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Atuabo gas project to boost Ghana’s energy sector

Hydrocarbon Engineering,

According to Business Monitor International (BMI), the start up of the Atuabo Gas Project represents a major boost to Ghana’s energy sector. As the facility reaches full capacity, Business Monitor forecasts increased oil output, rising gas fired electricity generation and a spike in domestic LPG output.

Gas has flowed from the Kwame Nkrumah floating storage and offloading (FPSO) unit to the Atuabo gas processing plant in Ghana. Initial output will be limited – 0.45 billion m3 in 2015, according to BMI forecasts – but the impact on the wider energy sector will be significant.

A lack of gas processing facilities has weighed on output from the country’s flagship Jubilee field in 2014. Due to the moratorium on flaring, an additional injection well had to be completed to re-inject associated gas production. However, a cap on the volume of gas that could be safely re-injected saw oil production fall by approximately 3000 bpd.

In June, the government eased the restrictions on flaring to support increased oil output, but this was unable to increase production significantly beyond 100 000 bpd. With the Atuabo facility online, BMI forecasts stronger production growth in 2015, with overall Ghana liquids production reaching an average of 142 000 bpd.

The facility will also help bridge the gap between electricity supply and demand. Ghana has suffered repeated power outages, in large part due to disruptions in the feedstock supply. Ghana imports its gas from Nigeria via the West African Gas Pipeline (WAGP). Damage to the pipeline, along with high volatility in Nigerian exports, have led to repeated gas shortfalls in Ghana. The government has been forced to replace gas with oil in its thermal generators at an estimated cost of US$ 3 million/d, according to the electricity utility, Volta River Authority (VRA).

Gas from Atuabo will be used to feed VRA’s Aboadze thermal plant – which powers Essiama, Takoradi and Prestea – offering a more stable and lower cost source of supply. The reduced oil import burden is particularly important to the government, given its rising debt load and heavy budget imbalance.

Aside from supplying gas to Aboadze, Atuabo will also produce LPG at a peak production rate at 4900 bpd, approximately 2017. Currently, all of Ghana’s LPG is produced at the Tema Oil Refinery (TOR); capacity is approximately 1500 bpd, but output is significantly lower. For 2014, BMI forecasts total LPG output of below 750 bpd.

TOP has poor utilisation rates – falling as low as 25% in recent years – due to poor operational efficiencies and disruptions in the crude oil supply. The refinery make up is also relatively basic, which lowers the yield of light end products, such as LPG. Output from Atuabo will help plug the deficit in domestic LPG production, progressively lowering import volumes between 2016 and 2020.

However, beyond 2020 BMI sees this trend reverse and LPG imports begin to rise. This is due to a strong forecast in LPG consumption growth, outstripping production; over the next 10 years, BMI anticipates that LPG consumption will increase almost three fold, albeit from a very low base.

Several factors support this view. Chana is pushing an aggressive fuel switching programme in the transport sector; from 2006 to 2013, vehicular demand for LPG grew by between 11 – 26%/y. residential demand is also increasing, as rapid urbanization and rising household expenditure shift consumption away from traditional biomass and towards LPG.

Expansion of the Atuabo plant in 2016 0 2017 could boost domestic production, although the Ghanian National Gas Company (GNGC) has yet to indicate what proportion of the additional gas would be directed to LPG. The domestic power sector will likely get precedence, but a growing market and rising domestic prices makes a strong commercial case for growing LPG production. Based on this, BMI has factored additional output into its forecast, from 2018.

Adapted from a report by Emma McAleavey.

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