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Sound planning, partnerships critical for success of Africa’s gas-to-power initiatives

4th November 2016

By: Creamer Media Reporter

  

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By: Webb Meko

Africa is home to one of the greatest future energy sources – gas. Continuous exploration and talks, combined with gas’s low carbon make-up, have paved the way for a potentially powerful emerging gas-to-power market.

However, bringing gas-to-power facilities on line involves a complex process of planning – focusing on fuel supply and site reviews, technology assessments and the development of supporting supply infrastructure – followed by detailed design and procurement, as well as the construction of separately packaged or integrated gas-to-power facilities.

These and other critical elements can take years to complete, even under optimal conditions. Given rising demand for new, lower- emissions energy, the time to begin planning for Africa’s gas-to-power future is now.

Proactive and accurate planning will help project sponsors establish early market positions, with the prospect of bringing reliable energy to 600-million people and businesses across the continent and providing gas for both local use and export, ultimately establishing a thriving domestic gas sector, thus driving economic progress and creating jobs.

It is vital that careful planning is championed, particularly in locations such as South Africa, Mozambique, Ghana, Tanzania, Kenya and elsewhere, where early gas-to-power facilities are earmarked for completion as the 2020 ratification deadline for the Paris Agreement on climate change approaches.

Africa’s electricity generation is expected to quadruple by 2040, and gas-to-power projects could grow by up to 25%, with a strong push in West, East and Southern Africa.

Already identified as part of South Africa’s diversified energy mix, gas-to-power is especially favourable, considering the continent’s need for an additional 250 GW of power generation capacity by 2030.

South Africa’s Department of Energy (DoE) estimates that gas industry development would boost gross domestic product (GDP) growth in the medium to longer term and create employment for about 1.25-million people over a 25-year period.

The recent DoE announcement that 2 000 MW of generation from imported liquefied natural gas (LNG) would take place at the Richards Bay and Coega industrial development zones – and that project management bidding would start soon – have inspired renewed confidence in South Africa’s gas-to-power build programme.

But which comes first as a kick-starter to bring this opportunity to fruition – infrastructure or economic growth?

Although the end of the commodities supercycle and lowered global economic growth projections have tempered capital investment, continued project development and planning to facilitate gas-to-power gene- ration is the prudent path to meeting Africa’s demand for power.

It also sets the stage for the country to diversify its power portfolio in order to have a more balanced mix of complementary generation sources.

Additionally, economic studies indicate that investments in power infrastructure and greater energy capacity correlate directly with higher levels of economic growth.

Turning up the Heat
Creating a thriving gas-to-power industry requires a strong infrastructure foundation that can have immediate and long-term GDP impacts.

Gas-to-power infrastructure includes heavy drilling operations, pipelines, storage, roads, towns and more.

Costs may seem prohibitive – and are amplified by financial concerns, policy and regulation, political will, favourable agreements, adequate skills, adequate investment returns and ultimate buy-in from host country citizens and groups.

Yet, the benefits are undeniable – a secure and competitive fuel supply is also an impera- tive – and can only be achieved through dedicated and collaborative buy-in. Global strategic partnerships bring the best industry players together and their respective strengths to the table. In addition, developing the necessary infrastructure will enable thousands of workers to develop new, high-value skills that will improve the productive capacity of a well-versed gas-to-power workforce of the future for generations to come.

This is particularly important in a country such as South Africa, where future demand for electricity – both internally and in Southern African Power Pool member countries – could surpass energy infrastructure build, creating a market for lower-cost imported gas and LNG.

Given access to the existing Mozambique reserves and the requirement to deliver on the Integrated Resource Plan 2030, tapping natural gas provides a logical win-win solution.

While pipelines provide a means of high- volume cross-border LNG transport, a typical terminal also needs other primary systems, such as ocean access, storage and transport tankers, besides others.

Each of these factors has a unique role in vapourisation, which converts gas for reuse and sale readiness. In addition, LNG terminals also require supporting facilities as well as control and safety systems to ensure safe and reliable gas supply.

African nations are also showing interest in smaller-scale LNG facilities, particularly floating LNG (FLNG) production facilities. Offshore FLNG has many benefits for this region, including cost competitiveness, shorter schedules or faster commercial operation, access to multiple financing options, controlled shipyard construction with available skilled labour resources and flexible solutions for shallow or deep water. Moreover, producers can monetise small, stranded gasfields, alternate in building fixed assets gradually, and redeploy gas to the most attractive import markets in Africa and elsewhere.

Be it land-based LNG power schemes or FLNG power infrastructure, sound project plans and complex project execution acumen are needed if the full potential of gas-to-power is to be realised. Expertise must be applied by industry providers who understand the benefits of LNG and power integration.

Importance of Gas-to-Power: Mozambique
Despite economic headwinds, investment scrutiny and pockets of unrest, Mozambique remains a frontrunner in the race to gas development, given the progress in the country’s gas-to-power initiative. Government and private-sector support has resulted in continued upstream development and confirmation of the construction of a R2.7-billion natural gas pipeline for the Republic of Mozambique Pipeline Company’s Loop Line project, with the second loop line expected to increase the pipeline’s capacity from 169-billion to 191-billion standard cubic feet a year.

This project will supply South Africa, support regional integration and become a milestone for intra-continental gas supply. The pipeline will prove to be especially beneficial in the long term to the economy of Mozambique, where electricity demand is expected to grow significantly over time.

Taking Gas-to-Power Forward
Africa has the potential to solve its energy challenges by tapping its significant gas reserves, thus providing citizens with much-needed access to power, improving air quality and developing new skills. Additionally, economic growth could stem from gas-rich African countries becoming dominant players in the global gas industry.

That said, critical policy, funding and technical challenges must be addressed to advance this sector and harness the promising opportunity for reliable power and lower emissions and ensure a more diversified electricity portfolio. At the same time, experienced global participants, and proven planning, engineering, procurement and construction methods associated with LNG and FLNG, power generation and related infrastructure should not be overlooked.

Gas-to-power projects are undoubtedly complex endeavours. Successful deployment requires well-defined plans, adequate project funding, consideration of LNG supply, import infrastructure, efficient and reliable power generation equipment, proven cost and schedule control methods, and complex project management abilities, including solutions for local construction risks.

Partnering with experienced global development and execution organisations, particularly those with proven expertise, can help mitigate gas-to-power project risks.

 

Meko is the business development director for sub-Saharan Africa at engineering company Black and Veatch - he is based at the firm's offices in Johannesburg.

 

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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