Industry experts have expressed apprehension about the slow pace in developing infrastructure for the utilisation of associated gas from the Jubilee oil production, which commences this November. Tullow Oil Chief Operations Officer Stuart Wheaton recently said: “gas from oil production in Jubilee will have to be injected back into the well until infrastructure for utilising it is ready.” Key stakeholders opined at the recent First Domestic Content and Matchmaking Exhibition/Conference in the Oil and Gas Industry, and the 8th West African Mining and Power Conference, both held in Accra, that injecting Jubilee gas back into the well will have cost implications as well as deny the country the benefit that would have been obtained from utilising the gas to generate electricity. Additionally, industry observers are concerned that no indications have been given as to how long the non-utilisation of Jubilee gas will last. Their concern stems from the fact that the country needs to urgently put its gas infrastructure in place to help generate critically needed electric power – especially as it was anticipated that would be done before first oil in the last quarter of 2010 and the Ghana National Petroleum Corporation (GNPC) has imposed on itself a policy of zero-gas flaring from oil production. GNPC intends to utilise associated gas from the Jubilee oil production to power thermal plants at Effasu and Takoradi for the generation of more than 600 megawatt of electricity to help in the country’s industrialisation as well as generating revenue by selling natural gas and derivatives to the domestic and international marketplace. The GNPC, with a 13.5 percent stake in Jubilee, is mandated by government to utilise all associated gas from the country’s oil production and expects to take 50 percent of an expected daily production of 120 million cubic feet of natural gas from Jubilee. State-run GNPC has the responsibility of constructing the gas processing infrastructure to off-take the Jubilee gas from a floating production storage and offloading vessel, the FPSO Kwame Nkrumah, operated by Jubilee partners. GNPC officials have disclosed that they are in the process of developing the gas processing infrastructure, with an earmarked land at Bonyere some 62 km from the Jubilee field currently being surveyed to establish its suitability as a location for the gas processing plant. Officials also disclosed that the process of identifying a minority partner for GNPC in the gas infrastructure project is far advanced, without giving details of firms involved and timelines for delivering various stages of the infrastructure such as offshore pipelines, the gas processing plant, and the onshore pipelines expected to connect to the thermal plants at Effasu and Aboadze in the Western Region. Experts say such infrastructure could take up to three years to develop and bring up to full operation. “That would be a long time to wait to realise our national dream of improving electric power generation capacity to address the debilitating power supply shortfalls and poor quality power delivery that is making local industry so uncompetitive against foreign counterparts,” an industry expert said. Initially, Jubilee partners had proposed that Sithe Energies - which owns stakes in nine operational facilities in the US with a total generating capacity of more than 1,300 MW and which sells energy to utilities, industrial companies governments, and other institutions - develop a 240 MW onshore thermal power generation plant to utilise associated gas from the Jubilee field, by the end of 2010. Gas utilisation and monetisation was, however, a contentious issue in the approval of the plan of development for Jubilee production. Under the Petroleum Agreement for the blocs straddled by Jubilee, operators including Tullow Oil and Kosmos Energy owned the associated gas. Energy Minister, Oteng-Adjei, however adeptly wrung concessions from operators who agreed to give gas gratis to government under phase-one of the Jubilee developments to enable government develop its gas infrastructure; but for phase-two, they will charge market price. In October 2009, Nigerian indigenous explorer Oando Plc was announced to partner GNPC in developing Jubilee’s gas infrastructure. Oando, eventual winner among a shortlisted five out of an initial 50 international bidders, were to be the “lead developer” of three firms chosen to form a consortium with GNPC. The other firms were Italy’s Saipem and a Japanese consortium, Modec-Itochu. The project, said to be worth US$1 billion, includes the development of offshore and onshore gas pipelines, processing facilities, and liquefied petroleum gas and condensate storage tanks, among other structures. Source: BFT