Gas utilization in Nigeria : an economic comparison of gas-to-liquid and liquefied natural gas technologies

Abstract

Natural gas is a versatile resource that can be used as a fuel or as a feedstock for conversion to higher priced products. Nigeria has a huge natural gas reserve of about 187 trillion cubic feet (TCF) and the drive to utilize and subsequently monetize these gas resources has led to the development of the Nigeria gas sector. Two technologies that are poised to play vital roles in this regard are the Liquefied Natural Gas (LNG) and Gas-To-Liquid (GTL) technologies. It is therefore, imperative that an economic comparison of both technologies be done. This comparison shall be the focus of this research work. The GTL and LNG technologies were economically evaluated for a plant capacity capable of utilizing 1,000 MMSCF/D of natural gas. The capital expenditure (CAPEX) applied in this research work for plants employing both LNG and GTL technologies were based on the CAPEX of LNG and GTL plants that are currently under construction in Nigeria. Five economic indicators were used in developing a model for proper comparison of the two technologies. Of these indicators, net present value (NPV), internal rate of return (IRR), and profitability index (PI) gave results that were too close for an outright choice to be made from LNG and GTL. On the other hand, GTL performed better with the other two economic indicators - break-even and benefit-cost ratio. GTL will break-even at a lower cost compared to LNG; and the overall benefit-cost ratio for the GTL plant was better than that of the LNG. The results show that GTL technology will be better placed compared to LNG technology to help the Nigerian government achieve its objective of recovering maximum revenue possible from natural gas.