the realization of this work. I specially give thanks to my dear parents Mr. & Mrs. G.O Nwachukwu and sisters for their moral and financial support in the production of this work. I also acknowledge the good effort of my lecturers and course mates for their kind support and love, may the good God bless you all. My thanks goes to all my friends Inyang, Chinasa, Funmi, Ekele, Ebube, Ike, Marvelous, Obumse, Tony, Solomon and all Gymites you people are the best, I wouldn t have achieved half of this work without your support and love. Thanks a million

TABLE OF CONTENT
TITLE PAGE CERTIFICATION DEDICATION ACKNOWLEDGEMENT TABLE OF CONTENT ABSTRACT LIST OF ABBREVIATIONS LIST OF FIGURES LIST OF TABLES CHAPTER ONE: INTRODUCTION 1.1 OVERVIEW OF UNDERGROUND STORAGE 1.2 . . . ... . . ... . . . i ....ii .iii ...iv .vii ..viii .xi ..xiii ..1 1

FACTORS FAVOURING UNDERGROUND GAS STORAGE IN . ..4

NIGERIA 1.3

FACTORS AFFECTING/LIMITING UNDERGROUND STORAGE IN 4 ....6

5

NIGERIA 1.4 STATEMENT OF PROBLEM

1.5 SIGNIFICANCE OF STUDY 1.6 PROJECT OBJECTIVES 1.7 SCOPE OF STUDY CHAPTER TWO:LITERATURE REVIEW 2.1 DESCRIPTION OF NATURAL GAS STORAGE ..

6 7 ....7 .....8 PROCESS 8

2.2 FACTORS TO BE CONSIDERED IN UNDERGROUND NATURAL GAS STORAGE........................................................................................10 2.3 TRADITIONAL USE OF UNDERGROUND NATURAL GAS STORAGE ................................................................................................10 2.4 TYPES OF UNDERGROUND NATURAL GAS STORAGE 2.4.1 Depleted Reservoirs

... .14
15

2.4.2 Aquifers ..................................................................................19 2.4.3 Salt Caverns . . . .. .. .. ..22 ..26 ..31 36 ........36 ...36 ..
6

2.5 ECONOMICS OF GAS STORAGE 2.6 NIGERIA AND NATURAL GAS

CHAPTER THREE: METHODOLOGY 3.1 CASE STUDY 3.2 FIELD HISTORY 3.3 GEOLOGICAL DATA

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3.4 COMPOSITION OF NATURAL GAS TO BE STORED

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3.5 DESIGN, OPERATION, AND MONITORING OF UNDERGROUND STORAGE RESERVOIRSINVOLVE RECOGNITION OF THREE BASIC REQUIREMENTS 3.6 3.7 3.8 COST OF OPERATION AND DEVELOPMENT GAS UTILIZATION PROJECTS GAS PRODUCTION AND UTILIZATION IN THE REGION ...43 ..45 ....48 ..48 49 .. ..49

CHAPTER FOUR: RESULT AND DISCUSION 4.1 STORAGE CAPACITY

4.2 MINIMUM REQUIREMENT FOR CONSIDERING AN UNDERGROUND PROSPECT .. . 51 .. .54 ... 64 64 ...67 . .68 71

4.3 GAS UTILIZATION PROJECTS AND PRODUCTION 4.4 DISCUSSION

CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS 5.1 CONCLUSION 5.2 RECOMMNEDATION REFERENCES APPENDIX

ABSTRACT
For proper gas utilization, proper storage facilities are required to sustain supply, and proper analysis must be carried out, in other to choose the best candidate for storage. This work focused on the viability of underground gas storage in the Niger Delta in order to sustain supply using deliverability, containment, cost of operation and development, inventory, gas utilizing facilities in the region; anticipated, ongoing and fully functional and the present rate of gas production with the anticipated demand. To achieve this, data were gotten for proper analysis of gas volume capacity for depleted reservoir indicated the cushion gas requirement, working gas capacity and total volume of gas that can be stored. The analysis of the work showed that total cushion gas requirement for the well=8.99 BScf-10.79 BScf. Total working gas requirement = 7.19 BScf 8.99

BScf and best option for storage in Niger-delta as depleted wells due to its availability, size, cushion gas requirement, containment etc. The work further recommends investment, full development and encouragement of underground storage facilities in the region as soon as possible and certain incentives should be put in place by the Government.

LIST OF ABBREVIATION
A: areal extent of the reservoir Agip Energy and Natural Resources

AENR:

API0: oil gravity ALSCON: Aluminium Smelting Company Of Nigeria. AGA: America Gas Association BBL: barrel (unit of oil or liquid measurement) Bscf: Billion Standard Cubic Feet Bscf/d: Billion Standard Cubic Feet per day CNG: Compressed Natural Gas G: Volume of gas to be stored

GDP: Gross Domestic Product GFEG: Gas Fired Electric Generation

GTL: Gas To Liquid H: Reservoir average thickness

JVC: Joint Venture Company LNG: Liquefied Natural Gas

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LPG: Liquefied Petroleum Gas M3: Cubic Meters

Mbbls: Million Barrels Mmscf: Million Standard Cubic Feet Mscf: Thousand Standard Cubic feet NAFCON: National Fertilizer Company of Nigeria NAOC: Nigeria Agip Oil Company N.D: Niger Delta NEPA: National Electric Power Authority

NGC: Nigerian Gas Company NGL: Natural Gas Liquids NGMP: Nigerian Gas Master Plan NNPC: Nigerian National Petroleum Corporation NOG: Nigeria Oil & Gas NPDC: Nigerian Petroleum Development Company NPV: Net Present Value O&G: Oil and Gas OML: Oil Mining Lease Pc: Ppc: Critical pressure Pseudo-critical pressure

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Ppr:

Pseudo-reduced pressure

PHCN: Power Holding Company of Nigeria PSI: Pounds per Square Inch SCF: Standard cubic foot. STB: Stock tank barrel Swc: Connate or irreducible water saturation in a reservoir. UGS: Underground Storage Vb: Vp: Bulk volume Pore volume

WAPG: West Africa Gas Pipeline Z: Gas deviation factor

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LIST OF FIGURES
Fig 2.1: Gas Processing Fig 2.2 Working Gas Capacity by Type of Storage Fig 2.3 Daily Deliverability by Type of Storage Fig 2.4 Nigeria s . Historical Gas Utilization and Forecast .9 ..23 23 Potential 35 ..35 ..47 ...55 ..55 ...55

Demand

Fig 2.5: Gas infrastructural blueprint (NGMP) Fig 3.1:Cost estimation for UGS storage development Fig 4.1: Estimated cushion gas requirement Fig 4.2: Estimated rate of deliverability Fig 4.3: Estimated Containment

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LIST OF TABLES
Table 3.1:Average Compostion Mole Percent of Natural Gas in Nigeria Table 3.2:Computation of Average Molecular weight, etc Table 4.1:Results of computation Table 4.2 - Example Storage Contract for Depleted Reservoir Storage Table 4.3- Storage Facility Characteristics Table 4.4:Gas production and utilization (Mscf),2002 2010 Table 4.5:Gas production and utilization by Company(Mscf), 2010 Table 4.7: Mean Impacts of main items of investment cost Table 4.6:Gas utilization projects 38 .39 48 ..52 .53 ..53 .54 54 56

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CHAPTER ONE 1.0 INTRODUCTION

Natural gas is stored underground when it can be injected into natural rock or sand reservoirs that have suitable connected pore spaces, and it is retained there for future use. Underground natural gas storage can therefore be defined as the storage of gas at various depths beneath the earth surface when the gas is not needed for immediate consumption in order to support the natural gas demand in domestic, commercial, industrial and export purpose when it is needed. The underground storage of gas has played and continues to play a vital role in supporting the development and stabilization of the gas market worldwide. The purpose is to meet the growing demand for gas in the future and to stop the wasteful flaring of gas at the same time. Natural gas is a mixture of hydrocarbon gases and impurities. The hydrocarbon gases normally found in natural gas are methane, ethane, propane, butanes, pentanes, and small amounts of hexanes, heptanes, octanes, and the heavier gases. The impurities found in natural gas include carbon dioxide, hydrogen sulphide, nitrogen, water vapour, and heavier hydrocarbons.

1.1 Overview Of Underground Storage

The underground storage of natural gas began in Canada in 1915, and in the United States the following year. These two countries were the first to realize the

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economic importance and technical possibility of storing natural gas in natural reservoirs. The use of gas storage spread considerably with the development and production of gas reservoirs at large distances from the areas where the gas was used, and especially with the development of importation from one country to another UGS is the process which effectively balance a viable demand market with a nearly constant supply of energy provided by the pipeline system. Natural gas is stored underground in geological structures whose properties allow gas to be stored and withdrawn when required. Gas storage is described as conventional when it is carried out using depleted or partially depleted gas production reservoirs, semi conventional depleted oil reservoirs or aquifers (in other words geological structures containing water) are employed, and special when caverns excavated in underground salt formations or abandoned coal mines are used. The tendency to store gas in order to modulate supply began by using tanks located at the surface near towns and as production fields became depleted, by converting these into storage reservoirs. These have extremely high storage capacity and are thus more suited to the growing need of the gas market for storage. Today there are more than 580 storage fields in the world, of which 70% are in the United States; the remainder are concentrated almost exclusively in Europe and Russia. Essentially, any underground storage facility is reconditioned before injection, to create a sort of storage vessel underground. Natural gas is injected into
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the formation, building up pressure as more natural gas is added. In this sense, the underground formation becomes a sort of pressurized natural gas container. As with newly drilled wells, the higher the pressure in the storage facility, the more readily gas may be extracted. Once the pressure drops to below that of the wellhead, there is no pressure differential left to push the natural gas out of the storage facility. This means that, in any underground storage facility, there is a certain amount of gas that may never be extracted. This is known as physically unrecoverable gas; it is permanently embedded in the formation. In addition to this physically unrecoverable gas, underground storage facilities contain what is known as 'base gas' or 'cushion gas'. This is the volume of gas that must remain in the storage facility to provide the required pressurization to extract the remaining gas. In the normal operation of the storage facility, this cushion gas remains underground; however a portion of it may be extracted using specialized compression equipment at the wellhead. 'Working gas' is the volume of natural gas in the storage reservoir that can be extracted during the normal operation of the storage facility. This is the natural gas that is being stored and withdrawn; the capacity of storage facilities normally refers to their working gas capacity. At the beginning of a withdrawal cycle, the pressure inside the storage facility is at its highest; meaning working gas can be withdrawn at a high rate. As the volume of gas inside the storage facility drops, pressure (and thus deliverability) in the storage facility also decreases.

