Natural gas as alternative vehicular fuel

With trillions of cubic metres of natural gas, the use of Compressed Natural Gas (CNG) as viable fuel in Nigeria can be explored, if everything is put in place to promote the distribution of the white fuel across the country

With the approval of the Federal Government in a letter dated March 21, 2007, by President Olusegun Obasanjo, Nigeria joined the league of nations using natural gas to power their transportation needs.

With a population that grew by almost 400 percent to 180 million between 1960 and 2016, with significant urban drift, the demand for transportation energy will increase.

Despite these challenges, Nigeria continues to flare about 20 percent of associated gas in the oil exploration and production process. The Nigeria National Petroleum Corporation (NNPC) reported that oil producers flared about 51 percent of the associated gas produced between 1990 and 2010, a volume of about 459 billion cubic metres (bcm). This volume is equivalent to 53 billion litres of gasoline, which is more than 14.5 years worth of Nigeria's gasoline consumption.

To address the twin challenges of gas flaring and fuel shortages, the use of compressed natural gas (CNG) as an automotive fuel was proposed in the 1990s, to harness natural gas resources, but progress has been slow.

A global culture

The idea of using natural gas as fuel for vehicles is not new globally. Italy has been using it since 1930s and Iran, Pakistan, Brazil, Italy, USA, China and Egypt have unveiled programmes aimed at significantly improving the numbers of CNG vehicles in their countries.

With approximately 25 million natural gas vehicles around the world and consuming about 1,000 Bcf of gas annually, there has been a rapid growth of the natural gas vehicles market in the last 10 years, with a projection that more than 60 million of such vehicles would be in place by 2020.

Why Gas?

The challenges of global warming have compelled the quest for cleaner, better and safer fuels that would not be injurious to the ecosystem.

That was why when Obasanjo issued the CNG licence to NIPCO Plc, formerly Independent Petroleum Marketing Company Limited (IPMAN), experts had thought the government was desirous of positioning to effectively utilise the untapped resources hugely available in the country.

Sulaimon Salau, a natural gas technician, said CNG is a superior auto fuel and better than liquid fuels - petrol and diesel. According to him, replacing petrol with CNG, specifically in countries like Nigeria, blessed with over 186 tcf of natural gas, would save the country the much-needed foreign exchange.

Yet, nine years down the line, the total number of vehicles converted by NIPCO from petrol to gas is less than 4,500, with 95 percent of them commercial vehicles. Targets set by the NGC for the first two years was 50,000.

The General Manager of Green Gas Limited (GGL), a joint venture between Nigeria Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), and NIPCO Plc, Mr Rajesh Prabhu, said the government needed to do more to support the growth of the sector.

Prabhu, whose company is the only one that has developed nine operational CNG stations, with three others about to be opened and five others under construction, said the government had not fully thrown its weight behind making natural gas available for the use of Nigerians.

GGL started operation in Benin City, where about 4,200 vehicles run on CNG, replacing 20 million litres of petrol and saving over $9 million for the country from 2012 to 2015.

The advantages

If the Federal Government decided to replace just 20 percent of the current petrol consumption in Nigeria by switching to natural gas, Prabhu said Nigerians would not have used up to four percent of the nation's domestic gas and less than 0.5 percent of the current gas production, thereby saving close to $2 billion yearly.

Experts said CNG is cheaper on a mile to mile basis than petrol by as much as 50 percent and more than 80 percent compared to diesel. While the current price of PMS per litre is N145, a metric cube cost of CNG is N95 in Lagos and in Benin.

Because it is a clean fuel which burns with low carbon deposit, natural gas leaves no lead or benzene on the engine. The lead fouling of spark plugs is also eliminated. The CNG kits and systems are sealed, which prevents any spill or evaporation. The use of natural gas eliminates the need for expensive oil refineries, improves energy choice flexibility, reduces movement of heavy tankers on roads resulting in reduced improved energy security due to local availability. Also, it reduces the importation of petroleum products, which saves foreign exchange, stimulates local industry and create employment opportunities for the production of kits and components, such as cylinder manufacturers, conversion kits manufacturers, vehicle conversion workshops, maintenance workshops and the reduction in health hazards and improved air quality.

Prabhu said natural gas reduces harmful vehicle emissions that pollute the atmosphere, prevents green house gas emissions, reduces global warming and is non toxic either to the soil or water. Its economic benefits, according to him, include reducing cost of running a vehicle, bi-fuel option-flexibility (as the vehicle can run on petrol and CNG with just a shift in switch on the dash board of the vehicles), reducing exhaust emissions leading to improved quality of life and reduced health cost as well as reduction in transportation cost.

