NIGERIAN NATIONAL PETROLEUM COPORATION (NNPC)
Generating electricity from
natural gas:
The way forward for
Nigeria
A report presented by study group 3, class E,
NNPC, FSTP.
11/5/2012
Contents
1.0
Introduction ......................................................................................................................... 3
2.0 Power generation in Nigeria ..................................................................................................... 4
2.1 Current status ........................................................................................................................ 4
2.2 OVERVIEW OF POWER GENERATION .................................................................................... 5
2.3 Issues of power generation ................................................................................................... 8
3.0 The natural gas option ............................................................................................................ 10
3.1 Power generation using natural gas ................................................................................... 11
3.1.1 Steam Generation units ................................................................................................ 11
3.1.2 Gas turbine units .......................................................................................................... 12
3.1.3 Combine cycle units ...................................................................................................... 13
3.1.4 Natural Gas fuel cell Units (New technology). ............................................................. 14
3.2 Advantages of using natural gas as source of electricity .................................................... 16
3.3 Challenges of using natural gas ........................................................................................... 17
4.0 Achieving the target ................................................................................................................ 19
4.1 Infrastructure/asset ............................................................................................................ 19
4.2 Role of NNPC ....................................................................................................................... 19
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1.0 Introduction
A major thorn in the flesh of Nigeria’s economic, infrastructural and social development is the issue of
inadequate power supply. For decades several governments, both democratic and military have made
futile attempts through different schemes aimed at improving this sector but all have either totally
failed or made insignificant progress at surmounting this issue.
Nigeria lags significantly behind in access, quality and availability of public electricity supply.
The present generating capacity of 3,800 mega watts is not enough to drive the economy and also is
grossly inadequate for a population of about 150 million.
This threatens the actualization of the socio-economic goals of alleviating poverty and of jobs and
wealth creation.
South Africa has 40,000 mega watts with population of just 50 million and Brazil has 100,000 mega watts
with a population of 192 million.
Ironically Nigeria holds gas reserves that can sufficiently bridge this energy gap; NIGERIA has emerged
the country with the biggest gap between supply and demand for electricity in the world, according to
the progress report on the roadmap for power sector reform ((PTFP), 2012).
The generation of power by the utilization of natural gas is an extremely efficient method of electricity
generation that is rapidly taking over from other methods such as hydro and coal, all over the world,
Nigeria has very high potential for electricity generation as it is strategically positioned as 7th largest
natural gas reserves in the world, with 187 trillion cubic feet and a further undiscovered potential of 600
trillion cubic feet of gas.
This report aims at examining the current status of power generation in Nigeria and exploring the
potential of natural gas as the way forward for Nigerian power sector.
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2.0 Power generation in Nigeria
2.1 Current status
Electricity is the most critical of our national economic infrastructure. Nigeria’s abysmally poor supply of
electricity adds 40 per cent to the costs of goods produced in the country. In addition to deterring
domestic and international investment in Nigerian industry, the situation has compelled many industries
to either shut down or relocate to neighboring countries.
Production of Electricity began in Lagos in 1896, barely 15 years after the launch of commercial electric
power activities in England. At that time the Public Works Department which was a local municipal
authority constructed the first generation plant before other municipal authorities followed suit to build
and maintain power plants. The Electricity Corporation of Nigeria (ECN) was established to coordinate