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1.2 FACTORS FAVOURING UNDERGROUND GAS STORAGE IN NIGERIA

The principal drivers for the development of natural gas are usually Urgent need to reduce flaring in the country Desire for economic growth a Desire for broad gas based industrial development Governments desire to Transform the domestic market into a vibrant and fully commercial gas market where the gas price stimulates investment in supply and the sustainability of the market compliments the other regional and export LNG markets enabling a balance portfolio. The Nigerian Gas Master plan.

1.3 FACTORS AFFECTING/LIMITING UNDERGROUND GAS STORAGE IN NIGERIA

Today s commercial demand of gas in Nigeria is gradually increasing and is expected to shot up in the next 5 15 years. Even if over the years the utilization

of gas in Nigeria has increased, yet a considerable amount is still been flared, Instead of flaring this large volume of associated gas we should consider storing them as done in other countries for future use when the prices of gas is high or demand goes up.

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Factors hindering underground gas storage Lack of gas markets: Kirkland (ibid), chevron managing director(October 1997) noted gas commends such a low price in Nigeria, that it is difficult to economically justify gas project and he advised that there is need to find and develop markets that support higher gas price. Lack of adequate gas infrastructure to the available local markets from the area of production Low technology and industrial base for energy consumption in the country Inadequate fiscal and gas pricing policies to encourage investment Cost of storage facilities Physical factor: physical isolation of Nigeria from international gas markets due to vast distance rules out the possibility of gas export pipeline. The private sector are not playing to full capacity in the utilization of gas and putting in place relevant gas infrastructures. Legislative factors: amount charge per thousand ft3 of gas to be flared is something the company comfortable pay. Obviously operators in the industry prefer to pay the penalty than put in place a gas utilization scheme. Inappropriate domestic pricing policy government policy may also heavily

influence gas pricing, for example, through social or sector policies Economic factor: investigation shows that the main disincentive to investment in the gas sub-sector is the non guarantee of good returns on

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investments. flaring is seen more economical when compared to cost of processing and storage (this include cost of conversion into gas storage well in the case of aquifer and salt cavern, cost of maintenance and monitoring gas leakage, cost of injection and withdrawal). 1.4 STATEMENT OF PROBLEM Sustainable supply of gas to support projects utilising gas within and outside the country is a challenge with the anticipated increase in gas utilization in the coming years, and the present production rate of about 6.55Bscf/d and the flaring of 24.30% of the total production is not encouraging considering the future of the gas market in Nigeria. 1.5 SIGNIFICANCE OF STUDY This project will be significant in the following ways; i. It will encourage O&G companies to stop the unnecessary wasteful flaring of gas and protect the environment. ii. iii. iv. Create a sustainable gas supply system for the various gas projects. Sustain governments zeal for gas to have a multiplier effect on the economy The future demand of gas will be taken care of at almost no cost i.e. cost of base gas. v. Help determine the viability of UGS in Nigeria

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1.6

PROJECT OBJECTIVES The main aim is to determine the viability of UGS in the Niger Delta. To determine the storage capacity of a depleted reservoir D in the region. To encourage the storage of gas instead of flaring, and to determine the feasibility of gas storage in the region Cost specification of storage type(cavern, aquifer, depleted reservoir). Estimate the need of UGS in Nigeria Estimate the future expansion of natural gas transmission and distribution Gas utilization projects and plans . Promote the development of Nigeria underground natural gas storage.

1.7

SCOPE OF STUDY This study will be restricted to the Niger Delta region of the country since

this is the source of the oil and gas in the country. The determination of the viability of UGS facility in the region will be based its availability, capacity, containment, cost of operation and development, gas utilization projects in the country and the production rate of gas in the region. This is as a result of insufficient data since it is not being practiced in the country at this time.

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CHAPTER TWO LITERATURE REVIEW 2.1 DESCRIPTION OF NATURAL GAS STORAGE PROCESS
Gas stored in the reservoir must of course flow through the formation to the well bore, this process being called the inflow performance of the gas well. It must then flow upward through the well tubing to the surface. During this phase of the production, two factors are important: the friction loss experience in the well tubing and the resultant pressure drop and the amount of suspended water present. Even for a well producing hardly any water at all, an accumulation of water in the well tubing will build up in time, depending on the production rate. This will lead to an overall increase in density of the flowing gas with a consequent high hydrostatic pressure drop. This phenomenon of liquid held up is particularly important at flow rates. Finally after leaving the wellhead, the gas will have to be dehydrated and treated to pipeline quality, making sure that the gas is sweetened (removing the sulphur content), gas is then compressed by increasing its pressure; this is then injected into the storage reservoir with the pressure being monitored to know we reached full storage capacity of the reservoir in use. The main surface

facilities of storage fields are the compressor station, the gathering system, the treating and gas metering plants. The treatment of the gas withdrawn consists in the separation of water and hydrocarbon liquids in order to meet the quality
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standards required for pipelines and consumers. As a consequence, on the whole, the treatment processes are not different from the ones of the gas producing fields. The only difference is that during the withdrawal period there is a wide range of pressures and rates which require a higher flexibility to take into account sudden closures and openings or sharp variations in flow rates. The most widespread and convenient dehydration process uses triethylene glycol (V. Bolelli,1991)

Fig 2.1: Gas Processing

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2.2 FACTORS TO BE CONSIDERED IN UNDERGROUND NATURAL GAS STORAGE

Geology is a key issue for determining the location of new traditional underground storage projects and the expansion of existing projects. There are areas that have the geological characteristics to construct storage fields; other areas do not. Selection of any new underground gas storage location depends on geological and engineering properties of the storage reservoir, its size and its cushion, or base, gas requirements. It also depends on the site s access to transportation pipeline infrastructure, gas production sources, and to markets (FERC,2004).

2.3 TRADITIONAL USE OF UNDERGROUND NATURAL GAS STORAGE

Storage facilities were developed to allow the production capacity of natural gas to be moved from one point in time to another. Natural gas that reaches its destination is not always needed right away, so it is injected into underground storage facilities where it can be stored for an indefinite period of time. Primarily, underground storage provides an economical way to supply large volumes of gas when it is needed. Storage improves the transmission line load factor by providing a choice of delivering gas either to the users or to the underground storage reservoir. Another use is the transfer of gas from a highly competitive field to a field wholly controlled by one company. Under this arrangement the gas can be
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withdrawn as needed and used to best economic advantage. Also, the storage field can be used advantageously to store gas from low pressure wells, usually the smaller wells, during the off-peak season. In the case of long transmission lines, underground storage near the consuming centres also acts as a safeguard or reservoir in case of pipeline failures. Since the world production and distribution capacity is only slightly above demand and periodic increases in demand or decrease in production are quickly felt by consumers, governments and private consuming companies. The large reserves required to provide effective protection from supply interruptions have led many of these reserves to be primarily based underground. A final major advantage of underground storage is safety. The placing of hydrocarbons underground in a protected, oxygen-free Underground Storage of Natural Gas environment greatly reduces the risk of fire or explosions (Ikoku C.U, 1989). In general The traditional services offered by storage reservoirs are production services, seasonal control services and strategic reserves services(Eni, 2005).

Production Services
For technical and financial reasons, production reservoirs are developed in such a way as to consider optimal a daily production profile which is essentially flat. This is due to the fact that the determination of the size of the treatment plants and the number and type of wells to allow production fields to follow market fluctuations would entail additional costs and financial problems. Production services thus involve the storage of a sufficient volume of gas in order to obtain
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optimal performance from the production system, both from the point of view of production and of surface facilities.

Seasonal Control Services

Seasonal control is the traditional service provided by storage systems. Gas is injected during the spring and summer and then withdrawn during the autumn and winter to meet the demands of the market. Each natural gas sales company estimates the need for stored gas on an annual basis at the beginning of winter. More specifically, each company defines, on the basis of availability from national production and/or imports, the contribution required from storage reservoirs to meet its total predicted sales (both in terms of seasonal volumes and daily peak rate), on the basis of individual sales sectors, i.e. the residential, industrial and thermoelectric sectors.

Strategic Reserves Services

Another fundamental role played by storage systems is to provide the strategic reserves to be used to guarantee supply: the volume of gas which must be kept in storage reservoirs for this purpose is generally established by the relevant government authorities of each country. The gas held in storage reservoirs may be owned by storage operators or by gas sales companies. Strategic gas reserve is only withdrawn under unusual circumstances such as particularly hard winters, or significant and prolonged reductions in gas imports or national gas production. Once produced, other gas is re-injected into the reservoirs during the summer in

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order to maintain the volume considered necessary to ensure gas supply at a national level. The issue of strategic reserves is particularly important in countries where the availability of gas depends heavily on imports and is thus subject to potentially prolonged reductions due to political problems, or the partial or total unavailability of transport systems due to breaks in pipelines or the failure of boosting stations.

Special Services
Among the new services on offer, the most common are listed below. Parking/Peaking Services - This involves injecting and withdrawing gas over short periods of time, ranging from a week to a month, thus allowing the customers of the storage to meet temporary imbalances in the volumes supplied and sold, avoiding the application of penalties by the transport company. Interruptible storage - This is a service in which both working gas and peak rate are offered at particularly low prices, since the storage operator may interrupt supply at very short notice. These services which are offered on the basis of the capacity margins inherent in a storage system may become unavailable in the event of unplanned maintenance work, plant failures, the closure of wells, etc. Speculative Market Services where high deliverability storage quickly responds to changing gas prices capitalizing on price movements at market centres, and Emergency strategic storage (i.e. able to make up for a possible
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temporary suspension of supplies) is becoming more and more crucial to safeguard the continuity in imports but also to better negotiate supplies. Meet the regulatory obligation to ensure supply reliability at the lowest cost to the ratepayer by maintaining specific levels of storage inventory Support other electric generation loads

2.4 TYPES OF UNDERGROUND NATURAL GAS STORAGE

There are three main types of underground storage: depleted gas and oil reservoirs, aquifers, and salt caverns. Today most gas storage is carried out in depleted gas fields (around 70%), followed by those performed in aquifers and those in salt caverns. However, all have similar operational characteristics. All underground storage has a capacity measured in Bcf (billion cubic feet), which can be divided amongst the amount of working gas and base gas within a facility. Often when a capacity of a storage facility is quoted, it is referring to the working gas capacity seeing as it is the amount which can be withdrawn and injected into a facility. Every storage facility comes attached with a maximum and minimum withdrawal and injection rates which are typically expressed in Bcf/day. The injection and withdrawal rates for natural gas fluctuate based on the amount of pressure (PSI) within the storage facility. Withdrawal rates share a direct relationship with pressure while injection rates maintain an indirect relationship. Pressure for a facility is also bounded by a maximum and minimum quantity which

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is determined by the volume, depth, and structure of a facility. These operational characteristics determine the operational flexibility of a facility.

