Nigeria Set To Tap Into The Huge Methanol Market

 

Nigeria’s failure to develop its methanol industry over the years, despite an abundance of gas resources, left manufacturing companies with no choice but to import 100 per cent of their needs. But things are about to change with the recent Final Investment Decision on the Brass Fertilizer and Petrochemical Company Ltd (BFPCL), writes ROBERT EGBE.

 

 

Nigeria’s methanol situation is an unusual one. Flush with gas resources, the country still imports 100 per cent of its methanol, even from countries with lesser gas reserves. It is a riddle that, like Nigeria’s petrol importation situation, bewilders stakeholders.

 

Methanol, also known as methyl alcohol amongst other names, is a light, volatile, colourless, flammable liquid with a distinctive alcoholic odour similar to that of ethanol.

 

It can be made from virtually anything that is, or ever was a plant. This includes common fossil fuels – like natural gas and coal.

 

On an industrial scale, methanol is predominantly produced from natural gas by reforming the gas with steam and then converting and distilling the resulting synthesized gas mixture to create pure methanol. The result is a clear, liquid, organic chemical that is water-soluble and readily biodegradable.

 

It serves as an energy carrier for factories and electricity generation and alternative fuel in the face of the demand for cleaner energy. Globally, the market share of the product, standing at $20.4b in 2020 is projected to hit $26.6b by 2025.

 

 

 

Global Background

 The methanol industry spans the entire globe, with production in Asia, North and South America, Europe, Africa and the Middle East. Worldwide, over 90 methanol plants have a combined production capacity of about 110 million metric tons (almost 36.6 billion gallons or 138 billion litres).

 

According to IHS, global methanol demand reached 75 million metric tons in 2015 (24 billion gallons/91 billion litres), driven in large part emerging energy applications for methanol which now account for 40 per cent of methanol consumption. Each day, nearly 200,000 tons of methanol is used as a chemical feedstock or as a transportation fuel (67 million gallons/254 million litres). That’s enough methanol every day to fill nearly 7,500 tanker trucks stretching end-to-end for 63 miles or 100 kilometres.

 

But the methanol industry is not just those companies large and small throughout the globe that produce methanol every day from a wide array of feedstock – including natural gas, coal, biomass, waste and even waste CO2 – the industry is also made up of thousands of distributors, technology innovators, downstream manufacturers and service providers. The global methanol industry generates $55 billion in economic activity each year while creating over 90,000 jobs around the world.

 

 

 

Nigerian Situation

 Nigeria’s failure to develop its petrochemical industry, especially methanol, has been regarded as the reason manufacturing companies are importing about 80 per cent of their raw materials worth over $10billion.

 

Last year, the Federal Government put the nation’s total gas reserves at 203.16tr cubic feet (TCF), representing a marginal increase of 1.16tcf or 0.57 per cent from the 202tcf recorded in 2019. But the investment to unlock the resources remained elusive.

 

 

 

Change is in the air

 But recent developments suggest this abnormality may soon be corrected.

 

The Petroleum Resources Ministry is taking the lead in ending methanol’s importation. Following its recent Final Investment Decision on the Brass Fertiliser and Petrochemical Company Ltd (BFPCL), the country is set to reap the billions of dollars and other benefits of the globe’s methanol industry.

 

BFPCL shareholders took the FID for the construction of Nigeria’s first-ever methanol plant at the cost of $3.6 billion. The plant, an integrated methanol and gas project in Odioma, Brass Island, Bayelsa State, which is scheduled to come into operation in 2024, is expected to produce 10,000 tons of methanol daily.

 

The project is owned by DSV Engineering Limited, Nigerian National Petroleum Corporation (NNPC) and Nigerian Content Development and Monitoring Board (NCDMB). It will be financed by 70 per cent debt and 30 per cent equity.

 

Speaking at the FID announcement event in Abuja, on January 29, Minister of State, Petroleum Resources, Timipre Sylva disclosed that 30,000 jobs will be created during construction and 6,000 jobs when the plant is fully operational.

 

Sylva who described the FID as historical said when operational, the plant would have a major impact on the country’s economy, as it would end the 100 per cent import of methanol used in the country.

 

He explained that in July 2020, President Muhammadu Buhari, who also doubles at the Minister of Petroleum, approved the development of the Brass Gas Hub “with the sole aim of aggregating for monetising all stranded gas in the Brass area which amounts to over 14 trillion cubic feet of gas into the processing facilities to be built in the hub”

 

 

 

He explained that FID was for the phase 1 of the Brass Gas Hub, adding that the project is expected to have a very significant economic and developmental impact on the country, including support for gas-based industries, revenue generation and import substitution for methanol needs of the nation that is currently 100 per cent imported.

