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What is a Subsidy?

A subsidy (also known as a Render) is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributed as subventions in an industry to prevent the decline of that industry (e.g. as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labour (as in the case of a wage subsidy). A subsidy is a direct pecuniary aid  and as such it is supposed to act as a cushion until key parts of the sector being subsidized become sustainable. This is essential because subsidies can distort markets and incur large economic costs.

The Economic Problem

Nigeria is presently preparing a budget for the fiscal year ahead. The recurrent expenditure overshadows the capital expenditure and Nigeria borrows money yearly to balance the books. President Goodluck Jonathan has identified the Petroleum subsidy as a deterrent to a balanced economy and plans on eradicating the subsidy and divert the funds to capital projects. The Petroleum subsidy was introduced under past administrations with the military. The Federal Government argues that the Petroleum Subsidy is enjoyed by a few and its impact does not spread across 167 million Nigerians. The petroleum subsidy was serviced with 1.3 trillion Naira in 2011.

There is a strong resolve by Nigerians to resist government attempts to implement the European development fund (EDF)/IMF agenda to deregulate the downstream oil sector, which to the average Nigerian, simply means the removal of fuel subsidy. This is a hard sell, given the arguments presented by top bureaucrats in the Nigerian oil business and even more compelling, the candid revelations by Enrique Amundel, the Venezuelan ambassador to Nigeria, on some ‘facts of the matter’ on the deregulation debates. Before we comment on these ‘facts of the matter’ that gave further boost to the ‘pro subsidy’ campaign, it would do to briefly analyse the implication and logic in ODA/IMF position in pushing the deregulation ‘conditionality’.

Put bluntly, the removal of fuel subsidy in Nigeria is a direct affront to the millennium development goal number 1 of halving the number of people living in poverty by 2015 and at odds with global concern for the low levels of economic growth and recently reported declining human development index in Nigeria. The average Nigerian earns below a dollar in a day.

It also smacks of double standards in the current patterns of State intervention in free markets and increased levels of protectionism in leading capitalist enclaves.  It is also obvious that the pressure to remove subsidy is designed by experts with insufficient understanding of the Nigerian economy or who choose to ignore the inability of client governments to effectively implement anti poverty programmes planned as a wider element of a fiscal policy agenda.

President Goodluck Jonathan

President Goodluck Jonathan

The way forward

Subsidy can and does occur in deregulated markets, the difference being its point of application and nature of distribution in an economy. The Petroleum Subsidy was supposed to be a cushion to support prices until key aspects of the sector become sustainable. Unfortunately, this has not been the case. Nigeria’s refineries produce at 30% capacity and cannot meet up with the local demand for Petroleum products. A lot of pipelines have been vandalized over the years.

Firstly, the Federal Government has to carry out a general review to curb waste. An unconfirmed source reported that Senator David Mark (The Senate President) costs the country $4 million annually. Also, Political office holders take some exorbitant allowances like their Security votes. In a country that has recurrent expenditures overshadowing Capital expenditures excessive wage bills should be cut. Nigeria’s legislators are one of the highest paid in the world; however, it is a third world country striving for development. In Nigeria today, they are several awarded capital projects that end up abandoned. The inefficiencies of the Government create an avenue for embezzlement and waste. Publications in National Newspapers always post articles about corrupt public officers; not everyone that enters public office is corrupt, but, the inefficiencies of the system present those opportunities to embezzle hence become corrupt. Policies should be drafted and followed promptly. Monthly or quarterly reports should be made by Government offices to a special panel.

I would make a comparison of the PMS and diesel price rates in Nigeria and other OPEC countries.

In Nigeria, a litre of petrol sells for N65 but the same litre of petrol sells for US$0.02 (about N3.20) in Venezuela. In Algeria it is 32 cents (about N51.20), in Iran it is 10 cents (about N16); in Kuwait it sells for 23 cents (about N36.80); in Saudi Arabia it is 16 cents (N25.60); in United Arab Emirate it is 47 cents (about N75.20) and in Angola it is 65 cents (about N104). In Ecuador, it is 53 cents (about N84.80), in Iraq it is 78 cents (about N124); in Libya, it is 17cents (N27.20); and in Qatar it is 19 cents (about N30).

Similarly, the price of diesel varies from one country to the other. In Nigeria it is N115, while in Algeria it is US$0.19 per litre (about N30); in Angola, it is 43 cents (about N68.80); in Ecuador, it is (N45); in Iran, it is two cents (about N3.20); in Iraq, it is 56 cents (N89.60) and in Kuwait, it is 21 cents (about N34). A litre of diesel sells for 13 cents (about N21) in Libya; 19 cents (N30) in Qatar, 7 cents (about N11.20) in Saudi Arabia; 71 cents (about N114) in United Arab Emirate and one cent (N16) in Venezuela.

Arguments that Countries with low Petroleum prices have low populations present themselves. They argue that the Petroleum Reserve per person ratios in those countries is high. The argument is valid, but, the low Petroleum prices in those countries are accrued to the fact that Petroleum products consumed locally are refined locally. But in Nigeria, exports are given the preference. Our refineries produce at 30% capacity, hence, cannot serve the local demand.

The estimated daily demand for petroleum products in Nigeria today is 30 million litres of petrol (PMS), 10 million litres of kerosene (DPK), 18 million litres of diesel (AGO), and 780 metric tons (1.4 million litres) of cooking gas (LPG), and the estimated amount of crude oil required daily for domestic refining, that would satisfy the demand for petroleum products in Nigeria adequately, should be about 530,000 barrels per day (bbl/d). This is some 85,000 bbl/d more than the combined refining capacities of all the state-owned refineries located in Warri, Port Harcourt, and Kaduna. The four refineries have combined installed capacity of 445,000 bpd and have never reached full production due to sabotage and operational failures. Nigeria, which is Africa’s largest crude oil exporter, spent about N1.15 trillion to import an estimated 8.1 million metric tons (MT) of petroleum products in 2010 alone. Nigerian refineries have always been impacted by operational problems, the inability of previous Turn Around Maintenance (TAM) operations over the years, have kept the four refineries in the country perennially operating below installed capacity.

kaduna refinery

kaduna refinery

Algeria as a case study has no Petroleum Subsidy, the bulk of the domestic fuel requirement is supplied by the Algerian national oil company, Sonatrach, which is in charge of exploration and production, transport, refining, processing, marketing and distribution. The secret to the low prices of petroleum products in Algeria is local refining of crude oil.

One of the solutions to this problem is to build more refineries to meet up the local demand. Turn around maintenance in the four functional refineries have to be stepped up so the y can produce at optimum level. If Nigeria can produce more petroleum products locally, the prices of petroleum products would reduce and the economy would improve. The cost of building a refinery that can produce 200,000 bbl/day would cost 3-4 billion dollars which is expensive; But major fields in the Niger Delta can have mini-refineries that can produce about 20, 000 bbl/day and are cheap (about 15 million dollars).  http://www.scawa.com/Downloads/SCA_Mini%20refinery-feasibility-study.pdf shows a cost analysis for mini-refineries. The issue of subsidy would be eradicated if Nigeria can produce crude locally.

Refining more of the countries crude would give the country higher stakes in a deregulated market, stimulate medium scale service industries and also provide greater job opportunities for the teaming skilled unemployed.

Please drop a comment 🙂

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OVERVIEW

It is imperative that for our dear country to improve economically, the issue of Energy/Power has to be tackled. Nigeria has tremendous energy resources in the form of abundant gas, water and mineral resources. Yet, it is highly energy deficient. Per-capita electricity consumption is only 136 KWh compared to other neighboring West African countries, such as Ghana and Ivory Coast, which are not endowed with such resources, with per-capita electricity consumption of 309 KWh and 174 KWh respectively. But for this sector to become sustainable, billions of dollars needs to be invested in capital because the sector is still at its infancy and has not reached its full potential.

The Natural gas reserve in Nigeria is at an estimated 187 trillion cubic feet (proven) and could be up to 300 TCF(probable) and is the 7th largest in the world. Nigeria’s gas reserve is triple the nations Crude Oil reserve. These fossil fuel reserves are more than adequate to fuel much of Sub-Saharan Africa energy demand for several decades. By not fully harnessing gas resources, Nigeria loses an estimated 18.2 million dollars daily. Nigeria’s Natural gas is of high grade quality, contains 0% sulphur and is very rich in liquids. It is not of a doubt that if the sector reaches its full potential, the economy of the country will blossom. Employment generation, Transportation, Education, Health, Telecommunications, Environment, Agriculture, Power and Water resources would improve also.