the distribution of electricity, other bodies such as the Native Authorities and the Nigerian Electricity
Supply company were given licences to generate electricity in specific locations in the country. Shortly
afterwards the Niger Dam Authority (NDA) was later established to build and maintain dams; the River
Niger was used to generate hydroelectric power which was sold to the Electricity Generation Company
of Nigeria (EGCN) for distribution to consumers. In 1972 the ECN and NDA were merged together to
form the National Electrical Power Authority (NEPA). Investments in the Nigerian power sector were
limited between the years 1979 – 1999; this was due to a collapse in international oil prices, prolonged
military interventions in governance and chaotic democratic rule. This led to a fall in power generation
to a peak of about 1,750MW even though the nation had an installed capacity of 6,000MW. By 1999,
only 19 out of the country’s 79 available generating units were functioning. Unfortunately, majority of
Nigerians have no access to electricity and the supply to those provided is not regular.
Nigeria has an installed generation capacity of 8,644MW of which 6,905MW is government owned. Over
the past two decades, population has increased to 150 million, with an average GDP growth rate of
6.66% over the last 5 years. Within this period, power generation capacity has stagnated. These factors,
combined with inadequate maintenance of existing power generation stations, have given rise to severe
generation shortages (power, 2012).
Only recently did the immediate past Minister of Power, Prof. Bart Nnaji announced that Nigeria
attained a new level in power generation, for the first time in history generating 4,307.7 Megawatts,
plus 170MW which serves as spinning reserve, bringing the total quantum of power to 4,477.7MW
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(Toju, 2012), prior and subsequent to this Nigeria averages an average of 3,800 Megawatts, this is
obviously grossly inadequate to cater for a population of 150 million Nigerians.
It is estimated that 26,561MW will be required in the next 9 years to meet demand as envisioned in the
Vision 20: 2020 target
Nigeria has large bodies of water and abundant natural gas reserves; hence the bulk of electricity
generation comes from water and natural gas. Most of the country’s new power plants are thermal
stations i.e. powered by heating natural gas. Nigerian generating plants are currently fired by gas
(thermal) and water (hydro). The hydro generating plants are situated at Kainji, Jebba and Shiroro, while
the thermal plants are at Sapele and Ughelli. The facilities in many of Nigeria’s power plants are old (the
Kainji and Jebba plants were commissioned in 1968 and 1985 respectively), poorly maintained and
prone to frequent breakdowns. Power plants normally reserve some of their generating units as spare
capacity that can be used to replace units that require repair or maintenance; due to the insufficiency of
existing capacity , all available generating units in Nigeria are put into operation simultaneously.
Private power plants operated by Shell, Agip and AES produce 1, 100 of the 3, 300 to 3, 500 megawatts
that the Power Holding Company of Nigeria (PHCN) can currently distribute to Nigerians. The
independent power plants were initiated in 2005.
2.2 OVERVIEW OF POWER GENERATION
The Nigerian Power Generation sector can be detailed into the following sub-sectors:
(a) Existing Federal Government of Nigeria (FGN) Power Generation facilities.
(b) Independent Power Projects.
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Existing Govt. owned power stations-Hydro
S/N
1
Name of generation
Year of
company
construction
KAINJI/JEBBA
1968
Location
Kainji, Niger
Installed
Available
capacity(MW)
capacity(MW)
760
480
540
450
600
450
1900
1380
State
HYDROELECTRIC PLC –
Kainji Power Station
2
KAINJI/JEBBA
1985
Jebba, Niger
State
HYDROELECTRIC PLC –
Jebba Power Station
3
SHIRORO
HYDROELECTRIC PLC
1989
Shiroro, Niger
state,
Nigeria
Total
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Existing FGN Power Stations – Thermal
S/N
Name of generation
Year of
company
construction
1
EGBIN POWER PLC
1986
2
GEREGU POWER PLC
3
OMOTOSHO POWER PLC
Location
Installed
Available
capacity (MW)
power (MW)
Egbin, Lagos State
1320
1100
2007
Geregu, Kogi State
414
276
2007
Omotosho, Ondo
304
76
304
76
State.
4
OLORUNSOGO POWER
2008
PLC
Olorunsogo, Ogun
State
5
DELTA POWER PLC
1966
Ughelli, Delta State
900
300
6
SAPELE POWER PLC
1978
Sapele, Delta State
1020
90
7
AFAM(IV-V) POWER PLC
1963
Afam, Rivers State
726
60
8
CALABAR THERMAL
1934
Calabar, Cross
6.6
0
10
0
5004.6
1978
River
POWER STATION
State
9
OJI RIVER POWER STATION
1956
Oji River, Achi,
Enugu State
Total
The power unaccounted for in both tables above is contributed by the Independent Power Projects.
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2.3 Issues of power generation

