NIGERIA: MINISTER TAKES ACTION ON GAS FLARING

UNCLAS SECTION 01 OF 02 ABUJA 001328 SENSITIVE SIPDIS DEPT PASS AID AFR/SD FOR CURTIS, ATWOOD AND SCHLAGENHAUF DEPT PASS TO USTDA-PAUL MARIN, EXIM-JRICHTER DEPT PASS TO USTR-AGAMA JOHANNESBURG FOR NAGY DEPT OF ENERGY FOR PERSON TREASURY FOR PETERS, SOLOMON AND RITTERHOFF DEPT PASS TO USAID/AFR FOR ATWOOD AND SCHLAGENHAUF-EGAT/I&E/E USDA/FAS/OTP FOR MCKENZIE DEPT FOR OES/EGC FOR WMOORE AND FOR EEB/ESC/IEC/ENR DHENRY DOC FOR 3317/ITA/OA/BURRESS, 3130/USFC/OIO/ANESA/HARRIS E.O. 12958: N/A TAGS: EPET ENRG ECON SENV EIND EINV TRGY TPHY NI SUBJECT: NIGERIA: MINISTER TAKES ACTION ON GAS FLARING REF: A. ABUJA 1209 ¶B. ABUJA 1096 ABUJA 00001328 001.2 OF 002 SENSITIVE BUT UNCLASSIFIED; BUSINESS PROPRIETARY INFORMATION; NOT FOR DISSEMINATION OUTSIDE USG ¶1. (SBU) Summary: Minister of Petroleum Resources, Dr. Rilwanu Lukman is seriously discussing the installation and promotion of a Gas to Liquid (GTL) process developed and patented by Synfuels International in cooperation with Texas A&M University. Lukman would like to purchase the equipment and install a pilot plant to be sure that this new U.S. technology performs as reported. According to the information presented at the Ministry, the cost to purchase and erect this American technology plant is scalable by size; the presentation attended by EconOff at the Ministry on July 14 suggested project costs at approximately $250 million (reftel A). The liquid gas or alternately ethylene, produced through the process, can be sold directly to suppliers or used right at the plant location in an industrial activity, which if planned properly could lead to the creation of sustainable economic growth, reduce poverty, and build healthy communities (reftel B). It seems natural for the USG to embrace this opportunity to develop a study to bring a planned and sustainable economic outreach to the Niger Delta and also encourage more purchases of U.S. products and services. End Summary. NEW U.S. TECHNOLOGY TO SOLVE NIGERIA'S GAS FLARING -------------- -------------- ¶2. (SBU) EconOff attended a GTL presentation at the Ministry of Petroleum Resources on July 14 where the Minister of Petroleum Resources Dr. Rilwanu Lukman and Dr. Emmanuel Egbogah, Special Adviser to the President on Petroleum Matters, attended part of the meeting. Lukman is seriously discussing the installation of a new GTL process patented by Synfuels International, which was developed in cooperation with Texas A&M University. Lukman would like to purchase and install a pilot plant in Nigeria's Delta region to test how this new U.S. technology performs. The cost to purchase and install this American technology is scalable by size and costs at approximately $250 million, according to information provided at the presentation (reftel A). The main purpose of the plant is to process gas now being flared and turn it into either a liquid fuel such as 95 octane grade gasoline, diesel, or jet fuel, or alternatively, the process could produce ethylene, a chemical compound that can be used to produce plastic and other products. The process provides its own power source, with excess electricity for use in a manufacturing process or for light and power to a nearby community. The by-product of the GTL process is potable distilled water generated at a rate of about 60 gallons per minute. A BOOST FOR A NEW & SUSTAINABLE WAY OF LIFE IN THE DELTA -------------- -------------- ¶3. (SBU) The pilot project for the GTL technology offers an opportunity to six southern Delta states, referred to simply as the south-south region, i.e. Bayelsa, Rivers, Akwa Ibom, Cross River, Edo, and Delta States. The region is a low-lying land of innumerable creeks, waterways and mangrove swamps which stretch for over three hundred miles and is blessed with a variety of natural resources including abundant low sulfur oil and natural gas. The region continues to suffer a severe lack of basic social and economic infrastructure and widespread poverty and unemployment that contribute to social and political frustration. The GTL plant offers a way to convert a global pollution problem, gas flaring, to an investment in physical and human capital such as engineering, fabrication/manufacturing, logistics and training, which will lead to the creation of sustainable regional wealth, reduce poverty, and build healthier communities. ¶4. (SBU) The idea of a cluster development approach in deploying the GTL technology within the communities of the Delta has been discussed, but does not have a sponsor to spur it forward (reftel B). Technical support from the USG toward building the GTL plant ABUJA 00001328 002.2 OF 002 will pay off in the long run as the GON and various Delta states would be convinced of the value of the technology to address environmental degradation as well as spur economic growth; also sponsoring a study, a blueprint guide specific to the selected site for the GTL plant. Harvard University Professor Michael Porter defines a business cluster as a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. A cluster study for an identified location in the Delta would also take into account job creation, training, prefab or modular buildings, sanitation, utilities, suggested policy to guide controlled development and reduce environmental pollution, and avoid shanty town type outgrowth as experienced in Lagos. ¶5. (SBU) Comment: The problems of the Delta are well known; they play themselves out in the international press in stories of local criminals who either directly steal oil in a "bunkering" process or alternatively decide to blow up oil and gas infrastructure pipelines and facilities. The residents of the Delta states are surrounded by escalating pollution as a result of these criminal activities and become ever more impoverished. Engaging civil society, and promoting education and business development can be accomplished as a side benefit of the reduction of gas flaring and development of gas-for-power and gas-to-liquids. Other GTL activities include Chevron and ExxonMobil. Chevron is building a large GTL facility in Escravos, which will produce diesel at about 300 million standard cubic foot day. Exxon signed a memorandum of agreement with the Nigerian National Petroleum Corporation in June 2008 to study building a GTL plant producing gasoline. The Synfuels technology allows processing at the well head where the community can benefit. It seems natural for the USG to embrace this opportunity to bring economic outreach and development to the Delta and also encourage purchases of U.S. products and services. Time is critical. End Comment. ¶6. (U) This cable was coordinated with Consulate Lagos. SANDERS