My starting point of analysis is some facts about Nigeria’s energy crises despite natural endownments in both renewable and non-renewable resources. Coal reserves are also substantial at 2.75 billion metric tons. Also, a large amount of renewable energy resources including hydro electricity, solar, wind and biomass energy are present. Hydro resources are estimated at 14,750 Megawatts. Solar radiation is estimated at 3.5-7.0 Kilowatthour/m2 per day, wind energy 2.0-4.0 m/s, wind energy at 150,000 Terra Joule per year and biomass at 144 million tons per year. Second, despite being a world ranking exporter of liquefied natural gas (LNG), Nigeria’s gas-dominated electric grid experiences frequent system collapse linked often to inadequate gas supply. The oil-linked militancy which has resulted in gas and oil pipeline vandalisation in the oil and gas producing Niger Delta region has exacerbated the petroleum products and electricity supply problems. Largely unrestrained gas flaring has consistently put Nigeria among the world’s largest source of carbon emission, a major factor in global warming. The extensive substitution of poor public electricity supply with highly polluting self-generated power. Also the scarcity of kerosene combined with shortage-induced high kerosene prices has induced greater use of fuelwood for the low and middle income classes with adverse environmental consequences. Diesel shortages have crippled industrial production dependent on diesel-generated private electricity supply. Finally, there is the protracted nature of the energy crises. Nigeria’s chronic energy infrastructural gaps which have existed since the large scale inflow of oil income in the mid 1970s has worsened in recent times despite huge amounts of public expenditure in this government dominated and controlled industry. The billion dollars of pubic investment into capacity expansion in the energy industry contrast sharply with the extremely poor supply outcomes measured by refinery output, rise in imported fuels and frequent power outages and voltage variation.

Gas processing plant

Gas processing plant

Since the 80’s, there has been an increasing utilization of gas in Nigeria for Power generation, Industrial heating, Fertilizer & Petrochemical manufacturing and Steel production. Chevron is building the Escravos gas utilization project which will be capable of producing 160 million standard cubic feet of gas per day. There is also a gas pipeline, known as the West African Gas Pipeline, in the works but has encountered numerous setbacks. The pipeline would allow for transportation of natural gas to Benin, Ghana, Togo, and Ivory Coast.

DRAWBACKS

PRICING.

Benchmark gas price

Benchmark gas price

The decree issued by the Nigerian government to stop the flaring of natural gas in hydrocarbon exploration and production (E&P) activities by 2008 is an effort to realise commercial benefits from the nation’s huge gas reserves. Nigerian Natural gas has been grossly underpriced for years. Before some adjustments in recent times, NEPA (now PHCN- Power Holding Company of Nigeria PLC) used to purchase Natural gas for power generation at the rate of  $0.2/MMBTU and Natural gas to export projects were sold at rates ranging from $0.5/MMBTU to $3/MMBTU. Contrastingly, the current Henry-Hub benchmark price for Natural gas globally is $4.002/MMBTU. The Federal Government has been paying subsidies of 50-90 million dollars annually to balance the market.

In February 2008, the Government approved a package of measures to improve the medium- to long-term development of the gas sector that included a new gas pricing policy, introduction of a Strategic Aggregator, rolling out of a Gas Master Plan that identifies the future gas infrastructure network to be built by the potential investors, and an obligation for gas producers to serve the domestic market. The Government’s policy mandates all oil and gas operators to set aside a pre-determined amount of gas for the domestic sector. The policy sets a penalty for default at $3.5/mcf of obligation that is under-supplied and otherwise flared, and is also not tax deductable. An environmental surcharge of 0.5 C /mcf is levied over this. The policy also stipulates that the relatively cheaper Nigerian gas will be directed to the domestic market first. The gas policy mandates a sector based pricing to match 3 categories, (a) Cost + for strategic domestic sector; (b) Netback for the strategic industrial sector; (c) Alternative fuels pricing for commercial users. Lastly, it introduces the concept of strategic aggregator, who will be responsible for the volume and price of the gas supply.

The Government’s policy introduces a floor price of US$0.40/MMBtu at power plants based on a price of US$0.10/MMBtu at the well head and a transmission charge of US $ 0.30/MMBtu. The price of gas to non-power consumers is expected to cross subsidize the price to power plants resulting in a pooled price of US $ 0.80/ MMBtu to the gas producers. This arrangement of a pooled price is expected to be managed through the proposed institutional arrangement of a gas aggregator. The proposed “Gas Aggregator”
will manage the gas supply portfolio and payment for gas to the domestic sector. The Gas Aggregator will be the first contact point for the gas trade and will issue Gas Purchase Orders after due diligence of Sellers. Sellers make gas available to the Buyer at the Delivery Point agreed with the Buyer. However, the price of gas for power generation is set to go up to US $ 1.00/MMBtu by 2013, by which time the cross subsidy is expected to be phased out. The Government also introduced a securitization framework to assure investment in gas supply for the power sector. Both of these steps will provide a much needed boost to gas supply to the power sector.

FISCAL TERMS

The Federal Government’s share of rent is low as gas development is essentially being funded from the Government’s share of economic rent from oil projects. The fiscal regime for downstream investment is favourable to upstream investors and act as a barrier to non-oil investors.

There are no incentives to cover costs as capital costs offset at a higher marginal rate than the rates at which profits are secured and giving tax relief as an uplift of capital expenditure encourages upstream investors.

The fiscal environment discourages new investors and reduces government profits despite heavy investments in the sector.

INSTITUTIONAL ARRANGEMENTS

The nature of institutional structures such as the integrated role of NNPC as regulator and marketer or the export oriented structure of the incumbent IOC’s create and inflexible structure for sector growth and ultimately threatens sustainability of low cost supplies.

LEGAL & REGULATORY FRAMEWORK

The existing regulatory framework is written primarily for Oil, there is insufficient framework for downstream activities such as supply, distribution and transmission of gas. There is no law to prevent the abuse of market power or anti-competition behaviour and there is no level playing field in terms of fiscal reforms.

FINANCING

Investment requirements for gas projects are quite considerable ( an estimated 32 billion dollars over a few years) and downstream private financing of gas supplies and infrastructures limited by lack of bankable revenue streams.

RESOLUTIONS

The passing into law of the Petroleum Industry bill still pends apparently because it needs a lot of tuning. When the bill is passed, an ideal framework in which the sector would thrive would be built and parastatals to help facilitate the sustainability of Nigerian Natural gas would be created. There are 3 key levers to deliver GDP growth through this sector which are sustained investment inflows, stimulating growth of domestic labour and capital and efficient institutions and regulatory environment. The emergence of the Gas Master plan is an ideal tool to put the sector in order.

Gas plant

Gas plant

Chevron's Escravos Gas to liquid plant

Chevron's Escravos Gas to liquid plant

GOD BLESS NIGERIA. Please read and drop a comment 🙂

The Supercar for an everyday man.

For any driving enthusiast, the essence of a good car is its performance, comfort, beauty, the way it trails through corners amongst others. A car that has a good combination of these attributes is called a SUPER CAR.

HISTORY

A world rally legend like Tommi Antero Makinen a.k.a Turbo was drawn to only one supercar for all of his major rally success, ‘THE MITSUBISHI LANCER EVOLUTION.’ He is a four-time world rally champion, a series he first won, and then defended continuously throughout 1996, 1997, 1998 and 1999 on all occasions driving the Ralliart Mitsubishi Lancer Evolution. He also won the race of champions in 2000.

Tommi Makinen

Tommi Makinen, 2004 WRC

The Lancer Evo is a high performance Sedan. There have been 10 models till date since 1992. All of them come with 2.0 litre engines with turbocharge and 4-wheel drive systems. They come mostly as 4-door sedans but the Evo 7 has a 5-door wagon and are assembled at the Mizushima plant, Kurashiki, Okayama-Japan.

MITSUBISHI LANCER EVOLUTION X (2008-2011): THE IDEAL SUPERCAR.

Lancer evo X

Beauty, Style, Top performance are just a few ways to describe this Sedan. The tenth generation of the Lancer Evolution comes with an improved 2.0 litre 4B11T engine on line 4 aluminium cylinders and the MIVEC turbo. The concept of this car was released in 2005 at the 39th Tokyo Motor show. It was designed by Omer Halihodzic. It hit the market early 2008.

ENGINE.

The power and torque of this supercar varies with the particular market but all versions produce at least 276 bhp (which is phenomenal for a 2.0 litre, 4 cylinder car; a Toyota Camry 3.5L V6 produces about 270 bhp).  The UK versions of the Evo offer between 300bhp and 360bhp and produces 363 lb-ft of torque @ 3200rpm. It uses a sealed engine with aluminium cylinders.

EVO engine

TRANSMISSION

The US market offers two versions of the Lancer Evolution; the MR with the 6-speed twin clutch sportronic shift transmission (TC-SST), this version uses the double clutch system which makes gear shifts faster than the single clutch system thereby makes quicker accelerations. The GSR which has the 5-speed manual transmission system.

This new Evo also has a new full time 4-wheel drive system named the Super all wheel control (S-AWC). It uses the torque vectoring technology that allows the driver to send different amount of torque to any wheel at any time. It also has a version with the new sequential Semi-automatic Six-speed SST twin-clutch transmission with the magnesium alloy shift paddles.

PERFORMANCE

This Sedan depending on the version hits 0-60mph in 5 seconds approximately. The GSR does it in 4.8 seconds. The 360 bhp version does it in 4.1 seconds. The top speed of all the Evos are limited to 155mph. The engine of the GSR produces 422Nm of torque. I personally like the GSR model because its the most economical and with a manual transmission it has less maintenance issues compared to the other versions. The engine brake horse powers range from 276bhp @ 6500rpm  to 360 bhp @6500rpm.

STYLE

The standard GSR comes with 245/40R18 tyres (i.e. 18-inch rims), it comes with Recaro race car seats, Driver and Passenger dual stage airbags, Engine immobilizer with security alarm, Optional Mitsubishi communication system that has a 30GB hard drive audio/navigation system with a 7-inch LCD screen, Adequate leg room at the back for passengers, Optional Rockford Fosgate high-performance audio system, Xenon Headlamps, GPS system, Back spoilers and Optional Body kits.