Under-Investment
Since Independence, Nigeria's power sector has operated as a state monopoly, where only the
Federal Government invests in the generation, transmission and distribution of electricity. It has
also been responsible for the procurement, construction, operation and maintenance of all
power sector infrastructure and services required to support the sector. This centralization
could not supply adequate power to keep pace with economic and population growth.
There was severe underinvestment, equipment was poorly maintained and low salaries could
not attract new talents.

Stagnated Power Generation Growth.
Investments in the Nigerian power sector were limited between the years 1979 – 1999; this was
due to a collapse in international oil prices, prolonged military interventions in governance and
chaotic democratic rule. This led to a fall in power generation to a peak of about 1,750MW even
though the nation had an installed capacity of 6,000MW. By 1999, only 19 out of the country’s
79 available generating units were functioning. Since the inception of NEPA (now PHCN), the
authority expands annually in order to meet the ever-increasing demand of electrical power.
Unfortunately, majority of Nigerians have no access to electricity and the supply to those
provided is not regular.

Inadequate Operations and Maintenance
Nigeria's power sector has high energy losses (30 - 35 % from generation to billing), a low
collection rate (75 - 80 %) and low access to electricity by the population (36 %). There is
insufficient cash generation because of these inefficiencies and PHCN is consequently reliant on
fuel subsidies and funding of capital projects by the government.
At present only 10 % of rural households and 40 % of the country’s total population have access
to electricity.
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
Lack of Human Capacity development
The power sector in Nigeria has been unable to attract and retain young talents, this has led to
the decline in human and intellectual capital, and consequently the industry has suffered a brain
drain that has impeded its development.

Under utilization of natural resources (natural gas)
Nigeria holds the 7th largest natural gas reserves in the world, with 187 trillion cubic feet and a
further undiscovered potential of 600 trillion cubic feet of gas. It is an unfortunate fact that a
nation with such potential suffers a fate as that of Nigeria in terms of power generation.

Seasonal variance due to dependence on Hydro electricity
The Nigerian Electricity Regulatory Commission has said power generation drops by 300
megawatts after rainy seasons and this partly cancels the improvement in electricity supply
(OKPI, 2012)

Lack of Private sector involvement
The Nigerian power sector is sadly dominated by government monopoly, lack of proper
government policies and low electricity tariffs has made the sector unattractive to private
investors, and unfortunately the Government alone cannot cater for the huge power demands.
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3.0 The natural gas option
Natural gas is a mixture of hydrocarbons, the base of natural gas is methane (CH4), the simplest
hydrocarbon (organic compound consisting of carbon and hydrogen atoms). Normally, it also
includes heavier hydrocarbons – methane homologs – such as ethane (C2H6), propane (C3H8),
butane (C4H10), and some nonhydrocarbon admixtures. It results from the decomposition of
plant and animal materials over millions of years
Natural gas can exist in the form of gas fields in formations of some rocks in underground
reservoirs, as gas caps (above crude oil), and in dissolved or crystalline forms.
Nigeria Natural Gas Reserves
Nigeria holds the 7th largest natural gas reserves in the world, with 187 trillion cubic feet and a
further undiscovered potential of 600 trillion cubic feet of gas. Under the Nigeria Gas Master
Plan initiative, the Federal Government of Nigeria aims to leverage this resource base to meet
the aspired target of growing the economy at 10% under the Vision 20: 2020 program. The
Nigerian government has predicted a rise in domestic demand for natural gas to 5 billion
standard cubic feet a day by 2013 (Nigeria, 2012). Chart below shows Nigeria's position among
the world Natural gas reserves, and a summary of the Nigeria's Natural gas resources
respectively.
Source:( Dr. David Ige Ag. Managing Director Gas Aggregation Company Nigeria Limited (GACN)
2012 Gas to Power Status and Outlook)
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Statistics of Nigeria's Natural Gas Resource
Natural Gas Reserves
187 trillion cubic feet
Daily Production
3.5 billion cubic feet per day
Gas Flared
2.5 billion cubic feet per day
70% of gas produced daily is flared
Source: (Cyril Iyahasele (2011) Gas flaring reduction in Niger Delta: A case study of Shell
petroleum Development Company (SPDC))
3.1 Power generation using natural gas
Natural gas can be used to generate electricity in a number of ways:

