Problem Statement
The riverine communities of Nigeria’s Niger Delta contribute a large percentage of Nigeria’s oil and gas. Up till date a great majority are without electricity; whereas the oil facilities glow with lightings in their midst. As a panacea to this age long neglect, the government has mandated oil companies to utilize fared gas in generating power to these communities to improve infrastructure.
In compliance with the government steer on utilization of flared gas to power, the need for a workable option is now sort in advicing the operators of the oil/gas production around these communities.
Root Cause Analysis
Agitation by communities through blockage of supplies and frequent shutting down of facilities;
Militancy resulting in low production and damage to facilities.
Poor rural infrastructure.
Environmental degradation.
Stoppage of gas flaring.
High unemployment rate.
Huge amount spent annually on diesel for generators in community ($8m Opex).
Alternatives:
Alternative A: Power generated with Gas Turbine Generators at operator production facility and power transmitted via submarine cable to Communities.
Alternative B: Power generated with Gas turbine Generators at operator facility and power transmitted via overhead transmission.
Alternative C: Gas Turbine Generators located in community, gas transmitted via pipeline from operator facility and power evacuated through substation only.
Analysis of Alternatives
Alternative A: This requires the installation of 2no x 2.5MW gas turbines (GT) at operator facility and laying of 20km 33KV submarine cable from the generating facility to the community.
CAPEX Costs
Right of way acquisition for additional 5km canals - $0.5m
Environmental Impact Assessment - $0.6M
Engineering and Design
Hydrographic survey - $0.5m
Subsea Survey Works - $1M
FEED and Detailed Design - $1.1M
Procurement
Cost of Turbines - $6M
Cost of submarine cable - $12M
Construction
Installation of Turbines - $3M
River dredging and construction of canals to allow vessel navigation - $8m
Submarine Cable installation - $15M
Brownfield works at Facility (to allow gas processing and intake) - $3.1M
Project Management Contractor - $1.1M
Owners Cost - $1M
Contingencies - $4M
Total Project Cost - $57.4M
Schedule
Duration – 18 Months
Annual OPEX Costs
$1.8M
MERITS
Short duration for execution.
Lesser impact on environment.
Maintenance and operation of GT Turbine by Operator.
GT Turbine in relatively secure location.
Lesser persons involved in construction.
Cable burial by subsea burial tool.
Cable stringing and tensioning by cable-lay vessel.
No surveillance on line
No periodic maintenance on line
Cable not exposed for easy theft
Low security cost during construction
DEMERITS
High cost of cable
High cost of execution.
Lay-vessel not available in-country.
Cable to be wholly imported.
Execution of cable-lay largely by imported expertise.
Cable susceptible to damage through dredging, fishing, anchoring by vessels and drop objects.
Lack of technology transfer to locals through engineering, procurement and construction.
Expensive cost of repair when cable is damaged.
Repair of damaged portion takes a long time; requires deployment of repair vessel from outside country.
Difficulty in navigation by lay-vessel and route is not an open river.
Stringent approval process by regulatory authorities.
Alternative B: This requires the installation of 2no x 2.5MW gas turbines (GT) at operator facility and installation of 10km 33KV overhead transmission system from the generating facility to the community.
CAPEX Costs
Right of way acquisition for overhead transmission (10Km) - $0.1m
Environmental Impact Assessment - $0.45M
Engineering and Design
Route Survey - $0.3M
Geotechnical works - $0.2M
FEED and Detailed Design – $1.2M
Procurement
Cost of Turbines - $6M
Cost of Overhead line cables - $0.2M
Construction
Installation of Turbines - $3M
Pylons construction (pylon procurement, fabrication and installation including foundations) – $23M
Brownfield works at Facility (to allow gas processing and intake) - $0.9M
Project Management Contractor - $1.4M
Owners Cost - $1M
Contingencies - $0.9M
Total Project Cost - $38.3M
Schedule
Duration – 12 Months
Annual OPEX Costs
$2.7M
MERITS
Low cost of cable
Cable manufactured in-country
Shorter duration for execution.
Maintenance and operation of GT Turbine by Operator.
GT Turbine in relatively secure location.
100% Local capacity in transmission engineering, procurement and construction
Fault easily detected
Low cost of repair on line.
Repair works done over a short duration
Low contingency
Easy approval process by regulatory authorities
Line not easily susceptible to damage.
DEMERITS
Involves large workforce and high safety exposure
Tower erection time consuming
Cable stringing done manually.
Cumbersome stringing/pylons construction process along mangrove route.
Frequent surveillance along route
Periodic maintenance
High rate of cable theft resulting in power interruption
High cost of security during construction
High environmental impact during construction
Alternative C: This requires the installation of 2no x 2.5MW gas turbines (GT) in the community and laying of 5km gas pipeline operator gas manifold to the community.