INTERIOR

Interior

Recaro seats

Recaro race car seats

Instrument guages

Instrument guages

FUEL ECONOMY

The Evo does 19.9 mpg and 22mpg on the highway which is pretty good for a supercar and this is the result for the 354 bhp version. A 1.8litre Toyota Corolla does 28mpg which is a very economical car.

PRICE AND EXTRAS

I have not seen an Evo here in Abuja but there is a Mitsubishi dealership in Central Area, Abuja, ‘KEWELRAMS CHANRAI’ http://www.kewalramnigeria.com/.  Apparently, most Nigerians are not driving enthusiasts, they like to acquire new models of cars but low range models.

Once I saw and read reviews of the Mitsubishi Lancer Evo it got me captured because it offers everything a driving enthusiast wants and can be gotten for a fair price between $22,000 to $33,000 which  is equivalent to 3.3 million Naira.

Please drive carefully and please drop a comment after reading. Thanks 🙂

POLLUTION

I. INTRODUCTION

Pollution, contamination of Earth’s environment with materials that interfere with human health, the quality of life, or the natural functioning of ecosystems (living organisms and their physical surroundings). Although some environmental pollution is a result of natural causes such as volcanic eruptions, most is caused by human activities.

There are two main categories of polluting materials, or pollutants. Biodegradable pollutants are materials, such as sewage, that rapidly decompose by natural processes. These pollutants become a problem when added to the environment faster than they can decompose. Nondegradable pollutants are materials that either do not decompose or decompose slowly in the natural environment. Once contamination occurs, it is difficult or impossible to remove these pollutants from the environment.

Nondegradable compounds such as dichlorodiphenyltrichloroethane (DDT), dioxins, polychlorinated biphenyls (PCBs), and radioactive materials can reach dangerous levels of accumulation as they are passed up the food chain into the bodies of progressively larger animals. For example, molecules of toxic compounds may collect on the surface of aquatic plants without doing much damage to the plants. A small fish that grazes on these plants accumulates a high concentration of the toxin. Larger fish or other carnivores that eat the small fish will accumulate even greater, and possibly life-threatening, concentrations of the compound. This process is known as bioaccumulation.

II. IMPACTS OF POLLUTION

Because humans are at the top of the food chain, they are particularly vulnerable to the effects of nondegradable pollutants. This was clearly illustrated in the 1950s and 1960s when residents living near Minamata Bay, Japan, developed nervous disorders, tremors, and paralysis in a mysterious epidemic. More than 400 people died before authorities discovered that a local industry had released mercury into Minamata Bay. This highly toxic element accumulated in the bodies of local fish and eventually in the bodies of people who consumed the fish. More recently research has revealed that many chemical pollutants, such as DDT and PCBs, mimic sex hormones and interfere with the human body’s reproductive and developmental functions. These substances are known as endocrine disrupters.

Pollution also has a dramatic effect on natural resources. Ecosystems such as forests, wetlands, coral reefs, and rivers perform many important services for Earth’s environment. They enhance water and air quality, provide habitat for plants and animals, and provide food and medicines. Any or all of these ecosystem functions may be impaired or destroyed by pollution. Moreover, because of the complex relationships among the many types of organisms and ecosystems, environmental contamination may have far-reaching consequences that are not immediately obvious or that are difficult to predict. For instance, scientists can only speculate on some of the potential impacts of the depletion of the ozone layer, the protective layer in the atmosphere that shields Earth from the Sun’s harmful ultraviolet rays.

Another major effect of pollution is the tremendous cost of pollution cleanup and prevention. The global effort to control emissions of carbon dioxide, a gas produced from the combustion of fossil fuels such as coal or oil, or of other organic materials like wood, is one such example. The cost of maintaining annual national carbon dioxide emissions at 1990 levels is estimated to be 2 percent of the gross domestic product for developed countries. Expenditures to reduce pollution in the United States in 1993 totaled $109 billion: $105.4 billion on reduction, $1.9 billion on regulation, and $1.7 billion on research and development. Twenty-nine percent of the total cost went toward air pollution, 36 percent to water pollution, and 36 percent to solid waste management.

In addition to its effects on the economy, health, and natural resources, pollution has social implications. Research has shown that low-income populations and minorities do not receive the same protection from environmental contamination as do higher-income communities. Toxic waste incinerators, chemical plants, and solid waste dumps are often located in low-income communities because of a lack of organized, informed community involvement in municipal decision-making processes.

 

 

 

 

III. TYPES OF POLLUTION

Pollution exists in many forms and affects many different aspects of Earth’s environment. Point-source pollution comes from specific, localized, and identifiable sources, such as sewage pipelines or industrial smokestacks. Nonpoint-source pollution comes from dispersed or uncontained sources, such as contaminated water runoff from urban areas or automobile emissions.

The effects of these pollutants may be immediate or delayed. Primary effects of pollution occur immediately after contamination occurs, such as the death of marine plants and wildlife after an oil spill at sea. Secondary effects may be delayed or may persist in the environment into the future, perhaps going unnoticed for many years. DDT, a nondegradable compound, seldom poisons birds immediately, but gradually accumulates in their bodies. Birds with high concentrations of this pesticide lay thin-shelled eggs that fail to hatch or produce deformed offspring. These secondary effects, publicized by Rachel Carson in her 1962 book, Silent Spring, threatened the survival of species such as the bald eagle and peregrine falcon, and aroused public concern over the hidden effects of nondegradable chemical compounds.

A. Air Pollution

Human contamination of Earth’s atmosphere can take many forms and has existed since humans first began to use fire for agriculture, heating, and cooking. During the Industrial Revolution of the 18th and 19th centuries, however, air pollution became a major problem. As early as 1661 British author and founding member of the British Royal Society John Evelyn reported of London in his treatise Fumifugium, “… the weary Traveller, at many Miles distance, sooner smells, than sees the City to which he repairs. This is that pernicious Smoake which fullyes all her Glory, superinducing a sooty Crust or Furr upon all that it lights….”

Urban air pollution is commonly known as smog. The dark London smog that Evelyn wrote of is generally a smoky mixture of carbon monoxide and organic compounds from incomplete combustion (burning) of fossil fuels such as coal, and sulfur dioxide from impurities in the fuels. As the smog ages and reacts with oxygen, organic and sulfuric acids condense as droplets, increasing the haze. Smog developed into a major health hazard by the 20th century. In 1948, 19 people died and thousands were sickened by smog in the small U.S. steel-mill town of Donora, Pennsylvania. In 1952, about 4,000 Londoners died of its effects.

A second type of smog, photochemical smog, began reducing air quality over large cities like Los Angeles in the 1930s. This smog is caused by combustion in car, truck, and airplane engines, which produce nitrogen oxides and release hydrocarbons from unburned fuels. Sunlight causes the nitrogen oxides and hydrocarbons to combine and turn oxygen into ozone, a chemical agent that attacks rubber, injures plants, and irritates lungs. The hydrocarbons are oxidized into materials that condense and form a visible, pungent haze.

Eventually most pollutants are washed out of the air by rain, snow, fog, or mist, but only after traveling large distances, sometimes across continents. As pollutants build up in the atmosphere, sulfur and nitrogen oxides are converted into acids that mix with rain. This acid rain falls in lakes and on forests, where it can lead to the death of fish and plants, and damage entire ecosystems. Eventually the contaminated lakes and forests may become lifeless. Regions that are downwind of heavily industrialized areas, such as Europe and the eastern United States and Canada, are the hardest hit by acid rain. Acid rain can also affect human health and man-made objects; it is slowly dissolving historic stone statues and building facades in London, Athens, and Rome.

One of the greatest challenges caused by air pollution is global warming, an increase in Earth’s temperature due to the buildup of certain atmospheric gases such as carbon dioxide. With the heavy use of fossil fuels in the 20th century, atmospheric concentrations of carbon dioxide have risen dramatically. Carbon dioxide and other gases, known as greenhouse gases, reduce the escape of heat from the planet without blocking radiation coming from the Sun. Because of this greenhouse effect, average global temperatures are expected to rise 1.4 to 5.8 Celsius degrees (2.5 to 10.4 Fahrenheit degrees) by the year 2100. Although this trend appears to be a small change, the increase would make the Earth warmer than it has been in the last 125,000 years, possibly changing climate patterns, affecting crop production, disrupting wildlife distributions, and raising the sea level.

Air pollution can also damage the upper atmospheric region known as the stratosphere. Excessive production of chlorine-containing compounds such as chlorofluorocarbons (CFCs) (compounds formerly used in refrigerators, air conditioners, and in the manufacture of polystyrene products) has depleted the stratospheric ozone layer, creating a hole above Antarctica that lasts for several weeks each year. As a result, exposure to the Sun’s harmful rays has damaged aquatic and terrestrial wildlife and threatens human health in high-latitude regions of the northern and southern hemispheres.

Figure showing the release of smug into the atmosphere from crude flames.