Steam Generation units

Gas turbines unit/ Natural gas fired reciprocating unit (combustion engines)

Combine cycle units

Natural gas fuel Cell Units
3.1.1 Steam Generation units
This the most basic system use for electric generation. It consists of a steam generation unit,
where fossil fuels are burned in a boiler to heat water and produce steam that then turns a
turbine to generate electricity. These basic steam generation units have fairly low energy
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efficiency. Typically, only 33 to 35 percent of the thermal energy used to generate the steam is
converted into electrical energy in these types of units.
Figure 1, Schematic of a steam generating unit.
3.1.2 Gas turbine units
Gas turbines and combustion engines are also used to generate electricity. In these types of
units, instead of heating steam to turn a turbine, hot gases from burning fossil fuels (natural gas)
are used to turn the turbine and generate electricity. Gas turbine and combustion engine plants
are traditionally used primarily for peak-load demands, as it is possible to quickly and easily turn
them on. These plants have increased in popularity due to advances in technology and the
availability of natural gas. However, they are still traditionally slightly less efficient than large
steam-driven power plants.
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Reciprocating Engine System
3.1.3 Combine cycle units
Many of the new natural gas fired power plants are known as 'combined-cycle' units. In these
types of generating facilities, there is both a gas turbine and a steam unit, all in one. The gas
turbine operates in much the same way as a normal gas turbine, using the hot gases released
from burning natural gas to turn a turbine and generate electricity. In combined-cycle plants,
the waste heat from the gas-turbine process is directed toward generating steam, which is then
used to generate electricity much like a steam unit. Because of this efficient use of the heat
energy released from the natural gas, combined-cycle plants are much more efficient than
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steam units or gas turbines alone. In fact, combined-cycle plants can achieve thermal
efficiencies of up to 50 to 60 percent.
3.1.4 Natural Gas fuel cell Units (New technology).
Natural gas fuel cell technologies are in development for the generation of electricity. Fuel cells
are sophisticated devices that use hydrogen to generate electricity, much like a battery. No
emissions are involved in the generation of electricity from fuel cells, and natural gas, being a
hydrogen rich source of fuel, can be used. Although still under development, widespread use of
fuel cells could in the future significantly reduce the emissions associated with the generation of
electricity.
Figure 4, How a Fuel Cell Works
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Fuel cells powered by natural gas are an extremely exciting and promising new technology for
the clean and efficient generation of electricity. Fuel cells have the ability to generate electricity
using electrochemical reactions as opposed to combustion of fossil fuels to generate electricity.
Essentially, a fuel cell works by passing streams of fuel (usually hydrogen) and oxidants over
electrodes that are separated by an electrolyte. This produces a chemical reaction that
generates electricity without requiring the combustion of fuel, or the addition of heat as is
common in the traditional generation of electricity. When pure hydrogen is used as fuel, and
pure oxygen is used as the oxidant, the reaction that takes place within a fuel cell produces only
water, heat, and electricity. In practice, fuel cells result in very low emission of harmful
pollutants, and the generation of high-quality, reliable electricity. The use of natural gaspowered fuel cells has a number of benefits, including:

Clean Electricity - Fuel cells provide the cleanest method of producing electricity from fossil
fuels. While a pure hydrogen, pure oxygen fuel cell produces only water, electricity, and heat,
fuel cells in practice emit trace amounts of sulfur compounds and very low levels of carbon
dioxide. However, the carbon dioxide produced by fuel cell use is concentrated and can be
readily recaptured, as opposed to being emitted into the atmosphere.