2.4.1 Depleted Reservoirs

An underground gas storage field or reservoir is a permeable underground rock formation (average of 1,000 to 5,000 feet thick) that is confined by impermeable rock and/or water barriers and is identified by a single natural formation pressure (FERC, 2004), it is the most prominent type of underground storage due to their wide scale availability. These storage facilities are gas or oil reservoir formations that have already been tapped of all their recoverable resource through earlier production, leaving an underground formation geologically capable of holding natural gas. As a result, storage facilities of this nature are abundant in producing regions. Of the three types of underground storage, depleted reservoirs are the cheapest and easiest to develop, operate, and maintain. Using an already developed reservoir for storage presents the opportunity to reuse the extraction and distribution equipment left over from when the field was productive, reducing the cost of conversion to gas storage (Natural gas .org,2004). The expertise developed in countries where depleted gas reservoirs are used allow guidelines to be drawn up for the selection of fields which are to be converted into gas storage. This selection is based on a careful analysis of geological data and the physical parameters of the pre-selected structures. The most important factors are: the shape and dimensions of the geological structure,

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the aquifer size, the gas-water contact (in the case of depleted or partially depleted reservoirs), the properties of the reservoir rock and cap rock. The most important physical parameters of the reservoir rock, which require careful evaluation, are: The porosity, which should be extremely high, thus providing greater storage capacity. The permeability, which expresses the ease or otherwise with which the rock allows a fluid, liquid or gas, to flow through it; the higher the permeability of the reservoir rock, the better suited it is to storage. The water saturation, which should be as low as possible since, if it is high, it reduces available volume. Another factor to be considered is the drive mechanism , which expresses the ability of the aquifer to move within the reservoir rock as the reservoir is filled and emptied. In the depletion drive reservoirs the gas-water contact remains substantially stable during the productions and injection phases allowing high performances and minor problems during the production. On the contrary, in the water drive reservoirs the gas-contact moves upwards during the production phase and the water which has risen must be pushed back during the gas injection phase. In these reservoirs the performance is reduced due to water production and the need for more pressure to displace the water. Storage in partially or wholly depleted oil reservoirs has similar characteristics to that in gas reservoirs converted into storage; consequently some
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of the operational and development methods applied to the latter remain valid. In some cases, the injection of gas into an oil reservoir may form part of the secondary recovery project for the oil itself; in this case as well as the typical benefits of storage there are also those of the additional recovery of oil. It should be added that the treatment facilities needed to give the gas the requisite quality specifications before it is channelled into the transport network often differ from those needed for gas reservoirs, since the fraction of liquid hydrocarbons suspended in the gas must be removed (Eni, 2005). In order to sustain pressure in depleted reservoirs, the facility maintains equal parts base and working gas. However, depleted reservoirs, having already been filled with natural gas, do not require the injection of what will become physically unrecoverable gas seeing as it already exists in the formation. Depleted reservoirs with high permeability and porosity are ideal for natural gas storage, porosity lending itself to the amount of natural gas it can hold and permeability determining the rate of flow of natural gas through the formation. This in turn determines the injection and withdrawal rate of working gas. Foh et al., (1979) in his work discussed the delivery rates and how it could be enhanced by an active water drive, using water to displace gas by filling previously gas-filled pores. A suitable aquifer for storage will have geology similar to depleted gas reservoirs. The potential reservoir must have ample porosity and permeability with an existing formation pressure and large reservoir capacity. Gas stored within aquifers are

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typically drawn down once during the winter season. However, aquifers may be used to meet peak load rates. Disadvantages of using depleted reservoirs are the uncertainty of capacity. The configuration of the geological formation is never fully used since it runs the risk that injected gas may diffuse into the outer veins of the formation and becomes inaccessible. Other disadvantages include a reservoir s limited cycling capabilities, where working gas volumes are usually cycled only once per season. In addition, reservoirs are characterized with having low deliverability and thus would not be well suited for peaking services. It is most typically employed for seasonal cycling (NaturalGas.org 2004). George G Bernard et al(1970) evaluated the effectiveness of foam in preventing the escape of gas from a leaky gas storage reservoir. They simulated the behaviour of a leaky gas reservoir with a sandstone model and found that foam was 99% effective in reducing leakage of gas through the model. Foam, because of its unique structure, reduces gas flow in porous media. The blocking action of foam was uniquely suitable for sealing leaks in underground gas storage reservoirs. It was discovered that the amount of foaming agent required to seal a leak depends on the adsorption-desorption properties of the agent. The best result was obtained after testing some foaming agents with a modified anionic esters of relatively low molecular weight. He suggested that foam generation is an effective and economical method for reducing or stopping gas leakage from an underground gas storage reservoir.
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2.4.2 Aquifers
Only if a depleted gas or oil reservoir is unavailable or unsuitable would Storage of Natural Gas consideration be given to using a water-bearing structure or aquifer as a storage medium, tests would have to be conducted to determine the suitability of such a structure to hold gas without leakage to overlying or underlying formations(Ikoku, 1989). Aquifers are underground permeable rock formations that act as natural water reservoirs (Dietert and Pursell, 2000). When reconditioned, these formations may be used as natural gas storage facilities where gas is injected on top of the water formation displacing the water further down within the structure. Advantages of aquifer storage include their close proximity to markets where other geological reservoirs are not readily available. Deliverability rates may also be enhanced due to the presence of an active water drive which increases the storage facilities overall pressure. The high deliverability allows the working gas volumes to cycle through the facility more than once per season. Most of the following requirements must be satisfied for a properly designed aquifer storage. There should be a large enough layer of water bearing rock to accommodate a worthwhile volume of gas. The rock should have a porosity that enables water to be forced out by gas at a reasonable pressure and the rate at which gas can be withdrawn should be suitable. The structure of the layer should preferably be dome shaped, and the aquifer should be closed on all sides. There

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should be a suitable layer of completely impermeable rock above the aquifer layer. And the aquifer should be situated in a continuous, unfaulted layer of rock. The most important requirement for storage facilities in aquifers is the seal of the cap rock, which must be suitably thick and have low permeability values, close to zero, as in shale formations. This second requirement is necessary as during the injection of gas the hydrostatic pressure is always exceeded. When the original pressure is exceeded in order to increase the volume of working gas in storage of this type (and that in depleted gas reservoirs), care must be taken not to exceed the threshold pressure, in other words the pressure above which the gas begins to pass through the cap rock. The threshold pressure is determined in the laboratory by means of tests on cores collected during the drilling phase, and subsequently with long injection tests performed in the wells (early injection). When storage is initiated in an aquifer, the gas displaces the water, advancing more rapidly where permeability is higher, and thus leads to the formation of a gas bubble. After a few years, as injection continues, the water in the upper part of the reservoir is entirely displaced by the gas; at this point the storage can become operational (Eni, 2005). It was observed that in an underground gas aquifer containing water concentration of dissolved solids, knowledge of the hydrostatic head at two points does not necessarily enable one to determine the direction of flow, if any, between the two points. Secondly, a trough filled with dense water can serve as a barrier to flow and also, that a downward potential gradient across a cap rock can decrease the chance for leakage of stored gas. If the water above and
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below the cap have different densities, this must be taken into considerations in determining the total effect of the observed gradient (D.C. Bond & K. Cartwright, 1969). Slagle et al presented the problems associated with using slotted liners and sand screen in protecting the aquifer storage from sand production, the liners either plugged or had holes eroded in them by the sand, The slotted liners allowed too much sand to be produced and had to be removed when the wells needed stimulating and cleaning out. Therefore, the method of plastic sand consolidation was investigated by them. They came to a conclusion that for the ultra-lowtemperature, high-stress requirements imposed on an aquifer storage reservoir the plastic consolidation system appears to be the best (slagle et al, 1969). Advances in aquifer storage concern the reduction of investment costs of cushion gas by partially substituting it with inert gases such as CO2 or N2 . The risk is the possibility of mixing these inert gases with working gas, thus not respecting the pipeline quality standards (V. Bolelli,1991). Dehydration is necessary in storage projects involving aquifers or water drive fields, The produced gas is saturated with water and, in cold weather, hydrates form and plug surface fittings. This is often prevented by wellhead heaters or by methanol injection at the Wellhead. The gas then Loses its water to diethylcne glycol or a dry desiccant before it travels on to the market (Keith H. Coats, 1966) Aquifer storage is the least desirable form of storage due to its physical and economic disadvantages. A significant amount of time and money is spent testing
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the suitability of an aquifer for natural gas storage and subsequently developing the infrastructure needed for an effective natural gas storage facility. In addition, in aquifer formations, base gas requirements are as high as 80 percent of the total gas volume. Unlike base gas from depleted reservoirs, this base gas is unrecoverable in aquifer storage due to the risk of facility damage. This high base gas requirement increases the initial cost of capital for aquifer storage projects, thus limiting their number. Most aquifer storage facilities were developed when the price of natural gas was low, meaning this base gas was not very expensive to give up (Natural gas.org,2004).

