The gas-to-liquids (GTL) plant being constructed in the Escravos area, located in southern Niger Delta about 100 km (62 miles) southeast of Lagos, in partnership with Chevron Nigeria Limited (CNL) and South Africa’s energy company, Sasol, is running behind schedule. The Escravos GTL (EGTL) plant was to have been completed by late 2008, with the plant becoming fully operational soon after, but now CNL says the plant is expected to begin production in 2013.

Nigeria’s first major attempt to monetize its gas reserves – estimated in excess of 180 Tcf.

Nigeria, is already earning US $2 billion yearly from its NLNG project, the company’s management said in a release. Revenue accruing from the EGTL project would be an addition to this – both incomes from the country’s natural gas, a lot of which is being flared in the Niger Delta, the country’s main oil-producing region.

A pre-feasibility study of EGTL started in April 1998 followed by an engineering and feasibility study to confirm the design configuration and economics. The front-end engineering and design (FEED) was completed in 2002. Agreement between Sasol, Chevron Corp., and the Nigerian National Petroleum Corporation (NNPC) were signed while the environmental and economic assessments were completed and site preparations began early in 2002.

In April 2005 the NNPC and Chevron awarded the construction contract of the EGTL to a consortium of GGC of Japan, KBR (Kellogg, Brown, and Root), and Snamprogetti, a subsidiary of ENI. The NNPC said the joint venture will also construct a mini-refinery in the Niger Delta to be used for fuelling boats, fixed-wing aircraft, drilling rigs, and onshore/offshore facilities.

According to the partners, the EGTL is expected to convert more than 325 MMcf/d of natural gas to 33,000 b/d of GTL diesel; GTL naphtha, which is a feed stock used in plastics manufacturing; and LPG. CNL describes GTL diesel as “clean-burning, low-sulfur diesel fuel for cars and trucks,” and is expected to be marketed in Europe and around the world. Also, there is plan to expand the EGTL capacity to 120,000 b/d capacity within 10 years.

The NNPC said the EGTL plant would use the Slurry Phase Distillate (SPD) process, a registered technology package owned by Sasol, which is based in Johannesburg.

CNL and NNPC have equity of 75% and 15% respectively in the EGTL while Sasol has 10%.

Chevron’s Escravos Gas Project Phase 3 (EGP3) is expected to process 400 MMcf/d of natural gas out of which the more than 325 MMcf/d of the natural gas will be used as feedstock for the EGTL that is near the EGP3 project. The company is expected to expand the EGP3 project scheduled for completion in 2013.

The EGTL project was initially to cost $1.7 billion, which in fact, generated a big controversy in Nigeria compelling its government to put the project “on hold” in 2005 because the government thought its cost put forward by the contractors was too high. The Nigerian Senate also made the same complaint of high cost. But the EGTL cost has since gone higher according to several media reports.

A Reuters report in February 2011 said Chevron expected the EGTL project to cost $8.4 billion or $2.5 billion more than its last estimate of $5.9 billion in 2010.

An expert in oil and gas in Lagos, Nigeria, said the higher cost of EGTL could be due to the rising costs of construction of similar projects in the oil and gas sector around the world and noted that the project had been beset by other problems such as insecurity and youth restiveness in the volatile Niger Delta, frequent strikes by the workers over salary negotiations, and other demands and disagreements between CNL and the project’s host communities.

In spite of these problems, the NNPC said the EGTL project has immense benefits for Nigeria and its people.

The corporation in a release said the EGTL is an initiative that is squarely in line with the priority goal of the federal government of Nigeria for putting a stop to gas flaring, will provide many jobs and training for Nigerians in new skill and technologies, and is an investment that will bring a cutting edge energy technology to Nigeria and make it one of the leading countries in the global GTL industry.

It added that the EGTL’s use of gas to produce high-performance energy products with lower environmental impacts will help towards creating a cleaner environment while at the same time, delivering a high-value diversification option for the monetization of Nigeria’s huge gas resources.

And to support the job provision and training aspects, Sasol and Chevron have sent 200 Nigerians to South Africa on a 26-month training course at Sasol’s plants in Secunda and Sasolburg.

It is hoped that the EGTL will finally come on stream next year barring other difficulties so that Nigeria will join countries such as Qatar, Malaysia, and South Africa that run GTL plants commercially.

Sasol last month announced it would build the first commercial plant to convert natural gas to diesel and other liquid fuels in the US. The plant is to be based in Louisiana and is to produce 96,000 b/d of fuel using its GTL technology, the company said.

Obafemi Oredein, Special to E&P