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Nigerian Crude: From Wellheads To Export Terminals, Is It Adequately Measured?

As conversations around hydrocarbon metering in the Nigerian oil and gas industry intensifies, with many Nigerians positing that the exact amount of the nation’s crude production is unknown, e360 made findings about the crude’s journey and metering system from the wellheads to the terminals and writes

 

Nigeria is Africa’s largest crude producer with an estimated 2million barrels per day (bpd) production. Crude sales accounts for about 95percent of the country’s foreign exchange earnings and 80 percent of its budgetary revenue. However, there are strong augments that the exact amount of the country’s crude production is unknown because of inadequate metering infrastructure in the industry, coupled with industrial scale theft along the chain.

In an attempt to ascertain the veracity or otherwise of these claims, a study, ‘hydrocarbon metering research’, and an advocacy campaign tagged #OilMetering was launched in Abuja, in December 2017, with support by Facility for Oil Sector Transformation (FOSTER), in partnership with the Nigerian Extractive Industries Transparency Initiative (NEITI).

The main objective of the campaign is to create a better understanding of the issues with current metering infrastructure to determine the status, challenges and how to better improve Nigeria’s hydrocarbon metering system.

To drive the dialogue further, a stakeholder’s engagement was held last week in Abuja, where officials of relevant government agencies had the opportunity to interact on the issues.

As dialogue around the subject matter intensifies, e360 speaks with Engr T.K Braide, Manager Standards, Department of Petroleum Resources (DPR), on the key issues. Braide, who expressed confidence that the research was one that could help improve Nigeria’s hydrocarbon metering, said, “Yes, I think, probably because we have been open in our discussion, everybody have brought their perspective to what the issues are.”

On the narrative that Nigeria does not know the exact quantity of its crude oil production, Braide said: “That’s an aberration, we know what we produce fully well. We know what gets into the flow stations and we also know what gets to the transfer points, so you cannot tell me we don’t know what we produce.

“However, in between these strategic metering points, there are third party interventions, do we lose some volumes of oil? I agree. But to conjecture that we don’t know what we are producing is totally wrong,” he said.

Also reacting to arguments of inadequate metering in the sector he said, “Obviously we can’t have meters in the middle of nowhere, the only place where we don’t have meters are the wellheads. But wellheads are within the vicinity, most times, of the flow stations, and at the flow stations we measure.”

According to Braide, there are different grades of meters, with the most strategic being at the flow stations where the crude first comes in contact with humans. At this critical point, he says the DPR measures and partially treats the crude before being sent to the terminal, another strategic point, where the crude is further metered.

“You know there is a long stretch between the flow stations and terminals and there are huge pipelines and we can’t just have meters for the sake of having meters on the pipelines,” he further explained.

On whether there adequate guidelines on metering and the level of compliance with such guidelines by the companies, Braide explained: Obviously there’s a very new guideline now, we keep reviewing and upgrading our guidelines because you and I understand that technology is evolving by the day, it’s not static.”

He emphasized that the oil and gas industry is a very dynamic environment which informed why the DPR keeps updating and upgrading its guidelines to meet and match the trend in the market.

On the compliance level, Braide said: “What we have done over time is that we use the stick and then we also use the carrot. The carrot is making companies to understand that, if their systems are not functioning properly does not necessarily mean they are gaining anything, but that they could be the one losing, that’s an understanding we carry to the operators.

“The other thing is if we find out, even with all these persuasions that they still default, then penalties come. If you default you have defaulted and penalties will come. It’s like the child and mother at home, if there’s a misdemeanor it is not necessarily because the child hates the mother, and penalties are for corrective measure. So the measure we have is what I will call the corrective measures for the companies when they default.”

Braide however, added that the companies, by their setting would not deliberately want to default; “but for exigencies when they do, they pay the necessary penalty,” he said.

Another narrative is that DPR’s monitoring activities are said to be facilitated by the operators, a situation many believe would make it impossible for the agency to catch the operators in the act of wrongdoing.

Responding to this narrative, Engr. Braides who admitted that the DPR gets “bits of support for our operations”, however, maintained that officials of the agency man the facilities on a 24hours basis. “So there’s no way we cannot catch them,” he said. Adding, “It’s not even a matter of catch or no catch, the strategic terminal points like I said, we man 24hours, seven days a week, 365 days a year, including on all national public holidays. When other Nigerians are celebrating holiday season, our men are there 24hours,” he said.

Nonetheless, he said, upon completion of the hydrocarbon metering study, its recommendation, where necessary, would be supported by the DPR to further strengthen the system.

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