2.4.3 Salt Caverns

For storage in salt formations, caverns obtained by dissolving the salt mass in fresh water pumped through one or more wells are used. The salt is then extracted from the water; when this is not considered economically viable, it is reinjected into another suitable geological formation. An understanding of the shape of the cavern and the properties of the rocks surrounding it are important elements for determining the minimum and maximum pressure at which the storage can be operated (Eni, 2005). Salt cavern capacity typically is 20 percent to 30 percent cushion gas and the remaining capacity is working gas. Working gas can generally be recycled 10-12 times a year in this type of storage facility. These facilities are characterized by high deliverability and injection capabilities and are mainly used for short peak-day deliverability purposes (i.e., for fuelling electric power plants) (FERC 2004, pp4).
35

Fig 2.2 Working Gas Capacity by Type of Storage

Fig 2.3 Daily Deliverability by Type of Storage

Three factors should be considered in selecting a storage cavern to be created by solution mining: a sufficient salt thickness at adequate depth, an adequate supply of fresh water for salt leaching (solutioning), and a means of brine disposal. The process of constructing caverns by solution mining salt formations is conceptually simple, involving the injection of unsaturated "raw water" into a salt deposit and removing nearly saturated brine, thereby creating a cavity. This general procedure has been used for hundreds of years for the production of salt, but generally little or no concern was given to the shape, stability, or pressure tightness of the produced caverns (Ikoku C.U, 1989). lain Knott and K.G. Cross described how new site selection criteria were established in a feasibility study, summarises
36

the engineering and geological requirements for cavity development through leaching, concentrating on the evaluation and interpretation of existing geological information in the area to establish the most favourable site and then concluded that that the geological study was the most important criteria in assessing a new Greenfield site location and The chosen new site location cannot be proved feasible until a well is drilled to prove suitable salt thickness and purity to support cavity development. However, the geology study increased confidence in finding a suitable site before committing to major expenditure (lain Knott and K.G. Cross,1992). Han et al., (2006) in his work indicated that developed caverns will possibly intercept various lithologies within bedded salt formations and each layer will contain its own set of properties that affect creep rates, deformation, and slip between bedding planes . Underground salt formations are well suited to natural gas storage allowing for little injected natural gas to escape from the formation unless specifically extracted. The walls of a salt cavern have the structural strength of steel making it resilient against degradation over the life of the facility. Base gas requirements are the lowest of all three storage types, requiring on average only 33 percent of total gas capacity to the natural gas storage vessel which maintains very high deliverability rates, exceedingly higher than that of depleted reservoirs and aquifers. This allows for natural gas to be more readily withdrawn, sometimes on as little as an hour s notice, which is well suited for satisfying unexpected surges in demand. Yuan Guangjie et al (2008) introduced various corrosion phenomena that
37

are encountered during the operation of leaching salt caverns and during naturalgas injection and withdrawal. He discussed the main factor that causes corrosion such as brine, air, microbes, components of natural gas, gas injection velocity, operating status as well as some measures of preventing corrosion. He concluded that the flow velocity of injection water, the mass of dissolved oxygen and partial pressure of carbon dioxide are the main corrosive factors of wellhead and strings. He presented the measures of preventing corrosion such as; Oxygen scavenger and disinfectant (i.e. addition of either ferrous chloride or stannous chloride or hydrazonium regularly into the injection water), coating protection, and annulus protection liquid and cathodic protection. The caverns also offer operational flexibility having the ability to cycle working gas four to five times a year, reducing the per-unit cost of each thousand cubic feet of gas injected and withdrawn. This multiple cycling capability coupled with its high deliverability is why salt caverns are well suited for peaking services as well as responding to volatility in natural gas market prices for commodities traders. . Salt domes are thick homogeneous bodies located largely along the Gulf Coast. Due to the salt s homogeneous nature and thus isotropic properties caverns created within domes are structurally stable above a depth of 6000 ft Below 6000 ft salt deformation is great and cavern stability is difficult to maintain (Bruno et al. 2002) Drawbacks of this form of storage are volume limitations where each cavern size typically ranges from 5-10 Bcf of working gas, considerably smaller than
38

capacity capabilities of depleted reservoirs and aquifers. In addition, start-up costs generated during cavern development are substantial, and the disposal of saturated salt water produced during the solution mining can be detrimental to the environment (NaturalGas.org 2004).

2.5 ECONOMICS OF GAS STORAGE

The variations in the physical characteristics of each of the storage facilities affect the amount of pressure that can be maintained in the different facilities. The amount of pressure a facility can hold is important because it determines the speed with which gas can be injected into and withdrawn from storage. Higher pressures allow the gas to be injected into and withdrawn from the storage facility more quickly, providing what is referred to as a higher deliverability rate. Facilities with higher injection and withdrawal rates can be filled and emptied more times over the course of a year, in other words facilities with higher deliverability rates are able to have more injection/withdrawal cycles per year. When a storage facility is full, the pressure is higher than when it is only partially full. Thus, injection and withdrawal occurs at faster speeds when a facility is fuller. The more empty a cavern is, the more difficult it becomes to extract the gas. Some gas may not be able to be extracted at all. This non-extractable gas is called the base gas or cushion gas. The extractable gas is called the working gas. The three types of underground storage vary in the percentage of capacity that ends up as base gas.

39

The investment cost for the development of a new storage field depends on the type of storage and, in the case of identical types of storage, on its capacity, which may or may not permit economies of scale. Investment costs for a storage project can be subdivided into: a) exploration costs (unnecessary where partially depleted or depleted gas/oil reservoirs are used) b) drilling costs which are related to the number and depth of the storage wells. c) costs of the cushion gas volume d) costs of surface facilities, related to the size of the treatment and compression plants. The overall cost of a single storage facility depends on: a) the size of the surface facilities necessary for treatment and compression of the gas. b) the number and depth of the wells c) the number of caverns/wells in the case of salt cavities. d ) the volume of cushion gas. Jerzy Stopa et al stated that UGS require high capital costs and definitely lower level of operation cost in the future (Jerzy Stopa et al,2009)

Operating costs
The cost of managing gas storage can be divided into fixed and variable costs. Fixed costs are those related to the workforce, insurance, maintenance work, etc.

40

Variable costs are the costs of the fuel and/or electrical energy required to power the compressors, consumer goods, etc.

Economic considerations on the development of storage in depleted reservoirs

For this type of storage exploration costs are generally unnecessary, since the reservoir is already well-known from the point of view of both the geology and productive behaviour. On rare occasions additional wells may be necessary in order to locate the boundaries of the reservoir more accurately; more frequently, new wells of a different type from existing wells may have to be drilled (horizontal wells, wells with gravel pack, i.e. wells with calibrated sand filters or wells with large diameter tubing) to allow high daily flow rates and reduce the time required to inject/withdraw gas. Most existing surface facilities (gas dehydration plants, compressors, pipelines, instrumentation, control room, etc.) and wells can also be used for storage facilities, even though with some modifications. The volume of gas to be immobilized as cushion gas depends on the size of the reservoir and the drive mechanism (the volume of gas is smaller for reservoirs which produce by simple expansion than for those which produce by water-drive). The impact of cushion gas on total investments depends on how much of this is still present in the reservoir when it is converted into a storage site, and on how much must be purchased at market prices and injected into the reservoir (Eni, 2005). Apart from natural gas, which during UGS construction is injected, increasing the buffer

41

capacity, there still remains native natural gas. In the case of future exploitation of the field, this gas would be exploited and sold, generating income to the owner. This fact should be accounted for when assessing the economic efficiency of an UGS in a partly depleted field (J. Stopa et al, 2009). However, they generally have low injection and withdrawal rates due to their low porosity, which keeps pressure low in the wells. Consequently, most depleted gas fields are only capable of having one injection/withdrawal cycle per year. In order to keep pressure up, about 50% of the capacity of depleted reservoirs must be kept as base gas (Recon, 2009). Depleted fields are the least expensive type of gas storage facility to develop at $56 million per Bcf of working gas capacity (FERC 2004,).

Economic Considerations On The Development Of Gas Storage In Aquifers

The search for these geological structures requires considerable exploration expenditure to identify those suitable for storage. Once the structure has been identified, it is necessary to drill all of the development wells and build the treatment and compression plant, without the possibility of using existing facilities. The volume of gas to be immobilized as cushion gas is large, since the front of the aquifer must be kept at a distance from the productive zone; the impact on total investments is significant, since all of the gas used for this purpose must be bought on the open market and injected into the reservoir (Eni, 2005). Aquifers are underground porous, permeable rock formations that act as natural water

42

reservoirs. Some aquifers can be converted into gas storage reservoirs, though at a higher development cost than the other two types of underground gas storage. Gas extracted from a water-bearing aquifer typically requires further dehydration prior to shipping. Aquifers typically require more base gas than depleted fields, up to 80% of capacity. Because of the high cost, aquifers are typically only used if there are no depleted gas fields or salt caverns nearby (Recon, 2009).

Economic considerations on the development of gas storage in salt caverns

These types of storage use underground caverns which are sometimes created by the exploitation of salt formations to extract rock salt; in other cases they are created specifically for storage. It is clear that in the former case investment costs are limited to those for wells and the treatment and compression plant, whereas in the latter case exploration costs and the cost of artificially creating the cavity must also be taken into consideration. The volume of gas used as cushion gas is relatively modest, and is conditioned only by the minimum pressure which we wish to maintain at the end of the flowing cycle (Eni, 2005). Salt caverns are storage facilities created in naturally occurring salt domes or salt beds. Salt domes are large salt formations that usually go far down into the earth. Salt beds are shallower than salt domes. To form a cavern for storage, salt domes are drilled and then leached with water to dissolve the salt. The resulting brine is pumped out, a process which requires a large amount of water. Natural gas is

43

pumped into the resulting cavern to create pressure. Sometimes abandoned salt mines are used as caverns, saving the expense of drilling and leaching a new cavern. Smaller, shallower salt caverns can also be drilled in salt beds. Salt caverns are generally smaller than depleted gas fields, averaging around 5 to 10 Bcf of working capacity per cavern. However, salt caverns require only about 33% of total capacity to be base gas. The higher pressure pushes gas in and out of the storage facility more quickly. This provides for higher injection and withdrawal rates, allowing for multiple injection/withdrawal cycles over the course of a year. Although the higher pressure in salt caverns gives them more rapid deliverability, it also makes them more prone to blowouts if there is a weakness in part of the cavern (Recon, 2009).

