Modular refineries as way forward for Nigeria

With plunging crude prices, there is need to think differently, try something different, otherwise we will continue to obtain the same results as before.  It is, therefore, time to explore and test the idea of modular refineries at strategic locations of the country, to increase internally generated revenue and reduce fuel scarcity.

Nigeria has a name plate refining capacity of 445,000 BOPD and produced only 95,300 BOPD of products in 2012, and has for years been heavily dependent on imports from outside, specifically Europe.   

The idea of modular refineries will diversify our economy, with security implications. It is a known fact that refining is a mature technology; it is governed by Standards and Specifications; it is a process of heating, evaporation, cooling, and condensation.  Heats of reaction are thermodynamically endothermic or exothermic.  Catalysts are required for acceleration of reactions; modular mini-refineries can provide a flexible and cost-effective supply option for crude oil producers in remote regions.

A Modular Refinery will help the country to support and improve the operations of existing refineries; save foreign exchange in such services currently done abroad; contribute to the Nigerian Content programme of the Federal Government; contribute to research and development in the downstream sector; contribute to human capital development in the oil and gas sector.

All these could be achieved through a deliberate strategy to build, operate, commission a modular refinery in Nigeria, to train, grow the refining and petrochemicals industry as the sure path to diversifying the country’s revenue stream, and growth in other sectors.

Modular refineries can particularly be useful where there is a need to adapt rapidly to meet local demand and they have relatively low capital cost, with speed and ease of construction being key advantages.

With modular refineries, you can produce unit modules from 4,000 bpd up to 30,000 bpd primary distillation capacity.   More could be added together with debottlenecking to create a refinery of 100,000 bpd or more, should demand dictate.

Modular/pilot plants provide a middle stage data and process conditions between engineering software predictive evaluation and the implementation in a commercial plant. It is this vacuum that is to be filled by modular/pilot initiative, which is designed to acquire and install pilot plants to provide full support for the refineries.

Pilot/Modular plants are used for developing concepts, research, demonstration, testing of process and products. Pre-built modular process plants may be appropriate to replace or augment existing facilities where space is an important consideration. Scale-up and process development at a larger-than-pilot scale, requires process and product demonstration plants. Skid-mounted and modular, demonstration plants can generate significant quantities of product for market testing, and are often used together with pilot plants to support the ongoing operation and optimization of commercial-scale units.

Considering the varied processes, technologies and systems, flexible and modular pilot plants will be appropriate. For less complex and lower capacities, pilot/modular plants design allows the operators flexibility and other applications to existing configurations; but for higher capacities and complexities it may not make economic sense. Flexibility in process flowsheet configuration for pilot plants, especially for small capacities and less complex units allows for opportunities to study and accommodate varied process configurations. These can enable the operators to adapt various flowsheet and process conditions to match the desired flow directions and plant configurations.

The scope will usually focus on the following three areas; Feedstock (crude oil) preparation – atmospheric and vacuum distillation (Crude distillation unit (CDU) and Vacuum distillation unit (VDU)); Catalytic conversion (Catalytic reforming unit (CRU), Hydrotreating units for naphtha and kerosene); Products refining/purification (Fluid catalytic cracking – FCC). These process units are at the centre of refining in terms of quantity and quality of light to heavy distillate fractions. Targeting to improve these plants will impact remarkably on the overall performance of the refineries.

With a modular refinery, equipment parts and maintenance issues can easily be identified, addressed, and studied well ahead of arrival of contractors for TAM. NNPC cannot shut down a big refinery system, but modular refinery can, providing and incorporating results obtained ahead of TAM, thereby saving enormous costs to the country.

With a modular refinery  test, cost savings in expensive catalysts suitability for a specific crude is defined. Feedstock measurements with modular refinery  within Nigeria. Modular refinery can be adapted to respond to Program requirements. Modular refinery is the basis for developing all commercial technologies. Products from modular refinery could be sold to 36 states of Nigeria.

Modular refinery solves wide varieties of fuel-formulation challenges. With  modular refinery,  progress in scientific knowledge is advanced. No more outsourcing, but tests are conducted within Nigeria. With catalysts evaluation and feedstock performance measurements, modular refinery adapts and responds to R&D program requirements. Modular refinery  will enhance development and profitability to NNPC refinery operations, and training critical manpower for NCDMB (Nigerian Content Development & Monitoring Board) .

