The economic analysis of gas pipeline construction for the evacuation of natural gas from a gas processing facility to a gas fired power

ABSTRACT

 

The site of electrical power plants has been a subject of interest since the advent of electricity and the distance between energy sources (mines, oil and gas fields, and water bodies for renewable energy) and distance load (cities and industrial hubs) centres. The quest for sufficient energy infrastructure to supply Nigeria’s huge and growing population of about 190 million and also to power the much-anticipated industrialization and economic growth and development made the government to embark on unprecedented investment in natural gas and electricity generation, transmission and distribution infrastructure. The Geregu gas turbine project, located in Geregu, Kogi State consist of a FGN 414MW open cycle gas turbine commissioned in 2007 and a NIPP 444MW open cycle gas turbine commissioned in 2013. These turbines are fed natural gas from Oben gas fields in Edo state through 36 inches, 196 KM pipeline whose construction cost is $228,317,572.65 and with revenue form current transportation charges of $0.80/MSCF, has a payback period of sixteen years. However, if the power plants were to be sited in Edo State and a 330KV transmission line constructed from the power plant to Kogi state, the construction cost would have been $123,426,000.00 and with revenue from current tariff charges of $8.76/MWH, the payback period is 12 years.  Hence it is cheaper to construct the power plant in Edo state and evacuate the generated energy via 330kv transmission lines to Kogi state than to construct the plant in Kogi state and supply natural gas to it via pipeline. Nevertheless, the Oben-Geregu pipeline has throughput capacity of over one billion scf/d of gas and since the maximum gas requirement by the power plants is 210 MMSCF, the pipeline can serve additional installation requiring natural gas feed along its route thereby raking in additional revenue and thus reduction in its payback period.

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Cover page      ……………………………………………………………………….…….i

Title page        …………………………………………………………………………….ii

Declaration     …………………………………………………………………………….vi

Certification    ……………………………………………………………………………vii

Dedication      ……………………………………………………………………………viii

Acknowledgements    ………………………………………………………………….....ix

Abstracts         …………………………………………………………………….....……x

List of Abbreviations              .............................................................................................xi

 

CHAPTER ONE – INTRODUCTION...…………………………………………….…1

1.1              Background of the study        …………………………………………….….……1

1.2              Statement of the problem        …………………………………………….………2

1.3              Aim and Objectives of the study        ……………………………………………20

1.4              Research questions     ……………………………………………………………20

1.5              Significance of the study        ……………………………………………………21

1.6              Scope of the study      ……………………………………………………………21

 

CHAPTER TWO – LITERATURE REVIEW..............………………………………22

2.1        Conceptual framework           ……………………………………………………22

2.2        Natural gas transmission system         …………………………………………....22

2.2.1        Oben-Ajaokuta-Geregu ROW survey            ……………………………………40

2.2.2        Technical Description of the Oben-Geregu, 36-inch pipeline            ……………43

2.2.3         

2.3        Electricity Transmission Lines           ……………………………………………45

2.3.1        Major Transmission equipment          ……………………………………………48

2.4        Empirical Review                               ……………………………………………57

 

CHAPTER THREE – METHODOLOGY AND MATERIAL   ………………….…58

3.1        Design Specification   ………………………….…………………………,…..…58

3.2        Data Collection           .............................................................................................58

3.3        Gas turbine-based generation………………………………………………….…59

3.3.1        Determination of volume of gas requirement by Geregu power plants….…….…62

3.3.2        Determination of size of pipe for transportation of natural gas….…………….…63

3.3.3        Project details for Oben-Geregu 36-inch natural gas pipeline……………………64

3.4        Electricity transmission losses            ……………………………….…………...68

3.4.1        Determination of transmission line losses      ………………………………....…71

3.4.2        Practical line loadability                                 …………………………………....72

3.4.3        Recommended value of transformer losses    ........................................................73

3.5        Nature/Sources of data           …………………………………………………....74

3.6        Method of data collection       ……………………………………………….…...74

3.7        Methods of cost analysis         ………………………………………………....…75

3.8        Determination of investment, o and m cost of transmission lines      ……………75

 

CHAPTER FOUR – RESULTS AND DISCUSSION......…………………………….79

4.1        Presentation of Data (Tables, Graphs and Plates)      …………………………….79

4.2        Data Analysis  …………………………………………………………………….79

4.3        Cash Flow Analysis Techniques........…………………………………………….80

4.3.1        Pay Back (PB)…………………………………………………………………….80

4.3.2        Discounted cash flow (DCF)  …………………………………………………….81

4.3.3        Net present value (NPV)        …………………………………………………….82

4.3.4        Internal rate of return (IRR)   ……………………………………..………..…….85

4.4       Discussion of Findings……………………………………………………………86

 

CHAPTER FIVE – SUMMARY, CONCLUSION & RECOMMENDATION.……91

5.1        Summary         ………………………………………………………………....…91

5.2        Conclusions     …………………………………………………………..…….…92

5.3        Recommendations      …………………………………………………..…….…93

5.4        Contribution to knowledge     …………………………………………..………..94

 

REFERENCES          ……………………………………………………………..…..…85

APPENDICES           ………………………………………………………………....…