2.6 NIGERIA AND NATURAL GAS

Nigeria is endowed with abundant natural gas resources with estimated proven reserves of about 184 TCF. This represents about 4% of the world s proven gas reserves, making Nigeria the seventh largest gas reserve holder in the world and the largest in Africa with 95TCF AG and 89TCF NAG, the gas is rich in quality with 0% sulphur and rich in NGL (Abubakar L.Y,2007). The United States Geological Society (USGS) has indicated that Nigeria s gas reserve could reach about 600 trillion cubic feet with dedicated gas exploration (Dr E.O. Egbogah, 2011). But, more than 60% of the reserves are associated, meaning that the reserves exist with crude oil as free gas. Over the years, lack of adequate domestic gas utilisation infrastructure, domestic gas market and inefficiency of existing gas
44

utilisation infrastructure, has resulted to the flaring of over 50% of the reserves or in some cases reinjection of gas for enhanced oil recovery, presently Nigeria produces about 6.55 Bcf/d and flares 24.30% of the produced gas(NNPC,2011). However, there has been no significant gas exploration to date and growth in the gas reserves are largely linked to oil exploration. Earth scientists believe that there are more gas reserves not found which when discovered may double the current figures. These resources are evenly distributed between associated and nonassociated gas and are greatly characterised as some of the best quality in the world. However, due to low utilization in domestic and industrial usage of natural gas and the limited gas distribution infrastructure, Oil industries producing natural gas in association with their crude oil production have been compelled to flare these gases due to some of the reasons listed below (Ukpohor & Excel T.O, 2009): 1. Limited numbers of appropriate reservoirs conducive for gas re-injection and storage and the economics of the process. 2. Financial commitment of developing major and interconnecting network of gas pipelines. 3. Low technology and industrial base for energy consumption in the country 4. Limited regional market 5. Inadequate fiscal and gas pricing policies to encourage investment. However, growing pressure from environmentalists, government s concerns over revenue loss from flared gas and increasing local and international demand

45

for natural gas have renewed the interest of Nigerian government to seek alternative strategies for utilising the abundant gas reserves in the country. The current and expected increase in natural gas demand in the Nigerian region, coupled with the greater complexity of natural gas market operations, requires all natural gas market players to optimize flows of natural gas in order to ensure uninterrupted supply of the fuel, its delivery at affordable prices and flexibility in meeting demand peaks as well as various other consumer needs. While efficient operation of the natural gas industry is certainly a prerequisite for the vast majority of companies for maintaining desirable profitability and meeting prescribed technical standards and safety requirements, it is also considered to be a condition for improving security of supply. There is an expected rise in demand for natural gas in Nigeria over the next 5 to 15 years as a result of the various projects utilizing gas and the Governments zeal to make gas have a multiplier effect on the economy, stimulate a gas based industrialization and facilitate the use of gas in power generation by introducing the Nigerian Gas Master plan(the Domestic Gas Supply Obligation, the Gas Pricing Framework and the Gas Infrastructure Blueprint), has further accentuated the pressure on the natural gas industry to guarantee reliable delivery from ever increasing distances at a competitive cost (Nigerian Gas Master Plan). (Diezani .A,2010) noted that the unprecedented growth in natural gas demand has however created a short term challenge for the sector in terms of response. This prompted the reform of the sector through the Gas Master-plan. Underground gas storage
46

within the whole industry chain might play an important role in securing a reliable and efficient supply of natural gas to industrial, residential and other consumers in the region and country at large. Considering the increasing importance of natural gas in power generation, liquefied natural gas(LNG), gas to liquid technology(GTL), methanol and fertilizer production, cement, aluminium and steel industry, only the constant supply of gas can effectively yield the expected result in this sectors and this supply can be achieved by the storing of gas when the demand is low and supplying it to meet the demand during peak periods. Presently over 500 billion is needed to complete all

the projects required in the power sector (Bart Nnaji,2011). Strategically gas storage allows security of supply in case there are disruptions to production, transport or supply.

47

Fig

2.4

Nigeria s

Historical

Gas Utilization and

Forecast

Potential

Demand

[source:www.ngmproadshow.com]

Fig 2.5: Gas infrastructural blueprint (NGMP)

48

CHAPTER THREE 3.0 METHODOLOGY

The main aim is to determine the viability of UGS in the Niger Delta, and considering the various storage types the available one is storage in depleted oil/gas reservoirs, we will be concentrating only on the storage capacity of reservoir D whose prevalent drive mechanism is gas cap, with available geological data an assessment of Obigbo north field is carried out with the quality of a typical gas produced in the region that would be injected and also to determine benefits for storage in Niger delta with reference to Deliverability. inventory. containment . cost of developing and operation. Available gas utilization projects. Gas produced and flared in the region.

3.1 CASE STUDY:

Field and geological data were acquired from Obigbo north field. This data were used in estimating the reservoir storage capacity.

49

3.2 FIELD HISTORY

The Obigbo North field is located some 18km north-east of Port Harcourt and straddles OML's 11 and 17. The field was discovered in October 1963 by exploratory well Obigbo North-1 and covers approximately 50 km2. The exploration well was drilled on the main accumulation of the Obigbo North field and encountered hydrocarbons between 6,540 and 10,000 ftss. The field contains 66 reservoir blocks, of which 55 oil bearing and 11gas bearing. Except for the E6.0 and deeper reservoirs, which contain light oil the average reservoir contains medium gravity (API=26, Rsi 300 to 400 scf/stb) oil.

3.3 GEOLOGICAL DATA GIVEN AS:

Swc=connate water saturation=0.20 A=areal extent of the thickness =100acres H=reservoir average thickness (ft) =100 P=initial reservoir pressure=4900psi T=reservoir temperature =710oR H=well depth (ft) =10000 Ct=total compressibility (psi-1) =25910-6 =gas viscosity=0.0235cp

50

K=permeability=250md Vb= bulk volume of cone sample =8.03 ft3 W1=weight of dry cone sample=786.94lb W2=weight of saturated core sample=2831.56lb e= density of non volatile liquid=849.36lb/ft3

3.4 COMPOSITION OF NATURAL GAS TO BE STORED

This is the average composition of gas to be stored in the storage facility, it is an average composition of gas produced in the Niger Delta. Table 3.1:Average Compostion Mole Percent of Natural Gas in Nigeria
Symbol C1 C2 C3 iC4 nC4 iC5 nC5 C6 C7+ N2 Co 2 H2S (ppm) Name Methane Ethane Propane Iso Butane Butane Formula CH4 C2H6 C3H8 C4H10 C4H10 C5H12 C5H12 C6H14 C7H16 N2 Co2 H2S Average (mole %) 85.82 6.46 2.71 1.25 0.92 0.42 0.28 0.16 0.26 0.41 (Impurity) 1.16 (Impurity) <0.15 (Impurity) Composition

Normal Iso

Pentane Pentane

Normal Hexane Heptanes Nitrogen

Carbon dioxide Hydrogen Sulphide

Source: Compiled from SPDC

51

In this case, the compressibility factors which depends on the quality of gas needs to be calculated together with the formation porosity before we can determine the volume of the reservoir. Table 3.2:Computation of Average Molecular weight, Gas gravity etc of Gas from Nigeria Comp C1 C2 C3 iC4 nC4 iC5 nC5 C6 C 7+ N2 Co2 H 2S (ppm) Yi 85.82 6.46 2.71 1.25 0.92 0.42 0.28 0.16 0.26 0.41 1.16 0.15 Mi 16.043 30.070 44.097 58.124 58.124 72.151 72.151 86.178 100.205 28.013 44.010 34.076 YiMi Pc (psia) 1376.81 667.8 194.25 707.8 119.50 616.3 72.65 529.1 53.47 550.7 30.30 490.4 20.20 488.6 13.79 436.9 26.05 396.8 11.49 493.0 51.05 1071.0 5.11 1306.0 Y iP i (Pci) (psi) 57310.6 4572.4 1670.2 661.4 506.6 206.0 136.8 69.9 103.2 202.1 1242.4 195.9 Tc (oR) Y iTc(Tci) (oR) 343 29436.3 549.8 3551.7 665.7 1804.1 734.7 918.4 765.3 704.1 828.8 348.1 845.4 236.7 913.4 146.1 972.5 252.9 227.3 93.2 547.6 635.2 672.4 100.9

Ma =

YiMi

Yi

(1)

=1974.62 100 =19.75 Kg.Kgmol-1

52

g=

........................................................................................(2)

= 0.68 (air =1) using the Standard katz Z factor chart for sweet gas since the amount of non

hydrocarbon component is less than 5% by volume. YiPc

Ppc =

Yi

..(3)

= 66877.4 100 YiTc

=668.77psi

Tpc =

Yi .......................................................................(4)

=38245.55 100 Ppr = P Ppc

=382.46oR

(5)

= 4900 668.77 =7.33 Tpr =T Tpc .........................................................................................(6) = 710 382.46

=1.86

53

Z=f(Ppr, Tpr) =f(7.33,1.86) Z =1.13 Gas formation volume factor

.(7)

Bg = Vr Vs = 0.283ZT P.....................................................................(8) = 0.283 1.13 710 4900

Bg=0.0463 Depleted gas reservoirs are normally pressurized to back to their original discovery pressure when they are converted to storage reservoirs. However, if a good cap-rock is present, a top storage pressure higher than discovery pressure can be considered. This practice has two advantages, the larger storage capacity and higher flow capacity. However, compression requirements, market needs, production problems, and economics must be considered when selecting the storage top pressure. A storage top pressure above the discovery pressure should not be selected when the caprock is thin or mechanical conditions are questionable.

54

For higher deliverability, pressure higher than the initial reservoir pressure is chosen: a pressure of about 6500psi (the higher the injection/reservoir pressure the higher the storage capacity and deliverability). Vp

Porosity

Vb ........................................................................(9)
. . . . .

Vp =

Vp =2.41 Vb =8.03 = =
. .

=0.3

Reservoir Capacity, G G=
. . . .

.....................................................................(10)

G=

G=

G=17,976,822,760scf=17.98 Bscf

55

3.5 Design, operation, and monitoring of underground storage reservoirs involve recognition of three basic requirements:
1).

INVENTORY: which represents the volume of the gas that resides

in the storage horizon. In depleted reservoirs, in order to sustain pressure, the facility maintains equal parts base and working gas. However, depleted reservoirs, having already been filled with natural gas, do not require the injection of what will become physically unrecoverable gas seeing as it already exists in the formation unlike storage in aquifers where the base gas is unrecoverable due to fear of facility damage.

