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
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
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
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
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?
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.
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