Evaluation of the Economic Potentials of a Mini Gas-to-Liquids (GTL) Plant in Nigeria

Abstract

In this paper, the economic potential of using a mini gas-to-liquids (GTL) plant for monetization of stranded associated gas in Nigeria was extensively evaluated. Feedstock to the plant comprises 50 MMscfd of treated stranded associated gas from Assa North in the Niger Delta region of Nigeria. 5000 b/d of GTL diesel product was realized after simulation using Fischer-Tropsch (FT) type modular gas-to-liquids technology. Economic analyses were performed for a wide range of economic conditions to determine the economic potentials of the GTL project. From the result, it was realized that for base case, the net present value (NPV) of the project was US$32,421 barrel-liquid-per-day (BLPD) corresponding to US$162.1 million for 5000 b/d of GTL diesel produced. The payout time (POT) was 4.48 years while the net cash ratio (NCR) was US$81.83 million. The internal rate of return (IRR) was 22.2%. From the sensitivity analyses performed, it was realized that the variable having the most influence on the NPV was the GTL product price (the price of diesel) followed by the capital cost of the GTL plant and then the natural gas price. It was also realized that the operating cost of the plant has the least (negligible) effect on the NPV of the project. Furthermore, it was realized that GTL project remained profitable for diesel prices above US$80/bbl as long as the price of natural gas was maintained below US$2.2/Mscf at 15% discount rates. In general, it was realized that the mini-GTL project was profitable for diesel prices equal to or greater than US$80/bbl as long as discount rates remained below 20% for base CAPEX and OPEX. It was recommended that the government of Nigeria subsidizes the price of natural gas to increase the profitability of mini-GTL projects creating a greater participation by the private investors and thereby reducing the volume of associated gas flared.