B. Water Pollution

The demand for fresh water rises continuously as the world’s population grows. From 1940 to 1990 withdrawals of fresh water from rivers, lakes, reservoirs, and other sources increased fourfold. Of the water consumed in the United States in 1995, 39 percent was used for irrigation, 39 percent was used for electric power generation, and 12 percent was used for other utilities; industry and mining used 7 percent, and the rest was used for agricultural livestock and commercial purposes.

Sewage, industrial wastes, and agricultural chemicals such as fertilizers and pesticides are the main causes of water pollution. The U.S. Environmental Protection Agency (EPA) reports that about 37 percent of the country’s lakes and estuaries, and 36 percent of its rivers, are too polluted for basic uses such as fishing or swimming during all or part of the year. In developing nations, more than 95 percent of urban sewage is discharged untreated into rivers and bays, creating a major human health hazard.

Water runoff, a nonpoint source of pollution, carries fertilizing chemicals such as phosphates and nitrates from agricultural fields and yards into lakes, streams, and rivers. These combine with the phosphates and nitrates from sewage to speed the growth of algae, a type of plantlike organism. The water body may then become choked with decaying algae, which severely depletes the oxygen supply. This process, called eutrophication, can cause the death of fish and other aquatic life. Agricultural runoff may be to blame for the growth of a toxic form of algae called Pfiesteria piscicida, which was responsible for killing large amounts of fish in bodies of water from the Delaware Bay to the Gulf of Mexico in the late 1990s. Runoff also carries toxic pesticides and urban and industrial wastes into lakes and streams.

Erosion, the wearing away of topsoil by wind and rain, also contributes to water pollution. Soil and silt (a fine sediment) washed from logged hillsides, plowed fields, or construction sites, can clog waterways and kill aquatic vegetation. Even small amounts of silt can eliminate desirable fish species. For example, when logging removes the protective plant cover from hillsides, rain may wash soil and silt into streams, covering the gravel beds that trout or salmon use for spawning.

The marine fisheries supported by ocean ecosystems are an essential source of protein, particularly for people in developing countries. Yet pollution in coastal bays, estuaries, and wetlands threatens fish stocks already depleted by overfishing. In 1989, 260,000 barrels of oil was spilled from the oil tanker Exxon Valdez into Alaska’s Prince William Sound, a pristine and rich fishing ground. In 1999 there were 8,539 reported spills in and around U.S. waters, involving 4.4 billion liters (1.2 billion gallons) of oil.

Figure showing water pollution by sewage pipe ways.

C. Soil Pollution

Soil is a mixture of mineral, plant, and animal materials that forms during a long process that may take thousands of years. It is necessary for most plant growth and is essential for all agricultural production. Soil pollution is a buildup of toxic chemical compounds, salts, pathogens (disease-causing organisms), or radioactive materials that can affect plant and animal life.

Unhealthy soil management methods have seriously degraded soil quality, caused soil pollution, and enhanced erosion. Treating the soil with chemical fertilizers, pesticides, and fungicides interferes with the natural processes occurring within the soil and destroys useful organisms such as bacteria, fungi, and other microorganisms. For instance, strawberry farmers in California fumigate the soil with methyl bromide to destroy organisms that may harm young strawberry plants. This process indiscriminately kills even beneficial microorganisms and leaves the soil sterile and dependent upon fertilizer to support plant growth. This results in heavy fertilizer use and increases polluted runoff into lakes and streams.

Improper irrigation practices in areas with poorly drained soil may result in salt deposits that inhibit plant growth and may lead to crop failure. In 2000 BC, the ancient Sumerian cities of the southern Tigris-Euphrates Valley in Mesopotamia depended on thriving agriculture. By 1500 BC, these cities had collapsed largely because of crop failure due to high soil salinity. The same soil pollution problem exists today in the Indus Valley in Pakistan, the Nile Valley in Egypt, and the Imperial Valley in California.

Figure showing oil spill causing soil pollution.

D. Solid Waste

Solid wastes are unwanted solid materials such as garbage, paper, plastics and other synthetic materials, metals, and wood. Billions of tons of solid waste are thrown out annually. The United States alone produces about 200 million metric tons of municipal solid waste each year (see Solid Waste Disposal). A typical American generates an average of 2 kg (4 lb) of solid waste each day. Cities in economically developed countries produce far more solid waste per capita than those in developing countries. Moreover, waste from developed countries typically contains a high percentage of synthetic materials that take longer to decompose than the primarily biodegradable waste materials of developing countries.

Areas where wastes are buried, called landfills, are the cheapest and most common disposal method for solid wastes worldwide. But landfills quickly become overfilled and may contaminate air, soil, and water. Incineration, or burning, of waste reduces the volume of solid waste but produces dense ashen wastes (some of which become airborne) that often contain dangerous concentrations of hazardous materials such as heavy metals and toxic compounds. Composting, using natural biological processes to speed the decomposition of organic wastes, is an effective strategy for dealing with organic garbage and produces a material that can be used as a natural fertilizer. Recycling, extracting and reusing certain waste materials, has become an important part of municipal solid waste strategies in developed countries. According to the EPA, more than one-fourth of the municipal solid waste produced in the United States is now recycled or composted. Recycling also plays a significant, informal role in solid waste management for many Asian countries, such as India, where organized waste-pickers comb streets and dumps for items such as plastics, which they use or resell.

Expanding recycling programs worldwide can help reduce solid waste pollution, but the key to solving severe solid waste problems lies in reducing the amount of waste generated. Waste prevention, or source reduction, such as altering the way products are designed or manufactured to make them easier to reuse, reduces the high costs associated with environmental pollution.

E. Hazardous Waste

Hazardous wastes are solid, liquid, or gas wastes that may be deadly or harmful to people or the environment and tend to be persistent or nondegradable in nature. Such wastes include toxic chemicals and flammable or radioactive substances, including industrial wastes from chemical plants or nuclear reactors, agricultural wastes such as pesticides and fertilizers, medical wastes, and household hazardous wastes such as toxic paints and solvents.

About 400 million metric tons of hazardous wastes are generated each year. The United States alone produces about 250 million metric tons—70 percent from the chemical industry. The use, storage, transportation, and disposal of these substances pose serious environmental and health risks. Even brief exposure to some of these materials can cause cancer, birth defects, nervous system disorders, and death. Large-scale releases of hazardous materials may cause thousands of deaths and contaminate air, water, and soil for many years. The world’s worst nuclear reactor accident took place near Chernobyl’, Ukraine, in 1986. The accident killed at least 31 people, forced the evacuation and relocation of more than 200,000 more, and sent a plume of radioactive material into the atmosphere that contaminated areas as far away as Norway and the United Kingdom.

Until the Minamata Bay contamination was discovered in Japan in the 1960s and 1970s, most hazardous wastes were legally dumped in solid waste landfills, buried, or dumped into lakes, rivers, and oceans. Legal regulations now restrict how such materials may be used or disposed, but such laws are difficult to enforce and often contested by industry. It is not uncommon for industrial firms in developed countries to pay poorer countries to accept shipments of solid and hazardous wastes, a practice that has become known as the waste trade. Moreover, cleaning up the careless dumping of the mid-20th century is costing billions of dollars and progressing very slowly, if at all. The United States has an estimated 217,000 hazardous waste dumps that need immediate action. Cleaning them up could take more than 30 years and cost $187 billion.

Hazardous wastes of particular concern are the radioactive wastes from the nuclear power and weapons industries. To date there is no safe method for permanent disposal of old fuel elements from nuclear reactors. Most are kept in storage facilities at the original reactor sites where they were generated. With the end of the Cold War, nuclear warheads that are decommissioned, or no longer in use, also pose storage and disposal problems.

Figure showing an overflowing landfill.

Figure showing liquid hazardous waste.

F. Noise Pollution

Unwanted sound, or noise, such as that produced by airplanes, traffic, or industrial machinery, is considered a form of pollution. Noise pollution is at its worst in densely populated areas. It can cause hearing loss, stress, high blood pressure, sleep loss, distraction, and lost productivity.

Sounds are produced by objects that vibrate at a rate that the ear can detect. This rate is called frequency and is measured in hertz, or vibrations per second. Most humans can hear sounds between 20 and 20,000 hertz, while dogs can hear high-pitched sounds up to 50,000 hertz. While high-frequency sounds tend to be more hazardous and more annoying to hearing than low-frequency sounds, most noise pollution damage is related to the intensity of the sound, or the amount of energy it has. Measured in decibels, noise intensity can range from zero, the quietest sound the human ear can detect, to over 160 decibels. Conversation takes place at around 40 decibels, a subway train is about 80 decibels, and a rock concert is from 80 to 100 decibels. The intensity of a nearby jet taking off is about 110 decibels. The threshold for pain, tissue damage, and potential hearing loss in humans is 120 decibels. Long-lasting, high-intensity sounds are the most damaging to hearing and produce the most stress in humans.

Solutions to noise pollution include adding insulation and sound-proofing to doors, walls, and ceilings; using ear protection, particularly in industrial working areas; planting vegetation to absorb and screen out noise pollution; and zoning urban areas to maintain a separation between residential areas and zones of excessive noise.

Concorde Airplane

Distinguished by a pointed nose that angles downward during takeoff, the Anglo-French Concorde flew at more than twice the speed of sound. Controversy surrounded its use in the United States; the supersonic plane was very noisy, and some believed its sonic booms harmed the environment. Even conventional jet engine airplanes produce noise pollution. Under normal operating conditions, jet engines produce sound at around 110 decibels, but people at close range as a jet engine takes off may be exposed to sounds of more than 130 decibels. Sounds of 120 decibels or more cause pain and damage the delicate tissues of the inner ear. The Concorde went out of service in 2003 because it was unprofitable.