Distributed Generation - Fuel cells can come in extremely compact sizes, allowing for their
placement wherever electricity is needed. This includes residential, commercial, industrial, and
even transportation settings.

Dependability - Fuel cells are completely enclosed units, with no moving parts or complicated
machinery. This translates into a dependable source of electricity, capable of operating for
thousands of hours. In addition, they are very quiet and safe sources of electricity. Fuel cells also
do not have electricity surges, meaning they can be used where a constant, dependable source
of electricity is needed.
Efficiency - Fuel cells convert the energy stored within fossil fuels into electricity much more
efficiently than traditional generation of electricity using combustion. This means that less fuel is
required to produce the same amount of electricity. The National Energy Technology Laboratory
estimates that, used in combination with natural gas turbines, fuel cell generation facilities can
be produced that will operate in the 1 to 20 Megawatt range at 70 percent efficiency, which is
much higher than the efficiencies that can be reached by traditional generation methods within
that output range.
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3.2 Advantages of using natural gas as source of electricity
Fewer Emissions - Combustion of natural gas, used in the generation of electricity, industrial
boilers, and other applications, emits lower levels of NOx, CO2, and particulate emissions, and
virtually no SO2 and mercury emissions. Natural gas can be used in place of, or in addition to,
other fossil fuels, including coal, oil, or petroleum coke, which emit significantly higher levels of
these pollutants.

Reduced Sludge – Coal-fired power plants and industrial boilers that use scrubbers to reduce
SO2 emissions levels generate thousands of tons of harmful sludge. Combustion of natural gas
emits extremely low levels of SO2, eliminating the need for scrubbers, and reducing the
amounts of sludge associated with power plants and industrial processes.

Reburning - This process involves injecting natural gas into coal or oil fired boilers. The addition
of natural gas to the fuel mix can result in NOx emission reductions of 50 to 70 percent, and SO2
emission reductions of 20 to 25 percent.

Cogeneration - The production and use of both heat and electricity can increase the energy
efficiency of electric generation systems and industrial boilers, which translates to the
combustion of less fuel and the emission of fewer pollutants. Natural gas is the preferred choice
for new cogeneration applications.

Combined Cycle Generation – Combined-cycle generation units generate electricity and capture
normally wasted heat energy, using it to generate more electricity. Like cogeneration
applications, this increases energy efficiency, uses less fuel, and thus produces fewer emissions.
Natural gas-fired combined-cycle generation units can be up to 60 percent energy efficient,
whereas coal and oil generation units are typically only 30 to 35 percent efficient.
Fuel Cells - Natural gas fuel cell technologies are in development for the generation of
electricity. Fuel cells are sophisticated devices that use hydrogen to generate electricity, much
like a battery. No emissions are involved in the generation of electricity from fuel cells, and
natural gas, being a hydrogen rich source of fuel, can be used. Although still under development,
widespread use of fuel cells could in the future significantly reduce the emissions associated
with the generation of electricity
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3.3 Challenges of using natural gas
Most critical challenges of the power generation using natural gas in Nigeria are:

Lack of sustained, sound and practicable relationship between the Federal Government and
other stakeholders particularly the Joint Venture (JV) international oil companies that produce
the gas and the Independent Power Producers (IPP).

Erratic supply of gas domestic resources for power generation

Inefficient investment in generation and distribution.

High capital intensive nature of gas power projects.