GGL in the last nine years have developed a state-of-the-art gas infrastructure in Benin, operating seven CNG stations where it serves 4000 automobiles, and three CNG kit conversion workshops which are the first of their kind in Africa. It has also developed a 51-kilometre steel gas pipeline network which connects industries in Benin.

The Federal Government allowed GGL to develop the CNG network on the expressways connecting Benin City to Warri, Lagos and Asaba-Onitsha, with a station at Okolovu on the Benin-Warri Expressway. Alongside three other stations ready to take off, three others at Ore, Oni Tea and Benin-Asaba Expressway are to take off between now and next year.

The company has also opened the largest CNG station in Ibafo Ogun State along the Lagos-Benin and Ibadan expressway with an installed capacity of 200,000 scmd and can dispense over 4,000 vehicles per day.

Global trend

CNG has been adopted as transportation fuel in many countries for various reasons of which economic benefits/considerations; environmental concern/benefits, energy security, and availability of natural gas resources are the major drivers. For example, the Supreme Court of India in an effort to control vehicular emissions ordered the conversion of the city bus fleet to CNG and the USA is pursuing alternative energy for energy independence and security.

While Iran's crude oil reserve is the second largest globally and the country is the fourth largest producer of crude oil, over reliance on importation of petrol in satisfying domestic demand led to the adoption of CNG as transport fuel.

In Nigeria, the need to reduce gas flaring, spiralling fuel prices and increasing environmental concerns Prabhu said, are the compelling reasons for CNG use.

However, until 2008, when the National Domestic Gas Supply Policy and the National Domestic Gas Supply and Pricing Regulation were introduced, the focus of government was the abatement of gas flaring as seen in the provisions of the Petroleum (Drilling and Production) Regulation 1969 and the Associated Gas Re-injection Act 1979.

Consequently, oil producers focused on gas re-injection rather than gas gathering and utilisation leading to a significant increase in the volume and percentage of associated gas re-injected, and slow adoption of gas as fuel domestically.

As reported by the NNPC, more than 0.5 trillion cubic feet (tcf) of associated gas has been re-injected yearly since 2002. Incentives for gas exploration and production were only provided through the Nigerian Liquefied Natural Gas (NLNG) (Fiscal Incentives, Guarantees and Assurances) Act 1990, the Associated Gas Framework Agreement of 1992 and later through Section 39 of the Companies Income Tax Act 2007.

Prabhu pointed out that price differential is key to the success of gas use, adding that the fastest growth is in Iran, where the price differential is the greatest, while Pakistan, having the highest saturation has CNG priced at 50% of equivalent gasoline. NGV penetration in India is less than five per cent and this could be due to the long period of subsidy for gasoline and diesel, which depressed the potential price differential. Similarly, a price gap range of six to 37 per cent between gasoline and NG in Nigeria does not appear to be compelling, as the subsidy on gasoline erodes the long-term economic benefit of CNG. Catalysts for the adoption of CNG in Nigeria are a market operator-set price per energy equivalent of a litre of gasoline, in a deliberate manner to encourage conversion, along with a dual pricing structure similar to Argentina, where credit lines cover conversion costs, to be repaid with savings from the use of CNG.


High cost

The minimum cost of conversion is N200,000 or ($1,000) and private vehicle owners are required to make a down payment of N40, 000 ($200) or 20 per cent of cost, while owners of vehicles used for commercial purposes, such as taxis, are required to make a down payment of N80,000 ($400) or 40 per cent. The loan repayment is through a price adjustment mechanism during refilling.

Prabhu said the company was still keeping to the old rate not to de-motivate those who might want to convert their vehicles to gas. Going by the current exchange rate, the cost of conversion, the GGL boss said, is about N500,000.

Most users said the CNG is economical if motorists could afford the cost of conversion. Femi Adeyemi, a commercial driver who has been using a CNG commercial bus since a year ago, said it saves money and its cost effective on the long run. Outside the cost of conversion, he spends N2,600 on gas to shuttle from Lagos to Ibadan, a distance that cost him N7,000 before. Olabisi Bakara, another commercial driver, who shuttles Lagos to Mowe, in Ogun State, would want all commercial operators to convert to gas as a cheaper alternative. For him, "CNG is a bonanza, especially for commercial motorists."

Oluwole Obasa, a truck driver who has been using CNG since one and half years, said he now spends N6,500 on CNG to Ibadan, from the N21,000 spent on diesel.

Sulaiman Salawu urged the government to encourage the importation of at least 20 percent of CNG-compliant vehicles and reduce import duties of conversion kits. He said it was sad that there is no CNG content in the automotive policy launced recently by the government.

Salawu also urged a slash in the wholesale and retail price of gas by the NGC, a development which is having a negative effect the operational cost of the companies like GGL which markets the CNG.



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