Sources of Wastes.

Wastes are generated from a variety of activities associated with petroleum production. These wastes fall into the general categories of produced water, drilling wastes, and associated wastes. Produced water accounts for about 98% of the total waste stream in the United States, with drilling fluids and cuttings accounting for the remaining 2%. Other associated wastes combined contribute a few tenths of a percent to the total waste volume (American Petroleum Institute, 1987). The total volume of produced water in the United States is roughly 21 billion barrels per year (Perry and Gigliello, 1990). A typical well can

generate several barrels of fluid and cuttings per foot of hole drilled. In 1992, 115,903,000 feet of hole were drilled in the United States (American Petroleum Institute, 1993), yielding on the order of 300 million barrels of drilling waste. Produced water virtually always contains impurities, and if present in sufficient concentrations, these impurities can adversely impact the environment. These impurities include dissolved solids (primarily salt

and heavy metals), suspended and dissolved organic materials, formation solids, hydrogen sulfide, and carbon dioxide, and have a deficiency of oxygen (Stephenson, 1992). Produced water may also contain low levels of naturally occurring radioactive materials, or NORM

(Gray, 1993). In addition to naturally occurring impurities, chemical additives like coagulants, corrosion inhibitors, emulsion breakers, biocides, dispersants, paraffin control agents, and scale inhibitors are often added to alter the chemistry of produced water. Water produced from waterflood projects may also contain acids, oxygen scavengers,

Introduction to Environmental Control in the Petroleum Industry 3 surfactants, friction reducers, and scale dissolvers that were initially injected into the formation (Hudgins, 1992).

Drilling wastes include formation cuttings and drilling fluids. Waterbased drilling fluids may contain viscosity control agents (e.g., clays), density control agents, (e.g., barium sulfate, or barite), deflocculants, (e.g., chrome-lignosulfonate or lignite), caustic (sodium hydroxide),

corrosion inhibitors, biocides, lubricants, lost circulation materials, and formation compatibility agents. Oil-based drilling fluids also contain a base hydrocarbon and chemicals to maintain its water-in-oil emulsion. The most commonly used base hydrocarbon is diesel, followed by less toxic mineral and synthetic oils. Drilling fluids typically contain heavy metals like barium, chromium, cadmium, mercury, and lead. These metals can enter the system from materials added to the fluid or from naturally occurring minerals in the formations being drilled through. These metals, however, are not typically bioavailable, An extensive discussion of the environmental impacts of drilling wastes has been presented by Bleier et al. (1993).

Associated wastes are those other than produced water and drilling wastes. Associated wastes include the sludges and solids that collect in surface equipment and tank bottoms, pit wastes, water softener wastes, scrubber wastes, stimulation wastes from fracturing and acidizing, wastes from dehydration and sweetening of natural gas, transportation wastes, and contaminated soil from accidental spills and releases.

Another waste stream associated with the petroleum industry is air emissions. These emissions arise primarily from the operation of internal combustion engines. These engines are used to power drilling rigs, pumps, compressors, and other oilfield equipment. Other

emissions arise from the operations of boilers, steam generators, natural gas dehydrators, and separators. Fugitive emissions from leaking valves and fittings can also release unacceptable quantities of volatile pollutants.

One common, but incorrect, perception of the petroleum exploration and production industry is that it is responsible for large-scale hydrocarbon contamination of the sea. The total amount of hydrocarbons that enter the sea is estimated to be 3.2 million metric tons per year, The individual contributions from the different sources of hydrocarbons.

OZONE LAYER.

OIL AND GAS INDUSTRY.

The Oil and Gas Industry can be considered as a whole under the following topics;

  • Exploration and Exploitation.
  • Transportation
  • Processing (Refining)
  • Storage
  • Utilization
  • Mechanisms of Petroleum Operations

Drilling and Production Operations.

 

In the upstream petroleum industry, there are two major operations that can potentially impact the environment: drilling and production. Both operations generate a significant volume of wastes. Environmentally responsible actions require an understanding of these wastes and how they are generated. From this understanding, improved operations that minimize or eliminate any adverse environmental impacts can be developed. Drilling is the process in which a hole is made in the ground to allow subsurface hydrocarbons to flow to the surface. The wastes generated during drilling are the rock removed to make the hole (as

cuttings), the fluid used to lift the cuttings, and various materials added to the fluid to change its properties to make it more suitable for use and to condition the hole.

Production is the process by which hydrocarbons flow to the surface to be treated and used. Water is often produced with hydrocarbons and contains a variety of contaminants. These contaminants include dissolved and suspended hydrocarbons and other organic materials, as well as dissolved and suspended solids. A variety of chemicals are also used during production to ensure efficient operations. During both drilling and production activities, a variety of air pollutants are emitted. The primary source of air pollutants are the

emissions from internal combustion engines, with lesser amounts from other operations, fugitive emissions, and site remediation activities.

DRILLING

The process of drilling oil and gas wells generates a variety of different types of wastes. Some of these wastes are natural byproducts of drilling through the earth, e.g., drill cuttings, and some come from materials used to drill the well, e.g., drilling fluid and its associated additives. This section reviews the drilling process, the drilling fluid composition, methods to separate cuttings from the drilling fluid, the use of reserves pits, and site preparation.

 Overview of the Drilling Process.

Most oil and gas wells are drilled by pushing a drill bit against the rock and rotating it until the rock wears away. A drilling rig and system is designed to control how the drill bit pushes against the rock, how the resulting cuttings are removed from the well by the drilling

fluid, and how the cuttings are then removed from the drilling fluid so the fluid can be reused.

The major way in which drilling activities can impact the environment is through the drill cuttings and the drill fluid used to lift the cuttings from the well. Secondary impacts can occur due to air emissions from the internal combustion engines used to power the drilling

rig.

During drilling, fluid is injected down the drill string and though small holes in the drill bit. The drill bit and holes are designed to allow the fluid to clean the cuttings away from the bit. The fluid, with suspended cuttings, then flows back to the surface in the annulus between the drill string and formation. At the surface, the cuttings are separated from the fluid; the cuttings, with some retained fluid, are then placed in pits for later treatment and disposal. The separated fluid is then reinjected down the drill string to lift more cuttings.

The base fluid most commonly used in the drilling process is water, followed by oil, air, natural gas, and foam. When a liquid is used as the base fluid, either oil-based or water-based, it is called “mud.”

Water-based drilling fluids are used in about 85% of the wells drilled worldwide. Oil-based fluids are used for virtually all of the remaining wells.

During the drilling process, some mud can be lost to permeable underground formations. To ensure that mud is always available to keep the well full, extra mud is always mixed at the surface and kept in reserves or mud pits for immediate use. Reserves pits vary in size, depending on the depth of the well. The pits can be up to an acre in area and be 5-10 feet deep. Steel tanks are also used for mud pits, especially in offshore operations. Pits are also used to store supplies of water, waste fluids, formation cuttings, rigwash, and rainwater runoff.

 

 

 

 Drilling Fluids.

Drilling fluids serve a number of purposes in drilling a well. In most cases, however, the base fluid does not have the proper physical or chemical properties to fulfull those purposes, and additives are required to alter its properties. The primary purpose of drilling fluid is to remove the cuttings from the hole as they are generated by the bit

and carry them to the surface. Because solids are more dense than the fluid, they will tend to settle downward as they are carried up the annulus. Additives to increase the fluid viscosity are commonly used to lower the settling velocity.

Drilling fluids also help control the well and prevent blowouts. Blowouts occur when the fluid pressure in the wellbore is lower than the fluid pressure in the formation. Fluid in the formation then flows into the wellbore and up to the surface. If surface facilities are unable to handle this flow, uncontrolled production can occur. The primary fluid property required to control the well is the fluid’s density, Additives to increase fluid density are commonly used.

Drilling fluids also keep the newly drilled well from collapsing before steel casing can be installed and cemented in the hole. The pressure of the fluid against the side of the formation inhibits the walls of the formation from caving in and filling the hole. Additives are often used to prevent the formation from reacting with the base fluid.

One common type of reaction is shale swelling. A final function of drilling fluids is to cool and lubricate the drill bit as it cuts the rock and lubricate the drill string as it spins against the formation. This extends the life of the drill bit and reduces the torque required at the rotary table to rotate the bit. Additives to increase the lubricity oT the drilling fluid are commonly used, particularly in highly deviated or horizontal wells.

Many of the additives used in drilling fluids can be toxic and are now regulated. To comply with new regulations, many new additives have been formulated (Clark, 1994), These new additives have a lower toxicity than those traditionally used, thus lowering the potential for

environmental impact.

Water-based Drilling Fluids

Water is the most commonly used base for drilling fluids or muds. Because it does not have the physical and chemical properties needed to fulfill all of the requirements of a drilling mud, a number of additives are used to alter its properties. During drilling, formation materials get incorporated into the drilling fluid, further altering its composition and properties.  These constituents are discussed in more detail below.