2).

DELIVERABILITY: Which represents the ability of the storage

field to deliver the gas stored to the market when needed. Deliverability depends on the pressure which is a function of the volume of the gas in the storage; therefore deliverability is related to inventory. Depleted wells has a limited cycling capability, where working gas volumes are usually cycled only once per season. Reservoirs are characterized with having low deliverability and thus would not be well suited for peaking services or speculative market services. It is most typically employed for seasonal services, strategic reserve services or production services. When compared to storage in salt caverns it s deliverability is low.

3).

CONTAINMENT: Which represents the ability of the storage field

to prevent movement of gas away from the storage horizon. Migration of gas away from the storage horizon results in attrition of the inventory and
56

consequently loss of the deliverability. The gas loss due to migration often depends on the pressure in the storage field which is related both to inventory and deliverability. Geologically, the reservoirs of depleted wells have proven capable of holding gas, since the reservoirs once trapped hydrocarbons that migrated up from the underlying source rock. However, some reasons for caution should be noted. In a few instances, reservoirs that once held gas actually continuously lost gas over geologic time up to the time of production. In other cases loss of gas occurred until the pressure dropped below the cap-rock threshold pressure i.e. the pressure required for gas to displace capillary water. In this instance loss of stored natural gas would occur once operating pressure was increased. To contain gas the reservoir must have high permeability and porosity and successful traps to seal the gas within the reservoir. The high permeability and porosity allows for large volumes of gas to be stored and for the operation of high gas injection and withdrawal rates. Traps that successfully contain gas are either structural, such as an anticline, or stratigraphic, such as an impermeable layer. Depleted reservoirs with high permeability and porosity are ideal for natural gas storage, porosity lending itself to the amount of natural gas it can hold and permeability determining the rate of flow of natural gas through the formation. This in turn determines the injection and withdrawal rate of working gas.

57

3.6 COST OF OPERATION AND DEVELOPMENT.

Underground storage fields have different costs associated with their development and operation. It has been estimated that investors require a rate or return between 12 percent to15 percent for regulated projects, and close to 20 percent for unregulated projects. The higher expected return from unregulated projects is due to the higher perceived market risk. In addition significant expenses are accumulated during the planning and location of potential storage sites to determine its suitability, which further increases the risk(Eni, 2005). Underground storage is more economical than LNG or LPG even on a 1-day basis (Harold E. S, 1971) The investment cost for the development of a new storage field depends on the type of storage and, in the case of identical types of storage, on its capacity, which may or may not permit economies of scale. Investment costs for a storage project can be subdivided into: a) exploration costs (unnecessary where partially depleted or depleted gas/oil reservoirs are used) b) drilling costs which are related to the number and depth of the storage wells. c) costs of the cushion gas volume d ) costs of surface facilities, related to the size of the treatment and compression plants. The overall cost of a single storage facility depends on:

58

a) Size of the surface facilities necessary for treatment and compression of the gas. b) The number and depth of the wells c) The number of caverns/wells in the case of salt cavities. d ) The volume of cushion gas. The capital expenditure to build the facility mostly depends on the physical characteristics of the reservoir. First of all, the development cost of a storage facility largely depends on the type of the storage field. .Cost is estimated by the type of storage facility to be developed and its intended use. Expenses include development of caverns and/or above ground infrastructure, the amount of cushion gas required, and the cost of operation for a single cycle facility versus a multicycle facility. Plant costs represent the cost to erect the facility, cushion gas cost is based on actual examples and are not directly comparable, and operation costs incorporate facility performance, maintenance, and cost of utilities. Aquifers are generally the most expensive to develop, whereas salt caverns are the most economic to operate.

Depleted Reservoirs: For this type of storage exploration costs are generally
unnecessary, since the reservoir is already well-known from the point of view of both the geology and productive behaviour. They are generally cheaper (in $/Mcf) to develop and operate than aquifers. In order to keep pressure up, about 50% of the capacity of depleted reservoirs must be kept as base gas. Depleted fields are the

59

least expensive type of gas storage facility to develop at $5-6 million per Bcf of working gas capacity. The reservoirs have an existing infrastructure in place and

Fig 3.1:Cost estimation for UGS storage development are already proven to trap and contain gas. Most depleted gas reservoirs contain residual natural gas that was never recovered from production. The abandoned gas can be used to meet cushion gas needs, thus reducing the cost and amount of cushion gas that must be injected.

Aquifer: They have the highest cushion gas requirements (about 80% capacity)
and longest development times. It typically takes five years to develop an aquifer due to reservoir characterization and constructing the above ground infrastructure. They are more expensive to develop and operate and are used only in the absence of depleted reservoirs and salt cavern.

Salt Cavern: are the most economical option for underground natural gas
storage. However, the development ($/Mcf) of the caverns and related infrastructure is a large capital expense. Although the higher pressure in salt
60

caverns gives them more rapid deliverability, it also makes them more prone to blowouts if there is a weakness in part of the cavern.

3.7 GAS UTILIZATION PROJECTS

There are various gas utilization projects, ongoing, completed and anticipated and their required gas feeds in the next 5 10 years in the country. The development of an underground storage facility is dependent on the availability of a sustainable gas market that will offset its high capital expenditure with time. The traditional use of UGS was for seasonal variation in order to store during the hot months and withdraw during cold ones when the demand for gas to heat homes and offices is high, but since the climate over here does not support seasonal variation, we will be considering other gas utilizing facilities like LNG, GTL, NGL/LPG, fertilizer, methanol, GFEG, aluminium and steel, etc where the demand for gas is constant over the year and they have impact on the nations GDP. 3.8 GAS PRODUCTION AND UTILIZATION IN THE REGION The gas produced and flared in the region has experienced an overturn over the past couple of years as a result of more gas utilization projects like NLNG, GTL, LPG/NGL, fertilizer, Power generation, etc in the country. The quantity of gas flared has been on the decrease yet there is still significant loss in revenue and the consequent environmental damage as a result of the quantity of gas still flared in the region. With the anticipated boom in the domestic and international demand for gas this wasteful flaring has its demerits in the nearest future where the problem of the country won t be demand any longer but supply.
61

CHAPTER FOUR 4.0 RESULTS AND DISCUSSION 4.1 Storage Capacity

Below are the results of the computation in chapter three; Table 4.1:Results of computation Term Type Depth Working Gas Capacity if base =60% Working gas capacity if base is 50% Base gas at 60% Base gas at 50% Volume capacity Porosity Z factor at 0.65 Gas Reservoir 10000 ft 7.19 BScf 8.99 BScf 10.79 BScf 8.99 BScf 17.98 BScf 0.3 1.13

In order to confirm that this depleted reservoir is of high quality for gas storage in it, we will take a look at the various petro-physical properties of the reservoir. Porosity: the Porosity value obtained is high and so is very good. Permeability: any porous formation is usually permeable, so we postulate that the formation is permeable.

62

Cap rock: this reservoir has a sealing cap rock, which is easily deduced from the fact formation formally housed crude oil deposits. Depth: the depth is 10000ft, which is a good one, since it will allow for storage of gas at a pressure of about 6500psi. Pore volume: from the calculation above, it is evident that not only will this reservoir supply the needed volume of gas; it will still have more left in the reservoir as a cushion gas for pressure maintenance. Volume capacity=17.98BScf In a developed reservoir about 50% of the gas is considered cushion gas; 50-60% of this is considered non-recoverable and should be depreciated. The recoverable cushion gas is included in the investment but is not depreciated. The recoverable cushion gas is included in the investment but is not depreciated. Fixed charges of depreciation return on investment and taxes dominate the operating cost of gas storage. For 60% cushion gas Cushion gas=60% of gas (17.98BScf) =10.79BScf For 50% cushion gas Cushion gas=50% of (17.98BScf) =8.99BScf Volume available for market= 7.19 BScf for 60% cushion gas
63

Volume available for market=8.99 BScf for 50% cushion gas. So on withdrawal of 40/50% of gas from this storage, about 50/60% will remain as cushion gas for pressure maintenance. Capillary pressure: gas is more volatile than water, as the production well is opened for flow, the gas will be virtually displaced before water can start coming out of the reservoir. The gas produced here that will be injected into the storage facility is a sweet gas ( 0.15% sulphur content) therefore having less acid removal plants and better quality. The storage facility is located in an area of great importance to gas transmission to various gas utilization projects in the region. The storage facility is located in Obigbo North of Port-hacourt which supplies gas to Ibom power plant, Aba industries, Ala-Oji power plant, calabar,etc. 4.2

Minimum requirements for considering an underground

prospect for gas storage include: (a)Storage Contract

In order to use any type of storage facility above, a storage contract must be entered into. A natural gas storage contract will specify the term date for the party s use of the storage, the type of storage facility, as well as the physical

64

Fig 4.1: supply grid from Obigbo North(UGS facility) constraints and operational costs of the facility. A specific catalogue of these physical and operational components can be found in the example contract below. b. A structure overlain by a cap rock. The water in the water filled cap rock seals the tight rock from penetration by the gas phase and prevents the gas from rising vertically, due to buoyant forces or from moving laterally and causes the gas to accumulate in the storage zone below the cap rock.

65

Table 4.2 - Example Storage Contract for Depleted Reservoir Storage Term Type Depth Maximum Working Gas Capacity Initial Working Gas Capacity Maximum/Minimum Injection Rate Maximum/Minimum Withdrawal Rate Fuel Injection Loss Spread Maximum/Minimum Facility Pressure 2/1/2012-1/31/2014 Oil Reservoir 10000 ft 8.99 BScf 0 BScf 75 MMScf/day 45 MMScf/day 150 MMScf/day 90 MMcf/day 1.0%- 2.5% 6700 1500 psi

c. Sufficient depth to allow the storage to take place under pressures. The pressure will allow satisfactory quantities of gas be stored into a given space and permit gas to flow readily into and out of a storage horizon. d. A high porosity and permeability storage zone beneath the cap rock that permits gas to be stored in sufficient quantities and to permit the gas to flow into and out of it readily. e. Water below the storage zone to confine the stored gas. All of these conditions are normally met in underground petroleum reservoir where hydrocarbon have been found trapped below a cap rock and confined by underlying water for millions of years. That is why many gas storage fields are partially depleted gas (or oil) fields which have been converted to storage.