 

“Other economic benefits include foreign direct investment, economic diversification, acceleration of Nigeria’s march to zero gas flaring and community development through the company’s plan to offer one per cent equity to host communities,” Sylva added.

 

 

 

One plant, 20,000 jobs

 If BFPCL methanol plant goes according to plan, it will create 20 000 jobs, the company has said.

 

When operational, it would place Nigeria among the top 10 methanol producers in the world, open up the economy and the local community for wider opportunities across all economic sectors.

 

Aside from the equity from NCDMB, NNPC and DSV, there is an impressive cast of lenders which includes a consortium of Chinese banks led by the China Exim Bank, African Development Bank (AfDB), international commercial banks, regional banks and African institutions and they would be expected to raise 70 per cent of the project cost.

 

Other agreements that have been firmed up include a Gas Supply Purchase Agreement (GSPA) with the Shell Petroleum Development Company (SPDC) led joint venture, off-take agreements and contracts for Engineering Procurement and Construction and technology provider.

 

Stakeholders see the taking on of the FID on a project of this magnitude with huge medium and long term potential as testimony that the Federal Government’s commitments to monetise and deepen gas utilisation, increase domestic gas utilisation and ultimately create value for Nigerians are not in vain.

 

 

 

How Important is Methanol to Nigerians?

 Methanol has been one of the world’s most widely used industrial chemicals since the 1800s and things are not about to change anytime soon.

 

It is a key component of hundreds of chemicals that are integral parts of our daily lives. It occupies a key position in the chemical industry, as a highly versatile building block for the manufacture of countless everyday products. The largest scale applications in terms of volume are processing into formaldehyde, which is further treated to form resins, glues and various plastics, and for the production of acetic acid which is essentially used for the production of polyester fibres and PET plastics.

 

As the most basic alcohol, methanol is an affordable alternative transportation fuel due to its efficient combustion, ease of distribution and wide availability around the globe. Methanol is a high octane fuel that enables very efficient and powerful performance in spark-ignition engines. Engines optimised for methanol could provide an energy-based efficiency gain of 50 per cent over a standard (port fuel injected, non-turbo) gasoline engine in a light-duty vehicle. The power-producing qualities of methanol are well-known and it is used in several motorsports. While methanol has a low cetane rating, it also can be used in combustion ignition engines as a diesel fuel substitute. Dual-fuel heavy-duty engines operating on diesel and methanol fuels can improve efficiency and dramatically reduce emissions for trucks, buses, and off-road vehicles.

 

The Methanol Institute (MI) released two new reports on the use of methanol as a safe, efficient and clean alternative fuel for cars, trucks and buses.

 

Increasingly, methanol is being used around the world in several innovative applications to meet the growing energy demand, particularly in transport. The primer presents methanol’s fuel quality benefits, addresses concerns about the use of methanol, the history of methanol blending in fuels, and its future potential as a renewable fuel capable of significantly reducing CO2 emissions.

 

Methanol plays a crucial role in reducing environmentally-damaging effluent that is discharged by wastewater treatment facilities across the globe. Through a process known as “denitrification”, water treatment facilities convert the excess nitrate into nitrogen gas which is then vented into the atmosphere, thus eliminating its ability to cause an algal bloom in watersheds and block oxygen and sunlight from reaching marine life below the surface. Methanol is the most common organic compound used in denitrification, accelerating the activity of anaerobic bacteria that break down harmful nitrate.

 

In the United States, for instance, nearly 200 wastewater treatment facilities are currently using methanol in their denitrification process.

 

Methanol is an attractive emerging fuel for electricity generation. During times of great electricity demand, such as the dry season in Nigeria, turbine engines are often used as “peak generators” to bolster the electric grid’s capacity. Methanol has been demonstrated to be a viable replacement to oil as a fuel for these crucial backup generators, as well as a more environmentally friendly way of improving their performance. Around the globe, several projects are underway to incorporate methanol into existing, dual-fuelled gas turbines. Methanol’s low heating value, low lubricity, and low flash point make it a superior turbine fuel compared to natural gas and distillate, which can translate to lower emissions, improved heat rate, and higher power output. Recent methanol-to-power demonstration project has shown the viability of this technology, especially for our island nations and other areas not situated near gas pipelines.