Viscosity Control

One of the most important functions of a drilling fluid is to lift cuttings from the bottom of the well to the surface where they can be removed. Because cuttings are more dense than water, they will settle downward through the water from gravitational forces. The settling velocity is controlled primarily by the viscosity of the water and the size of the cuttings. Because the viscosity of water is relatively low, the settling velocity for most cuttings is high. To remove the cuttings from the well using water only, a very high water velocity would be required. To lower the settling velocity of cuttings and decrease the corresponding mud circulation rate, viscosifiers are added to the water to increase its viscosity.

The most commonly used viscosifier is a hydratable clay. Some clays, like smectite, consist of molecular sheets with loosely held cations between them, such as Na+. If the clay is contacted with water having a cation concentration that is lower than the equilibrium concentration for the cation in the clay, the cation atom between the sheets can be exchanged with water molecules. Because water molecules are physically larger than most cations, the spacing between the clay sheets expands and the clay swells (hydrates). During the mixing and shearing that occurs as water is circulated through the well, these clay sheets can separate, forming a suspension of very small solid particles in the water. The viscosity of this suspension is significantly higher than that of pure water and is more effective in lifting the larger formation cuttings out of the well.

The most common clay used is Wyoming bentonite. This clay is composed mostly of sodium montmorillonite, a variety of smectite.

Most drilling fluids are composed of 3% to 7% bentonite by volume. Other clays can be used, but typically do not provide as high a mud viscosity for the same amount of clay added. During normal drilling operations, natural clays in the formations can also be incorporated into the mud, increasing the clay content and mud viscosity over time.

Adding hydratable clays to the water used as a drilling fluid provides a second important benefit for drilling of wells. Because the pressure of the mud in the wellbore is normally kept above the pressure in the formation to prevent blowouts, the water (mud filtrate) will flow into a permeable formation and be lost. When this occurs, the suspended clays are filtered out at the face of the formation, building a mudcake along the walls of the well. The clay particles of this mudcake are virtually always smaller than the grains of a permeable formation, so the resulting permeability of the mudcake is much lower than that of the formation. This low permeability mudcake acts as a barrier to minimize subsequent fluid losses to the formation. Because fluid losses are lower, the total volume of mud needed to drill the well is reduced.

One difficulty with using clay particles for viscosity control is that they tend to flocculate (agglomerate) if the mud is allowed to remain static in the wellbore. When flocculation occurs, the mud viscosity can significantly increase. If the viscosity becomes too high, the mud can become too difficult to pump at reasonable pressures and flow rates, rendering it ineffective as a drilling fluid. Flocculation occurs when the electrostatic charges along the periphery of the clay particles are allowed to attract other clay particles. The flocculation rate increases with an increasing clay content and electrolyte (salt) concentration in the mud.

A variety of materials are available that can suppress flocculation of clay particles in drilling muds, although none are totally effective under all conditions. The most common deflocculants are phosphates, tannins, lignites, and lignosulfonates. Phosphate deflocculants can be used when the salt concentrations and temperatures are low. Tannins are effective in moderate concentrations of electrolyte concentration and moderate temperatures. Lignites and lignosulfonates can be effective at high temperatures, particularly if they are complexed with heavy metals like chromium.

Polymers, like xanthan gum, have also been developed to increase the viscosity of drilling mud. These polymers have the advantage of shear thinning, which lowers the viscosity and required pumping power during high pumping rates, when a high viscosity is not needed.

Density Control

Another important function of a drilling fluid is to control the fluid pressure in the wellbore. Because many formations are hydrostatically pressured or overpressured and the pressure in the wellbore must be kept higher than that in the formation, the pressure in the wellbore must normally be higher than the hydrostatic pressure for pure water to prevent the well from blowing out. The fluid pressure in the wellbore is controlled by varying the density of the drilling fluid. The density is varied by adding heavy solids to the fluid.

Although the clays added to control the fluid viscosity also increase the fluid density, their specific gravity of 2.6 and low concentration in the mud is insufficient to provide the needed density for many applications. Materials having a higher specific gravity are normally required to obtain the desired mud density.

The most common material used to increase the density of drilling mud is barite (barium sulfate, BaSO4). Barite has a high specific gravity of 4.2. In some wells requiring a very high density, barite can constitute as much as 35% of the drilling fluid by volume. Because of the high specific gravity of barite, viscosity control additives (clays) are normally used to keep the barite suspended in the fluid. Other materials that can be used to control drilling fluid density include calcium carbonate, iron carbonate, ilmenite (FeO–TiO2) and hematite (Fe2O3). These materials are harder than barite and are less susceptible to particle size reduction during drilling. Although these materials have a lower specific gravity than barite, they have the added benefit of lowering the barium concentration in the drilling rnud,

Galena (PbS) can also be used, but will result in lead being added to the drilling mud. Rarely, barium carbonate has been used.

 

Lost Circulation Control

During drilling, fluid is lost to the formation as drilling fluid leaks into permeable strata. To minimize this loss, small particles are added to drilling fluids that will filter out on the formation face as fluid is lost. These solids then form a low permeability mudcake that limits further fluid loss. In most cases, the clay particles added to control the viscosity of a drilling fluid are successful in controlling fluid loss to the formation.

In some formations, however, the pore sizes may be so large that the clay particles are unable to bridge the pores and build a filter cake. Such formations may include those having natural or induced fractures, very high permeability sands, or vugs. To limit fluid loss in such formations, larger solids can be added to the drilling fluid, A mudcake of clay particles is then built on the bridge created by those solids, Solids that are commonly used for this application include mica, cane fibers, ground nutshells, plastic, sulfur, perlite, cellophane, cottonseed hulls, and sawdust.

If solids cannot be used to build a filter cake, the viscosity of the drilling fluid can be increased to limit fluid loss. Water-soluble polymers like starch, sodium polyacrylate, and sodium carboxymethylcellulose can be used.

A high mud pH between 9.5 and 10.5 is almost always desired in drilling operations. A high pH suppresses the corrosion rate of drilling equipment, minimizes hydrogen embrittlement of steel if hydrogen sulfide enters the mud, lowers the solubility of calcium and magnesium to minimize their dissolution, and increases the solubility of lignosulfonate and lignite additives. A high pH is also beneficial for many new organic viscosity control additives. To keep the pH in the desired range, caustic (sodium hydroxide) is normally added to the mud. Some of the new polymer muds, however, have better shale stabilization

properties -at a lower pH (Clark, 1994).

Lubricants

During drilling, a considerable amount of friction can be generated between the drill bit and formation and between the drill string and wellbore walls, particularly for deviated and horizontal wells. To reduce this friction, lubricants are sometimes added to drilling fluids.

These lubricants speed drilling and help maintain the integrity of the well. Common lubricants include diesel oil, mineral/vegetable oils, glass beads, plastic beads, wool grease, graphite, esthers, and glycerols.If a drill string becomes stuck in a well, a lubricant is usually

circulated through the well to help free it. These spotting fluids have

traditionally been formulated with diesel or mineral oils. Because these fluids “contaminate” cuttings with a hydrocarbon, the discharge and disposal options for cuttings is limited in some areas. Water-based spotting fluids are also available (Clark and Almquist, 1992).

 

Corrosion Inhibitors

Corrosion is commonly caused by dissolved gases in the drilling mud, e.g., oxygen, carbon dioxide, or hydrogen sulfide. Optimum corrosion protection of drilling equipment would include elimination of these gases from the mud. If elimination is not possible, the corrosion rate should be reduced. A wide variety of chemicals are available to inhibit corrosion from drilling mud. These additives are often used even when the pH is maintained in the desired range. Corrosion inhibitors do not prevent corrosion, but reduce the corrosion

rate to acceptable levels, e.g., below 400 mills per year or 0.02 Ibm metal per ft2 of metal in 10 hours. Inhibitors coat the metal surface and limit the diffusion rate of corrosive chemicals to the surface. The most common inhibitors utilize a surfactant that protects the metal with a coating of oil. High molecular weight morpholines and filming amines are most commonly used for oilfield applications, Ethylene diamine tetracetic acid (EDTA) is sometimes used to dissolve pipe corrosion.

Oil-soluble organic inhibitors applied every 10 hours appear to successfully reduce oxygen corrosion. These inhibitors are strongly absorbed on clays and cuttings, however, increasing the amount of inhibitor required. Water-soluble organic corrosion inhibitors may not be effective for controlling oxygen corrosion, although they can be used to reduce pitting from H2S in the absence of oxygen. A more complete discussion of corrosion is given by Jones (1988).

Biocides

Sulfur reducing bacteria can grow in many drilling muds, particularly those containing starches and polymer additives. These bacteria can degrade the mud and can enter the formation, where they can sour the reservoir (generate hydrogen sulfide gas). Hydrogen sulfide causes corrosion of equipment when present in drilling muds. To prevent these

bacteria from growing, biocides are added to drilling fluids. Common biocides include paraformaldehyde, chlorinated phenol, isothiazolin, and glutaraldehyde. The latter two biocides have lower toxicities and are replacing the former two in popularity (Clark, 1994).

 

Formation Damage Control

Many formations contain active clays that swell upon contact with fresh water. These swelling clays can plug pores in the reservoir, lowering its permeability, or they can cause shale around the wellbore to slough into the wellbore, “wellbore washout.” To prevent these reactions from occurring, salts are commonly added to the drilling fluid. These salts prevent water molecules from exchanging with the cations in the clays. Salts commonly used include sodium and potassium chloride. Potassium acetate or potassium carbonate can also be used, as well as cationic polymers. Shale stabilization additives based on glycols have also been successfully used (Reid et al., 1993). A number of cationic polymer muds having good shale stabilization properties have also been introduced (Clark, 1994).