Critical scientific knowledge and commercial success are products of using a modular refinery. Expertise gained will enable training and imparting knowledge to our talented student groups Modular refinery  will enable collection of experts with different capabilities – Process Engineering, Chemistry, Mechanical, etc. needed for near future. Modular refinery will be monitored by distributed control system network

With Local Content Law, and passage of PIB, modular refineries will enhance institutional capability, gain full insight, and fill the gap in training indigenous capacity in process and equipment designs, fabrication, installation, and operation of gas, refining, and petrochemical plants.

The “Owner of a Modular Refinery” will utilize two principal readily available crude oil (38 billion proven oil reserves) and natural gas (260 tcf), leading to more job creation as a means of poverty alleviation, with savings in foreign exchange in line with the Federal Government’s Vision 20:2020.

Modular refinery bothers on national economy and security. Each unit in oil and gas processing is a career employment opportunity because each step is a manufacturing process, waiting for us.

Other resource countries have diversified into petrochemicals, with amazing results. The Government should, therefore, set up a guiding Policy Document (Law) to enable entrepreneurs to develop the country.  We can train and turn the “illegal refineries” to “legal refineries”. The “illegals” already have the necessary raw production skills.  We just need to provide guidance and training (www.cgrpng.org). The knowledge gap in distillation processes will be provided on appropriate standards, codes, specifications, and catalysis.  This will in turn stop environmental pollution and degradation because all the refining fractions currently poured in rivers (depriving us of safe and reliable drinking water), will be fully utilized in some other process plants.  Stopping pollution is very important, because having money is no guarantee of good health. By providing jobs and reducing unemployment, the Federal Government and 36 other states will then have enough money to fund various projects.

As more countries are discovering oil, our exports will begin to drop at some stage. In addition, with climate change, development of alternative fuels, that is bad news for crude oil producers. Our case is even worsening because of frequent production outages and unprecedented oil theft, despite the billion-naira contracts awarded to militants to safeguard the pipelines.

The world’s biggest consumer of crude, the US, has now found a formidable alternative in shale oil.  So, the demand for our oil has fallen and will only continue to fall. The new reality is that crude oil is no longer a monopoly.  As demand falls, the price will fall. As the price falls, production will fall. Many oil fields will become unprofitable to operate. They are likely to close down. In this event, the naira would crash. A fall in foreign exchange inflow will hurt us since we are import-dependent. If we deplete our external reserves to protect the naira, it would impact negatively on the general prices of goods and services, hence, less money to build infrastructure, less money for government overheads, leading to retrenchment and salary cuts. Money to fund fuel subsidy and petrol price will increase and as petrol price goes up, mass unrest will ensue as cost of living rises.

Therefore, to provide employment, we have to turn the ‘illegal refineries’ into “legal refineries”.  To make this to happen, we need to design a strategy and policy to set up an energy bank to provide financing, taxable at low interest rate.  Sell crude oil to them at subsidized price.  If you legalize, then you stop bunkering because it becomes unprofitable for their sponsors.  They will become proud “owners” of a business, and kerosene, petrol (gasoline), diesel, will be everywhere, satisfying the demand in the country. 

The issue here in Nigeria is clear; prioritize and test the idea of modular refineries; set up a Refining and Petrochemicals Authority to have a focal point, and let illegal refineries become “legal artisanary refineries” by training them.  It is sound reasoning.  It is practicable.  It is demonstratively a true paradigm shift for the good.

The good news here is that for the first time in sub-saharan Africa, we are glad to report that we have just been given the green light by a major forward looking Nigerian Energy Corporation,  to procure a modular/pilot plant to use in research and development planning strategies, teaching, and hands-on training of, future Nigerian Gas, Refining, and Petrochemicals Engineers, at the University of Port Harcourt, and we have produced our first batch of engineers (www.cgrpng.org).  We expect the Federal and State Governments to use these new, highly trained manpower, to develop our energy infrastructures/industries.

GODWIN IGWE

Godwin Igwe (www.profigwe.com) is Professor and Director, Centre for Gas, Refining & Petrochemicals, Institute of Petroleum Studies, University of Port Harcourt.  He is a World Bank McNamara Scholar.  He is also a Fellow of the American Institute of Chemical Engineers, and Fellow, Nigerian Society of Chemical Engineers.