CAPEX Costs
Right of way acquisition not required – on existing right of way
Environmental Impact Assessment - $1.5M
Engineering and Design
Route survey – $0.4M
FEED and Detailed Design – $1.56M
Procurement
Cost of Turbines - $6M
Linepipes/fittings - $3.5M
Linepipes coating - $0.4M
Construction
Installation of Turbines - $3M
Pipeline construction – $1.2M
Site preparation works/sand filling at community - $11M
Gas processing Facility at community - $3.3M
Project Management Contractor - $1.4M
Owners Cost - $1M
Contingencies - $3.5M
Total Project Cost - $41.5M
Schedule
Duration – 9 Months
Annual OPEX Costs
$4M
MERITS
No power transmission from operator facility
Shorter duration for execution.
100 % Local capacity in engineering and construction
Fault easily detected
Low cost of repair on line.
Repair works done over a short duration
DEMERITS
100% procurement of linepipes out of country, in-country mill capacity overburdened.
Involves large workforce and high safety exposure
GT Turbine and gas processing facility security not under operator control.
A no-pass by regulatory authority – Gas line/facility in community
Frequent surveillance along route
Maintenance and operation of Turbine by community
Periodic maintenance
High rate of vandalism resulting in power interruption and operator facility shutdown
High cost of security during and after construction
High environmental impact during and after construction
SELECTION CRITERIA
Value Drivers – Opex <$2M, Low environmental impact (during and after construction), speedy approval by regulatory authority, duration not exceeding 15months, utilization of local content through EPC, lesser interface between operator facility and community, Capex < $50M, low security exposure and low repairs cost
Using Grid Analysis
| GRID ANALYSIS (UNWEIGHTED) | |||||||||||||
| Alternatives | Drivers | | |||||||||||
| OPEX < $2M | CAPEX < $50M | LOCAL CONTENT | ENVIRONMENT IMPACT | APPR BY REGULATOR | PRJ DURATION > 15MTH | REPAIR COST | GEN SETS AND PROCESS FACILITY EXPOSURE | SECURITY EXPOSURE | |||||
| A | 5 | 1 | 1 | 5 | 1 | 1 | 1 | 5 | 5 | ||||
| B | 3 | 3 | 5 | 3 | 5 | 3 | 5 | 5 | 3 | ||||
| C | 1 | 3 | 3 | 1 | 3 | 5 | 3 | 1 | 1 | ||||
| LEGEND | |||||||||||||
| High impact | 1 | ||||||||||||
| medium impact | 3 | ||||||||||||
| Low impact | 5 | ||||||||||||
| GRID ANALYSIS (WEIGHTED) | |||||||||||||
| Alternatives | Value Drivers | ||||||||||||
| OPEX < $2M | CAPEX < $50M | LOCAL CONTENT | ENVIRONMENT IMPACT | APPR BY REGULATOR | PRJ DURATION > 15MTH | REPAIR COST | GEN SETS AND PROCESS FACILITY EXPOSURE | SECURITY EXPOSURE | Total | ||||
| Weighting | 4 | 4 | 5 | 3 | 5 | 4 | 4 | 4 | 3 | ||||
| A | 20 | 4 | 5 | 15 | 5 | 4 | 4 | 20 | 15 | 92 | |||
| B | 12 | 12 | 25 | 9 | 25 | 12 | 20 | 20 | 9 | 144 | |||
| C | 4 | 12 | 15 | 3 | 15 | 20 | 12 | 4 | 3 | 88 | |||
| LEGEND - Magnitude of importance | |||||||||||||
| High | 5 | ||||||||||||
| medium | 3 | ||||||||||||
| Low | 1 | ||||||||||||
Selection of Alternative
Based on the value drivers listed and grid analysis above. Alternative B ranked highest in score therefore is the recommended alternative.
Recommendation
Environmental impact assessment is done to ascertain level of effect and mitigation carried out.
Engage community to partner on surveillance of line to increase security.
Drive opex down by handing over transmission line to public electricity authority.
Stakeholders engaged on time to carry everyone along and deter unnecessary show stoppers.
References:
The memory jogger 2 ‘Tool for continuous improvement and effective planning by Michael Brassard and Diane Ritter – Second Edition 2010.
http://www.mindtools.com/pages/article/newTED_03.htm
http://www.mindtools.com/pages/article/newTMC_80.htm
http://www.contactenergy.co.nz/web/pdf/our_projects/waikatowindfarm/june2008/R02_HMR_Transmission_System_Consideration_of_Alternative_Appendix8.pdf
Much better, Idubamo!!! The only part keeping you from earning a WOW!!! was Step 7..... You totally missed explaining to us how you plan on monitoring and controlling the project..... Or the PRODUCT of the project....
ReplyDeleteAnd when you get your Engineering Economy, you will see additional, more sophisticated methods in Chapter 14..... But plenty of time to learn how to use those tools and techniques in the coming weeks.
In the meantime, you are definitely on the right track and your level of sophistication in understanding and applying the tools and techniques is getting noticeably better...... So carry one and looking forward to another sophisticated presentation next week!!
BR,
Dr. PDG, Jakarta