A related problem during drilling is that cuttings can ball around the bit, forming a gummy paste. This paste reduces drilling speed because it is not easily removed from the bit by the drilling fluid. Copolymer/polyglycol muds have been successfully used to prevent bit-balling (Enright and Smith, 1991).

If a well is drilled through a salt dome, a water-based mud that is saturated in chloride salts may be required to prevent excessive dissolution of the salt along the wellbore.

Oil-based Drilling Fluids

Various organic fluids are also used as a base for drilling muds. In some cases, the properties of these “oil-based” muds are superior to those of water-based muds. Like water, however, these organic fluids do not have all of the proper physical and chemical properties needed to fulfill all of the requirements of a drilling mud, so various additives are also used.

Oil-based muds are often preferred for high-temperature wells, i.e.,

wells with temperatures greater than about 300°F. At temperatures above that level, many of the additives used with a water-based fluid can break down.

Oil-based muds are also used in wells containing water-sensitive minerals, e.g., salt, anhydrite, potash, gypsum, or hydratable clays and shales. Using an oil-based mud in a reactive formation can reduce wellbore washout by more than 20% (Thurber, 1990). Reducing the amount of washout reduces both the volume of drill cuttings to be disposed of and the volume of drilling fluid required to drill the hole. Reducing interactions between the drilling fluid and formation minerals by using an oil-based mud also limits the degradation of cuttings into smaller particles, which improves the efficiency of separating the

solids from the drilling fluid. Oil-based muds are also used in wells containing reactive gases like CO2 & H2S. When oil-based muds are used, corrosion is minimized because the continuous oil phase does not act as an electrolyte. These gases are prime contributors to corrosion of drilling equipment in water-based mud systems. Another application of oil based muds is in wells requiring unusually high levels of lubrication between the drill pipe and the formation. These wells include deviated or horizontal wells, where the drill pipe

rotates against the formation over long intervals. Oil-based muds are also useful for freeing pipe that has become stuck in the well. Oil-based muds are generally more expensive than water-based muds and have a greater potential for adverse environmental impact. The benefits of oil-based muds, however, can result in a significant savings in the cost of drilling a well. Because of their superior properties, drilling can often be completed faster, which may result in lower overall environmental consequences than those of water-based

muds. Because oil-based muds are more expensive, they are also more likely to be reconditioned and reused than water-based muds.

Historically, the most common base oil used has been diesel. It has an acceptable viscosity, low flammability, and a low solvency for any rubber in the drilling system. Diesel, however, is relatively toxic, making the environmental impact of diesel-based muds generally higher than those of water-based muds. The most common additive used in oil-based muds for viscosity control is water in the form of a water-in-oil emulsion. Small, dispersed drops of water in the continuous oil phase can significantly increase the mud viscosity. Water contents of typically 10% have been used. A chemical emulsifier (surfactant) is normally added to prevent the water droplets from coalescing and settling from gravitational forces. Commonly used emulsifiers are calcium or magnesium fattyacid soaps. If further viscosity increases are required, solids can be added to the mud, including asphalts, amine-treated bentonite, calcium carbonate, or barite.

The density of oil is significantly lower than that of water, so density control additives normally must be used. The water in water-in-oii emulsions only slightly increases the mud density, so solids are normally added. The same solids that are used to increase the viscosityasphalts, amine-treated bentonite, calcium carbonate, or barite—can be used to increase the density. One limitation with oil-based muds is that most of the solids that enter the mud, including cuttings, are waterwet. To prevent the solids from concentrating in the dispersed water droplets and settling out, chemical wettability agents (surfactants) are added to change the wettability of the solids to oil-wet. This allows the solids to be dispersed through the more voluminous oil phase.

One of the advantages of oil-based muds is their compatibility with water-sensitive formations. Because the continuous phase is oil, only oil can enter the formation as a filtrate. Water invasion is severely limited, which minimizes the damage to the formation. Because clay particles do not flocculate in oil-based muds, bit-balling is also minimized. If fluid loss becomes too high, fluid loss agents like bentonite, asphalt, polymers, manganese oxide, and amine-treated lignite can be used.

Although oil-based muds have a lower corrosion rate than water-based muds, corrosion can occur, particularly when drilling through a formation containing CO2 or H2S. Like water-based muds, the primary method to control corrosion is to control the pH of the water phase of the mud. A common additive for pH control of oil-based muds is calcium oxide.

A number of oil-based muds using organic materials have been developed as low-toxicity substitutes for diesel.

Natural Gas Production/Refining.

As natural gas flows from the ground, it contains a variety of impurities that must be removed before it can be sold. These impurities are primarily water vapor, carbon dioxide, and hydrogen sulfide. The process of removing hydrogen sulfide and carbon dioxide is called sweetening.

Natural gas also contains fluids like propane, butane, and ethane, which can be separated from the gas by liquefaction. These natural gas liquids are more valuable and can be sold at higher prices. Other materials contained in the gas stream include produced water, pigging materials for the pipelines, filter media, fluids from corrosion treatment, and solids like rust, pipe scale, and produced sand. Cooling water and used lube oils and filters from compressors are also generated during gas treatment (American Petroleum Institute, 1989).

Natural gas is separated from produced solids and liquids by gravitational forces in separators. Natural gas liquids are separated from the lower molecular weight components by compression, absorption, and refrigeration.

Water vapor is removed from natural gas by contact with liquid or solid desiccants. Liquid desiccants include triethylene glycol, ethylene, and diethylene. Solid desiccants include towers filled with alumina, silica gel, silica-alumina beads, or molecular sieves. The water is subsequently removed from the desiccant by heat regeneration, and the desiccant is reused. The desiccation processes can generate wastes of glycol-based fluids, glycol filters, condensed water, and solid dessicants. These materials may contain low levels of hydrocarbons and treating chemicals. Benzene and other volatile aromatics can

dissolve in glycols and be subsequently emitted when the glycol is being regenerated for reuse.

Carbon dioxide and hydrogen sulfide are removed from natural gas by contact with amines. The most common amines are diethanoiamine (DBA) and monoethanolamine (MEA). Hydrogen sulfide can also be removed by contact with sulfinol, iron sponges (finely divided iron oxide in wood shaving carriers), and caustic solutions. Amines and sulfinol can be restored for reuse by heat regeneration, but iron sponges and caustic solutions are spent as the iron is converted to iron sulfide and other sulfur compounds. Other wastes generated when removing sweetening natural gas include spent amine, used filter

media, and flared acid gas wastes. Sodium hydroxide is often added to the amine to prevent corrosion of equipment.

During sweetening, amine compounds are attacked by carbon dioxide and can break down. The solutions are filtered to remove the degradation products from the usable amine. The degradation products form toxic amine sludges that require treatment and disposal

(Boyle, 1990).

During the production of natural gas, hydrates can form from the gas and water vapor. Hydrates are a slushy, ice-like substance that can plug the production tubing and equipment. Various chemicals, primarily methanol and ethylene glycol, are sometimes added to gas-producing wells to lower the freeze point of hydrates to inhibit

their formation.

 

 Other Operations

A variety of other operations associated with the production of oil and gas generate wastes that have the potential to impact the environment. These wastes include wastewater from cooling towers, water softening wastes, contaminated sediments, scrubber wastes, used filter media, various lubrication oils, and site construction wastes.

Cooling towers are used for a variety of processes during oil and gas production. The cooling water used in these towers often contains chrome-based corrosion inhibitors and pentachlorophenol biocides. In many areas, produced water is reinjected into the reservoir to assist hydrocarbon recovery. Unfortunately, the level of dissolved solids, particularly hardness ions (calcium and magnesium), is often too high to be used because they readily precipitate and can plug the formation. Thus, before produced water can be reinjected, it must be softened to exchange the hardness ions with softer ions, e.g., sodium.

The most common way to soften produced water is through ion exchange. There are two major ion exchange resins (substrates) that are commonly used: strong acid resins, using sulfonic acid, and weak acid resins, using carboxylic acid. Strong acid resins can be regenerated simply by flushing with a concentrated solution of sodium chloride.

Weak acid resins, however, must be regenerated by flushing with a strong acid-like hydrochloric or sulfuric and then neutralizing it with sodium hydroxide.

During oil production, sand and shale sediments are often produced with the oil. These sediments are separated out in the surface equipment. They normally collect in tank bottoms and must be periodically removed. These solids are normally mixed with oil, forming a sludge. Sediments can also be contaminated with oil and other materials from spills and leaks from equipment.

The hydrocarbon content of oil-contaminated sediments can exceed 4% by weight (Deuel, 1990). These sediments may also contain heavy metals or hydrogen sulfide (Brommelsiek and Wiggin, 1990). Total heavy metal concentrations in produced solids are generally low, as indicated in Table 2-8 (Cornwell, 1993). It is not known whether the differences in heavy metal concentrations for native soils in Alaska, shown in Table 2-2, and for produced solids, shown in Table 2-8, are from production activities or just natural variations in geology. To remove the suspended solids that are not removed by settling, produced fluids are often passed through filters. The filter media must be frequently replaced or backwashed. The filled filters or filter backwash must be disposed.