Regular Vandalism of Gas Power Installations, illegal power connections associated with low
level of surveillance and security on all electrical infrastructures has led to shortfalls in revenue
that could have been ploughed to improve electricity supply in Nigeria.

Inefficient and inadequate gas transmission networks leading to high transmission losses.

Poor utilization of existing assets and deferred maintenance.

Some sections outdated with equipments (i.e. Gas turbines with less than 30% efficiency), in
poor state and inadequate maintenance.

Delays in the implementation of new projects.

Poor technical staff recruitment, capacity building and training programme.

Dependence on imports of parts and foreign experts to effect repairs and overhauls.

Inefficient billing and metering system: low efficiency in billing and revenue collection by
distribution companies thereby discouraging investors.

Inappropriate tariff that would enable the utility to get adequate funds to maintain and expand
the infrastructure.

Inadequate commercial pricing is deterring gas producers from investing in the sector.

Inadequate power evacuation at newly completed and fictionalized power plants.

Lack of required modern technologies or communication and monitoring of the generation,
transmission and distribution infrastructures.

Preferred continuous gas flaring by the International Oil Companies (IOCs).

High prevalence of inadequate working tools, vehicles and spare-parts for operating and
maintaining the power system.
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Natural gas also emits carbon dioxide (CO2) to the environment, though the amount is roughly
half of Coal and about 30% less than Oil.
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4.0 Achieving the target
Power Generation gap of 26,561MW expected to be closed by 2020. Consequently, an annual
growth of approximately 3,000MW is required (power, 2012). This means that Nigeria needs to
acquire about its total current capacity every 365 days, a herculean task yet achievable. To make
this projection a reality natural gas is the most viable option.
4.1 Infrastructure/asset
Gas has become very important in the global energy market because of its efficiency in power
generation and must be profitably harnessed. Different kinds of infrastructure are necessary to
ensure proper exploitation of these natural resources, in its production, processing,
transportation and power generation. Natural gas assets, such as gathering systems, processing
plants, compression station, transmission pipelines, storage fields and gathering facility and
power generating plants are necessary to ensure generation of required power to meet the
need power consumption in Nigeria.
This will drastically reduce the large quantity of gas been flared due to lack of infrastructure and
effective transmission and distribution systems, thereby giving us value for the resources with
respect to power generation.
Aggressive infrastructure expansion and gas supply development initiatives is imperative
because some of the existing power plants are not operating at the optimum capacity due to
insufficient of gas supply to the plants. Several pipeline systems have to be constructed to
match up with power demands of the good citizens of Nigeria. The existing pipeline systems
including Escravos-Lagos Pipeline System (which is the major pipeline linking South-West to
South-South) do not have enough capacity to satisfy gas supply to generate power for the
masses hence the need to construct more pipelines to the different parts of the country where
old and new power plants are situated.
4.2 Role of NNPC
NNPC should encourage the multinational oil companies (JVs and PSCs) in Nigeria to embark on
IPPs. The IPPs will not only boost electricity supply but also, provide necessary infrastructural
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support for economic growth, and also guarantee additional revenue to the participating JV/PSC
companies. The IPPs will further strengthen the oil companies’ social responsibility in the local
economy as well as protect the environment through environmentally sustainable operations
and industry best practices. Gas utilization in power generation will strongly support and
broaden economic expansion and urbanization, increase the income generating capacity of
Nigerian and lift the general wellbeing.
NNPC in collaboration with the oil majors has commenced construction another pipeline system
in order to double the capacity of the ELPS and other pipeline networks are to be expanded and
extended to the East and North through the following: Obiafu/Obrikom- Oben (OB 3) Gas
Pipeline, Calabar – Ajaokuta Gas Pipeline (CAP), Ajaokuta – Kaduna - Kano (AKK) transmission
lines, Ajaokuta – Gboko Gas Pipeline, Ibafo – Ibadan – Ilorin Gas Pipeline and QIT – Eket –
Calabar Gas Pipeline.
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