Sunday, April 14, 2024

Time for modular refineries

When the Federal Government announced its intention to legalise the “illegal refineries” in the Niger Delta region of the country, residents in the area and other concerned Nigerians said it was a commendable effort, aimed at tackling unemployment in the region.

In his speech at a townhall meeting in Umuahia, Abia State, Vice-President Yemi Osinbajo assured stakeholders that the President Muhammadu Buhari administration was determined to ensure that those from oil-producing areas of the country got benefits from the natural resources from their areas.

He said that it was regrettable that the communities that produced oil from where the country earned its greater revenue, did not derive significant benefits from the oil.

He said, “The high level of degradation people in the oil-producing communities have suffered is not new in the country; however, we are determined to change the way things are done so that people from such communities can benefit.

“I want to use this opportunity to commend the elders, traditional rulers and youth leaders of the Asa community for the mature way they have been handling the issue of youth restiveness and I want to assure you that your community will be rewarded.”

Several chemical engineers saw the development as a sound strategy that would enable the country to refine its own crude oil. Others praised the government, saying that the key advantage of the initiative was in its size, cost differential and flexibility.

A modular refinery, by definition, is a prefabricated processing plant that has been constructed on skid-mounted surfaces, with each structure containing a portion of the entire refining plant connected together by an interstitial piping, to form an easily manageable process.

Instead of stifling this new idea on the altar of the fear of environmental degradation, we believe the refineries should be constructed in a controlled environment, and properly tested, before being rolled out

But Nigerians were shocked, recently, when the government, through the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, declared that it would no longer allow the proliferation of modular refineries in the region.

“Having such refineries scattered across the length and breadth of the Niger Delta would heighten environmental degradation, worsen gas flaring and increase the problems of the region” Kachikwu said.

 

He added that government was considering a situation where modular refineries would be located only in areas where its products would be easily evacuated and where getting feedstock to them would not be cumbersome.

Kachikwu, who spoke at the New Nigerian Oil and Gas Sector Governance Policy Consultation Workshop in Aberdeen, Scotland, recently, further said, “Setting up smaller modular refineries in so many places in the Niger Delta would worsen gas flares in the region and also bring about environmental challenges.

“It is critical to develop an integrated approach and plan to modular refineries construction in the Niger Delta, ensure that they are properly optimised and are not scattered everywhere. If the refineries are scattered everywhere, they would not provide significant economic benefits for the country.”

Unimpressed by the ‘Uturn’ made by the government, our stand is that the President Muhammadu Buhari administration should re-consider its stance, even as we fault its several inconsistencies of policies.

Instead of stifling this new idea on the altar of the fear of environmental degradation, we believe the refineries should be constructed in a controlled environment, and properly tested, before being rolled out. A modular refinery is relatively easy to fabricate and erect.

Experts have said that whenever an area becomes unsuitable for the machines, they can be disassembled and reassembled in a more suitable environment.

For areas with non-cohesive geopolitics like Nigeria, modular plants can be scattered throughout the country; to serve the fuel supply needs as would be suitable for respective regions.

A modular plant’s maintenance cost is low, considering that it processes 2,000 to 15,000 barrels per day of mainly light, sweet crude, while routine turnaround maintenance and on-stream inspections would require less personnel and downtime.

The plants are easier to secure because of the reduced surface area and perimeter. Also, issues of internal monitoring of equipment and external acts of sabotage can be better policed given the smaller area of operation, and in a situation where one plant suffers an incident, the other smaller plants, scattered all over the country, can still be operational.

The impact of a modular refinery on the environment, it needs be stressed, is nothing, compared to the unhealthy emission that a large-scale refinery is capable of spurting.

While a full-conversion plant can cost anywhere from $2 billion to $9 billion, the same amount can be used to spread the riskpotential and build various modular plants all over the country, to cater to the needs of each geopolitical zone.

Finally, while it may take several years to build a large refinery, modular plants can be put to service in a matter of months, and only cost about $250 million.

Deriving any economic benefit from modular plants, as had been learnt, is highly dependent on their proximity to marine transportation. It is imperative, therefore, that areas around the Atlantic Ocean be made safe, one way or another. This is the responsibility of the Federal Government and it is imperative that this administration gives strong consideration to pipeline protection from the standpoint of advanced technology. These two factors are at the roots of any kind of viability in petroleum refining in Nigeria, and ultimately, national economic development.

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