The operations of much of the oilfield equipment, including stuffing boxes, compressors, and pumps, requires lubrication oil. As this oil is used, it changes its composition, making it potentially unsuitable for future use. The used lube oil must be replaced with fresh oil, and

the used oil must be disposed of. In areas where lease crude is burned, e.g., where steam is injected to recover oil, the combustion gases may need to be scrubbed to remove pollutants like sulfur dioxide. One way to remove sulphur dioxide from combustion gases is to bubble it through aqueous solutions containing caustic chemicals like sodium hydroxide or sodium

carbonate. Sulfur dioxide dissolves into water, forming sulfuric acid, which is neutralized by the caustic. Another form of scrubber uses various amines. Typical wastewaters can have very high levels of dissolved solids.

 

Naturally Occurring Radioactive Materials

Naturally occurring radioactive materials (NORM) are found virtually everywhere on the earth, including ground and surface waters (Judson and Osmond, 1955). During the production of oil and gas, radioactive materials that naturally occur within the earth can be

coproduced. Although the concentrations of NORM are usually very low, these materials can be concentrated during production; the concentrated levels can become high enough to cause a health hazard if improperly managed.

There are four radionuclides most commonly found in NORM in the upstream petroleum industry: radium-226, radium-228, radon-222, and lead-210. Radium-226 is probably the nuclide with the greatest potential for environmental impact for the petroleum industry. Other radioactive materials are also found, but in significantly lower amounts.

Radium (both 226 and 228) is highly soluble and is produced as a dissolved solid with the produced water. The levels of radium in produced water vary significantly. Although most wells do not produce significant amounts of NORM, typical concentrations in wells having

NORM have been reported to vary between 1-2,800 picocuries per liter (pCi/1). Much higher concentrations, however, have also been reported (St. Pe et al., 1990; Miller et al., 1990; Snavely, 1989; Stephenson, 1992). In comparison, the natural radium levels in surface waters are typically less than 1 pCi/1. Drinking water standards for radioactive materials are typically 5 pCi/1, and discharge standards for open water are 30 pCi/1, although these regulatory limits can vary.

Radium is coprecipitated with barium, calcium, and strontium sulfate as scale in tubulars and surface equipment during production. This concentrates the radium and makes the scale radioactive. Radium can also be concentrated in various production sludges through its association with solids in the sludge. NORM concentrations of several hundred thousand pCi/gm have been found in scale in piping and surface equipment. Concentrations in excess of 8,000 pCi/gm have been measured in the soil at pipe cleaning yards (Carroll et al., 1990).

The presence of NORM, however, can be easily identified with gamma ray detectors.

Radon-222 is a naturally occurring gas that is found in some produced water and natural gas liquids. This gas comes out of solution as the pressure is reduced during production. Because it is a gas, it normally is not concentrated in sufficient quantities to cause environmental impact, although it can be temporarily concentrated in lowlying

areas.

Lead-210 is of particular concern to the natural gas liquids industry (Gray, 1993). When lead-210 is formed, it precipitates on equipment surfaces, forming an extremely thin layer of radioactive film. Although significant levels of NORM have been seen at some

production operations, it is not normally encountered at drill sites.

GAS FLARING IN NIGERIA.

 

Gas flaring contributes to climate change

Gas flaring contributes to climate change, which has serious implications for both Nigeria and the rest of the world. The burning of fossil fuel, mainly coal, oil and gas – greenhouse gases – has led to warming up the world and is projected to get much, much worse during the course of the 21st century, according to The Intergovernmental Panel on Climate Change (IPCC). This scientific body was set up in 1988 by the UN and the World Meteorological Organisation to consider climate change.

In its 2001 Third Assessment Report, the IPCC said that the global average surface temperature increased by about 0.6°C over the 20th century, that it was 66-90% confident that most of the observed warming over the second half of the century was due to the increase in greenhouse gas concentrations, and projected that the temperature would increase from 1990-2100 by 1.4 to 5.8°C. It also stated that global mean sea level is projected to rise by 0.09 to 0.88 metres between 1990 and 2100, due primarily to thermal expansion and loss of mass from glaciers and ice caps.

In July 2003, Sir John Houghton, formerly co-Chair of the IPCC’s Scientific Assessment Working Group and Chief Executive of the United Kingdom’s Meteorological Office said that:

“the impacts of global warming are such that I have no hesitation in describing it as a ‘weapon of mass destruction'”.

In January 2004, the UK Government’s Chief Scientist said that:

“climate change is the most severe problem we are facing today, more serious even than the threat of terrorism.”

Climate change is particularly serious for developing countries, and Africa as a continent is regarded as highly vulnerable with limited ability to adapt. The IPCC identified 6 areas of concern for the continent as a whole, all of which are relevant in some part of Nigeria:

“Africa is highly vulnerable to the various manifestations of climate change. Six situations that are particularly important are:

  • Water resources, especially in international shared basins where there is a potential for conflict and a need for regional coordination in water management
  • Food security at risk from declines in agricultural production and uncertain climate
  • Natural resources productivity at risk and biodiversity that might be irreversibly lost
  • Vector- and water-borne diseases, especially in areas with inadequate health infrastructure
  • Coastal zones vulnerable to sea-level rise, particularly roads, bridges, buildings, and other infrastructure that is exposed to flooding and other extreme events
  • Exacerbation of desertification by changes in rainfall and intensified land use.”

According to the Nigerian government, “it is widely assumed that over the past decade in West Africa, temperatures have generally increased by 0.2 to 0.3 degree centigrade.”

On this basis the government has reported to the United Nations Framework Convention on Climate Change (UNFCCC) its analysis of the country’s vulnerability to, impact of, and adaptations to climate change in relation to its physical and ecological systems, agriculture and livestock production, fisheries, water resources, energy, industry and mining, transport, tourism and health. This analysis was presented by the Federal Ministry of Environment in November 2003.

For example, adaptation measures and coping strategies required in the agriculture and livestock production sectors include alterations to the planting calendar and crop choices, increased irrigation and reductions in stocking rates or livestock density. In respect of the energy sector, the analysis states:

“The most significant impact of climate change on energy will include (a) higher electricity demand for heating, cooling, water pumping, etc., (b) reduced availability of hydroelectricity and fuelwood, and (c) extensive damage to petrochemical industrial installations presently concentrated in the coastal belt.”

In this context, the contribution to climate change of gas flaring in the Niger Delta is particularly ironic, to say the least.

Another major implication for northern Nigeria is further desertification:

“In the past 25 years, the Sahel has experienced the most substantial and sustained decline in rainfall recorded anywhere in the world within the period of instrumental measurements (Hulme and Kelly, 1997). Linear regression of 1901-1990 rainfall data from 24 stations in the west African Sahel yields a negative slope amounting to a decline of 1.9 standard deviations in the period 1950-1985 (Nicholson and Palao, 1993). Since 1971, the average of all stations fell below the 89-year average and showed a persistent downward trend since 1951.”

Desertification in Africa has already reduced by 25% the potential vegetative productivity of more than 7 million km2, or one-quarter of the continent’s land area (UNEP, 1997). It will lead to more people being unable to live in the countryside and to an increase pressure on urban areas.

Industrial Smokestacks

Carbon dioxide, sulfur dioxide, and other types of contaminants pouring from industrial smokestacks contribute largely to the world’s atmospheric pollution. Carbon dioxide contributes significantly to global warming, while sulfur dioxide emissions are the principal cause of acid rain in the northeastern United States, southeastern Canada, and eastern Europe.

Impact of flaring of natural gas on climate change

Flaring produces the primary GHGs, CO2 and methane (CH4). In addition, flaring of gas rich in liquids can produce smoke, with aerosol effects that also contribute to global warming.

One of the key problems in assessing the impact of flaring on GHG accumulation is the lack of information not only about the quantities involved but also about the types of gases emitted. Key issues include:

  • The ratio of gas vented to gas flared is crucial because the impact of methane on global warming is about 21 times greater than that of CO2, so a small change in the ratio of flaring to venting makes a disproportionate change in the impact on the global environment. For example, if 90 percent of the associated gas volume is flared and 10 percent is vented, the amount vented would have approximately twice the global warming effect as the amount flared.
  • Gas flares vary greatly in the efficiency with which they burn methane and thus convert it into CO2. The least efficient flares still frequently used may convert only 90 percent of the methane to CO2, while the most efficient flares convert 98 percent. The global warming impact of the least efficient flares is twice that of the most efficient.
  • The composition of the gas being flared can vary greatly. Some gas is rich in hydrocarbons heavier than methane (propane, butane, pentanes plus) and thus produces more carbon, as well as smoke and aerosols. In other cases, gas may contain significant proportions of inert gases (nitrogen, helium) and sulfur compounds (H2S), as well as CO2. Incineration of such “impure” natural gas will have a different impact on the climate change than that of pure hydrocarbons.

Because of these uncertainties, the impact of flaring on global warming could be larger than normally assumed. A possible means of reducing uncertainty would be to measure a representative sample of flaring sites and assess the likely range of average characteristics of flaring on a regional basis, using improved figures on flaring volumes to arrive at a global estimate of the impact of flaring on global warming

 

 

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