66

Table 4.3- Storage Facility Characteristics Facility Depleted Fields Salt Caverns Aquifers Description Injectio n 120-200 Days Withdraw al 60-120 Days Operating Costs High with some fuel losses Major Use Seasonal Cycling

Low deliverability, low cycling, high capacity High 20 Days deliverability, high cycling, low capacity Low 120-200 deliverability, Days low cycling, high capacity

5-20 Days

Low with Peaking minimal Services fuel losses High with Seasonal some fuel Cycling losses

60-120 Days

4.3 GAS UTILIZATION PROJECTS AND PRODUCTION

Table 4.4:Gas production and utilization (Mscf),2002 2010
YEAR GAS PRODUCED TOTAL GAS UTILIZED TOTAL GAS FLARED FLARED %

2002 2003 2004 2005 2006 2007 2008 2009 2010

1,651,591,488 1,828,541,855 2,082,283,189 2,093,628,859 2,182,432,084 2,415,649,041 2,287,547,344 1,837,278,307 2,392,838,898

897,789,582 983,562,969 1,195,742,993 1,282,313,082 1,378,770,261 1,655,960,315 1,668,148,489 1,327,926,402 1,811,270,545

753,801,906 844,978,886 886,540,196 811,315,777 803,661,823 759,688,726 619,398,854 509,351,905 581,568,354

45.64 46.21 43 38.75 36.82 31.45 27.08 27.72 24.3

source: compiled from NNPC Over the past years the volume of gas flared has been on the decrease as a result of various gas utilization projects being put on stream by the Government. The gas market in Nigeria is undergoing an overturn with the present zeal of the Government to make gas have a multiplier effect on the economy(NGMP) but their
67

Table 4.5:Gas production and utilization by Company(Mscf), 2010

COMPANY GAS PRODUCED TOTAL GAS UTILIZED TOTAL GAS FLARED % FLARED JV SPDC 777,170,430.73 673,693,051.04 103,477,379.69 13.31 MOBIL 479,251,265.66 356,505,522.00 122,745,743.66 25.61 CHEVRON 194,327,349.00 76,018,339.31 118,309,009.69 60.88 TOTAL E& P 277,253,720.31 246,778,233.10 30,475,487.21 10.99 NAOC 441,864,139.00 338,975,625.00 102,888,514.00 23.28 Chevron (PENNINGTON) 7,683,657.00 130,491.00 7,553,166.00 98.30 PAN OCEAN 8,082,809.00 1,286,176.00 6,796,633.00 84.09 SUB TOTAL 2,185,633,370.70 1,693,387,437.45 492,245,933.25 22.52 PRODUCTION SHARING CONTRACT ADDAX 84,989,027.00 20,068,561.00 64,920,466.00 76.39 ESSO 104,990,024.80 97,610,252.45 7,379,772.35 7.03 SUB TOTAL 189,979,051.80 117,678,813.45 72,300,238.35 38.06 SERVICE CONTRACT AENR 6,713,476.00 182,142.74 6,531,333.26 97.29 SUB TOTAL 6,713,476.00 182,142.74 6,531,333.26 97.29 SOLE RISK/INDEPENDENTS NPDC 10,513,000.00 22,151.01 10,490,848.99 99.79 SUB TOTAL 10,513,000.00 22,151.01 10,490,848.99 99.79 GRAND TOTAL 2,392,838,898.50 1,811,270,544.65 581,568,353.85 24.3

source: compiled from NNPC greatest challenge is supply. With a present production rate of about 6.55 Bscf/d, the flaring of 24.30% of the total production and an anticipated demand of about 20Bscf over the next couple of years, the problem that the country would be faced with is supply. The various gas utilization projects outlined in table 4.6 have a multiplier effect on the economy, increasing the GDP, creating more jobs etc.

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Table 4.6:Gas utilization projects

S/N PROJECT TYPE LOCATIO N 1 2 Bonny NLNG Brass LNG 3 4 5 Olokola LNG Escravos GTL Escravos Plant 6 7 Oso NGL plant West NGL/LPG N.D EXPORT 600 170 450 LNG GTL N.D N.D 4500 300 700 LNG N.D N.D GAS FEED

(MMscf/d) 3500

River LNG

Gas NGL/LPG N.D

African Gas

Gas Pipeline 8 Power Projects Electricity NIGERIA 3000 4900

9 10

Cement sector Trans

Kiln

NIGERIA EXPORT

350 700 1000

Sahara Gas

gas pipeline 11 12 Steel Sector Fertilizer production 13 14 ALSCON Petrochemical feedstock Gas Gas NIGERIA NIGERIA 104 100 Gas Gas NIGERIA NIGERIA 120 307

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Fig 4.2: Domestic and Inter Governmental Export Gas Requirement

Fig 4.3: Domestic Gas Demand and Supply profile

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Gas demand in the domestic market is on the increase, fertilizer is anticipated to utilize about 307MMscf/d by 2015 from less than 110MMscf/d today. The base case gas demand for the cement industry could increase from 90MMscfpd currently to 350MMscfpd by 2015. This demand in the cement industry would be met by a combination of plant expansions, new grassroots capacity additions, and conversion of liquid fuelled kilns to the more efficient, gas fired kilns. The major gas consumer for cement production in Nigeria is the West African Portland Cement Company. Other cement producing companies (Ashaka Cement, Benue Cement, Sokoto Cement and the others) are yet to avail themselves the use of gas as a source of energy to power their equipments and fire their kilns despite the relative cheapness of gas over other sources of energy. This is due to the lack of a Natural Gas Grid, which should have made gas more accessible, but with the NGMP (Gas Infrastructural Blueprint) on stream gas will become accessible to these cement companies. The restarting of the steel plants in Ajaokuta since connecting infrastructure already exist will increase the demand from 70MMscf/d to 130MMscf/d and ALSCON and the Petrochemical sector taking a joint feed of 204mmscf/d of gas. Gas export is also on the increase with more LNG facilities coming on stream and the export line of WAGP and the trans Saharan pipeline requiring about 800 1500 MMscf/d feed gas. The power sector demand is the most aggressive of all the domestic sector demand with anticipated demand of 3000 4900 MMscf/d, the power sector has

the greatest impact on the economy, presently more gas is being produced in
71

Fig 4.4: forecasted power sector gas demand

Fig 4.5: Industrial base gas demand

the east(N.D) than is required for power generation so as gas infrastructures are being put in place to transport this gas to the west where there is insufficient

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supply, instead of flaring it can be stored. GTL converts non valuable gases flare

Fig 4.6: Eastern Area Power Plants Gas Requirement Vs Gas Allocation Profile

Fig 4.7: Western Area power plant requirement Vs Gas Allocation Profile

gases into useful synthetic fuels like diesel, and CNG usage in the country is limited as a result of lack of refuelling stations and automotives in the country are not designed to make use of it.
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4.4 COST OF OPERATION AND DEVELOPMENT

Looking at the overall cost (in $/Mcf) of each storage option, aquifers will be the most expensive. Aquifers use a great deal more cushion gas than the other options. For peak load needs salt caverns are the best value, as are depleted reservoirs for base load operations. Since we are considering more of UGS in depleted reservoir since the Niger Delta is an oil producing zone and sufficient depleted reservoirs are present there. A more in depth economic analysis will be presented below. Table 4.7: Mean Impacts of main items of investment cost CLASS OF INVESTMENT Surface plants Wells Cushion gas According to DEPLETED RESERVOIRS (%) 30 25 45 the FERC staff report, AQUIFERS (%) 25 15 60 2004 the cost of SALT CAVERNS (%) 40 35 25 developing an UGS

facility for depleted reservoirs is $5 $6 million per Bcf of working gas. So in the case of reservoir D under consideration the cost of setting it up will be about $54 million. Considering the mean impacts of investment cost, $54 million is the cost for the cushion gas, Surface plants and wells, but since we will postulate that the stored gas will be the gas presently being flared then the value of the cushion gas will not be considered i.e. cost of cushion gas is $0. Therefore the total cost of the storage project is about $30 million.

74

100

% CUSHION GAS

80 60 40 20 0 TYPES OF UNDERGROUND STORAGE depleted well salt carvern aquifer well

Fig 4.8: Estimated cushion gas requirement

80

% DELIVERABILITY

60 40 20 0 TYPES OF UNDERGROUND STORAGE FACILITY

depleted storage reservoir salt cavern aquifer

Fig 4.9: Estimated rate of deliverability

70 60 depleted reservoir storage salt cavern storage aquifer gas storage

% containment

50 40 30 20 10 0 underground storage types

Fig 4.10: Estimated Containment

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Fig 4.11: The analysis of sensitivity of UGS NPV to the change of key financial factor The sensitivity analysis carried out shows that the variable and fixed cost has little impact on the NPV but both the price of the gas and the capital cost in setting up the facility has a huge impact on the investments made. The cost of managing gas storage (operation cost) is divided into fixed and variable costs. Fixed costs are those related to the workforce, insurance, maintenance work, etc. Variable costs are the costs of the fuel and/or electrical energy required to power the compressors, consumer goods, etc.

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CHAPTER FIVE 5.0 CONCLUSION AND RECOMMENDATION 5.1 CONCLUSION

In many regions across the nation geologic formations can be used to store natural gas underground. Natural gas is stored to meet seasonal demands and to protect against accidents and natural disasters that could cause a disruption in supply. Storage of natural gas is used for strategic purposes, meet seasonal demands, base load and peak load requirements,. Storage options are dictated by the regional geology and the operational need. It is therefore proper to highlight at this stage the various areas in the natural gas industry where opportunities abound for private investors especially at the time of structural changes in the economy of the country. These investments opportunities will form the best strategies to efficiently utilize natural gas. The areas open for gas utilization in Nigeria are in the field of increased use of electric power generation, industrial fuel, GTL technologies, LNG for export , increased city distribution for domestic and commercial application, as feedstock for Nigeria-based fertilizers, methanol and petrochemical industries and for re-injection into oil reservoirs, for pressure maintenance or secondary/increase oil recovery purpose or for storage, Also, the fertilizer plant as one in rivers state uses natural gas as feedstock. Currently, depleted gas/oil reservoirs, aquifers, and salt caverns are the three main types of underground natural gas storage in use today. Underground storage
77

must have adequate capacity and containment of gas. The storage formation must have high permeability in order for gas to be injected and extracted at adequate rates. Porous reservoirs such as depleted gas reservoirs and aquifers must possess an impermeable cap rock along with a geologic structure to contain and trap gas. Mined caverns such as salt caverns contain gas by the impermeability of the surrounding host rock. Aquifers and depleted reservoirs possess the largest capacity and require the greatest volume of cushion gas. The reservoirs are typically cycled once annually and are used to meet base load demand. Unlike depleted reservoirs aquifers must be proven to trap and contain gas. Salt caverns are solution mined and hold a fraction of the gas volume than that of depleted reservoirs and aquifers. Salt caverns are typically used to meet peak load demands by possessing multi-cycle capabilities and providing high delivery rates. Economically, aquifers cost the most to develop and operate. The major costs contributed to the large cushion gas requirements and the need to verify the reservoirs capability to contain gas. Salt caverns are the most economical, due to their multi-cycle capabilities and high annual throughput of gas. Salt caverns are typically used to meet peak load demands, but has size disadvantage, rare in this part of the country, cost of conversion and development which includes compression horse power, surface equipments is high. From the analysis in chapter

78

3 and 4 the best storage facility for Niger delta is depleted reservoir, considering its availability and cost effectiveness. In the case of Obigbo north oil field, the depleted reservoir could store about 17.98 BScf with porosity of about 30% and high permeability which makes it suitable for gas storage. The location of the depleted reservoir in Obigbo North field is suitable for storage considering the geology and location. The reservoir can store gases that can be transmitted to calabar for power generation and manufacture of cement, to Aba industries and to Akwa Ibom in times of supply shortage. Recent development in the gas sector (NGMP) the demand for gas over the next couple of years is expected to increase by about 100% with the various gas utilization projects being put into place like LNG, GTL and other gas based industries and the reviving of old industries. Sustainable supply of natural gas in the region is required for the government to achieve its aim of gas having a multiplier effect on the economy and adding 10% of the GDP of the country, so in order for this supply to be achieved, UGS is essential so as to take care of any inefficiency in supply. Storage of natural gas in the Niger Delta region of Nigeria is economically viable, since the gas to be injected dose not cost anything (flared gases).

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5.2 RECOMMENDATION
This work has assisted in giving reasons for zero flaring of gas and proper gas utilization. However, full development and encouragement of gas projects calls for these incentives by the government: Free import of machinery and equipment Zero percent royalty Zero percent profit tax for gas used Free duty and VAT Tax deduction interest on loans for gas project investment Capital allowance Tax dividends for period of five years. Converting depleted reservoirs with desired storage characteristics to gas storage facility. Encourage companies to go into gas storage. Commenced implementation of the NGMP. Development of new market, gas investment opportunity e.g. packaging and distribution of gas(manufacture of cylinders or regulators) Strategic storage of gas should be embarked on.

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REFERENCES
Abubakar L. Yar'adua, (2007); Nigerian Gas Master Plan . Presented at The Nigeria Gas Stakeholders Forum. Arthur J. Kidnay and William R. Parrish, (2006); Fundamentals of Natural Gas Processing .CRC Press Bart Nnaji, (2011) Funding of Gas Infrastructure Required for Power: A Presentation To The Joint National Assembly Committee On Power. Boyun Guo and AIi Ghalambor, (2005); Natural Gas Engineering Handbook .Gulf Publishing Company Bruno, M.S. and M.B. Dusseault, (2002) Geomechanical Analysis of Pressure Limits for Thin Bedded Salt Caverns . Spring 2002 Solution Mining Research Institute Technical Meeting, Banff, Alberta, Canada, April 29-30. David Ige, (2011) Developing the Necessary Infrastructure to Meet the Objectives of the Gas Master Plan presented at the NOG Annual Conference. D. C. Bond, and Keros Cartwright, (1970) Pressure Observations and Water Densities in Aquifers and Their Relation to problems in Gas Storage . American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. Diezani Alison-Madueke, (2010) Gas to Power Initiatives and Opportunities presented at the Presidential Retreat for Power Sector Investors. Dietert, Jeff A., and David A. Pursell, (2000). Underground Natural Gas Storage. Simmons & Company International. D. M. Slagle, R. W. Ward, L. N. Reed, D. A, Wallen and C. A. Ledet,

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(1968); Control of Sand Production in the Underground Storage of Natural Gas , This Paper (SPE 2360) was presented at SPE Gas Technology .Symposium held In Omaha, Nebr., Sept. 12-13. Emmanuel O.Egbogah, (2011); New Oil and Gas Projects Unlocking the

Potential presented at the NOG Annual Conference. Eni, (2005); Encyclopaedia Of Hydrocarbons . Istituto della enciclopedia italiana fondata da giovanni treccani s.p.a. FERC, (2004); Current State of and Issues Concerning Underground Natural Gas Storage . FERC staff report. George G Bernard and L.W. Holm, (1970); Model Study of Foam as a Sealant for Leaks in Gas Storage Reservoirs . Journal of Petroleum Technology, march. Han, G., M.S. Bruno, K. Lao, and J. Young,( 2006); Gas Storage and Operations in Single-Bedded Salt Caverns: Stability Analyses . SPE Gas Technology Symposium, Calgary, Alberta, Canada, May 15-17. Harold E. Schwalm, (1971); Economics of Underground Gas Storage . This Paper (SPE 3288) was presented at SPE Midwest Oil and Gas Industry Symposium: held in Chicago, April 1-2, 1971 and published in the Journal of Petroleum Technology in October. lain Knott and K.G. Cross, (1992); Gas Storage Caverns in East Yorkshire Zechstein Salt: Some Geological and Engineering Aspects of Site Selection , This paper SPE 24923 was prepared for presentation at the 67th Annual Technical Conference and Exhibition of the Society of Petroleum Engineers held in Washington, DC. October 4-7. Ikoku C.U,(1989); Applied Gas Engineering Kreiger publishing company. Jerzy Stopa, Stanis aw Rychlicki, Tadeusz Kulczyk and Piotr Kosowski, (2009); Technical And Economical Performance Of The

Underground Gas Storage In Low Quality Gas Reservoir Mineral Resources Management.
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Katz, D.L, (1971) Monitoring Gas Storage Reservoirs SPE Paper 3287, Presented at SPE Midwest Oil and Gas Technology Symposium in Chicago, IL. Katz, D.L. and Tek, M.R,(1989) Overview of Underground Storage of Natural Gas . This paper SPE Paper 9390,Presented at SPE Annual Fall Technical Conference in Dallas, TX, 1980, and published in Journal of Petroleum Technology, June. Keith H. Coats,(1966) Some Technical and Economic Aspects Of Underground Gas Storage , This Paper(SPE 1657) was presented at the Summer Symposium on Natural Gas sponsored by the Exploration Production Group of the British Institute of Petroleum held in London, England, June 17, 1966 and was published in JPT December 1966. NNPC,(2011) 2010 Annual Statistical Bulletin . Corporate Planning & Strategy Division (Cp&S). Recon, (2009) Economic Analysis of the Gulf Coast Gas Storage Market . Recon Research Company. Saeid Mokhatab, William A. Poe and James G. Speight, (2006) Handbook Of Natural Gas Transmission And Processing . Gulf professional publishing. Wale Tinubu, (2011) Transforming the Nigerian Economy through Energy Projects presented at the NOG Annual Conference. William F. Burke,(1960) Simultaneous Underground Gas Storage and Secondary Oil Recovery , This paper SPE 1479 G was presented at the fourth biannual secondary recovery symposium of SPE on May 2 3, 1960 at Wichita falls, Texas and published in the JPT July. Ukpohor and Excel Theophilus O,(2009) Nigerian Gas Master Plan: Strengthening The Nigeria Gas Infrastructure Blueprint As A Base For Expanding Regional Gas Market . Nigeria Liquefied Natural Gas Company.
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V. Bolelli,(1991) Advances In Underground Natural Gas Storage . Agip S.p.A.. Yinka Omorogbe, (2011), The NOC Perspective on the New Legal Landscape presented at the NOG Annual Conference. Yuan Guangije, Wang Qinghua, Yuan Jinping, and Wang Chunmao, (2006) String corrosion and string protection during constructing and operating storage facility in bedded salt deposits . This paper (SPE 100386) was presented at the 2006 SPE international oilfield corrosion symposium, Aberdeen 30 may.

Energy Information Administration (EIA), The Basics of Underground Natural Gas Storage, http://www.eia.doe.gov/pub/oil_gas/analysis_publications/storagebasi cs/storagebasics.html. NaturalGas.org, Storage of Natural Gas, http://www.naturalgas.org/naturalgas/storage.asp, June 27, 2007. National Energy Technology Laboratory (NETL), Transmission, Distribution, & Refining, Natural Gas Storage, http://www.netl.doe.gov/technologies/oilgas/TDR/Storage/Storage.html, June 27, 2007. Steuben Gas Storage Company, Thomas Corners Field Development: Offer of Multi- Cycle Storage Service at Market Rates, November 2004 Marketing Brochure, Arlington Storage Corporation, Boston, MA, November 2004, found at http://www.steubengas-storage.com/tc/TC_Field_Development-Nov-2004.pdf. http://www.naturalgas.org/naturalgas/processing_ng.asp

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APPENDIX A
Average Compostion Mole Percent of Natural Gas in Nigeria Symbol Name Formula Average (mole %) C1 C2 C3 iC4 nC4 iC5 nC5 C6 C7+ N2 Co2 H2S (ppm) Methane Ethane Propane Iso Butane Butane CH4 C 2H 6 C 3H 8 C4H10 C4H10 C5H12 C5H12 C6H14 C7H16 N2 Co2 H 2S 85.82 6.46 2.71 1.25 0.92 0.42 0.28 0.16 0.26 0.41 (Impurity) 1.16 (Impurity) <0.15 (Impurity) Composition

Normal Iso

Pentane Pentane

Normal Hexane Heptanes Nitrogen

Carbon dioxide Hydrogen Sulphide

85

APPENDIX B
Gas Deviation Factor for Natural Gas(after Standing and Katz)

86

APPENDIX C
Pseudo critical properties of miscellaneous gas (after Brown et al)

87