In the business of
refining crude oil, what is good for the goose may not always be good for the
gander. In essence, the modus of refining crude oil in developed nations may
not always suit the third world countries like Nigeria. The fundamental
developmental differences in socio-economic infrastructure and maintenance
psychology demands that a more suitable approach be adopted by countries like
Nigeria, to align with their stage of societal evolution and political
uniqueness. History has shown in Nigeria that large scale, full-service power
plants are difficult to maintain and often function at the level of small-scale
modular plants anyway, despite their size and heavy output potential. The Port
Harcourt, Warri and Kaduna plants have been almost non-functional due to a poor
maintenance culture and a profound difficulty for Nigeria to sustain the
industrial ethics needed for large-scale refining.
While it is encouraging
that the 500,000 BPD plant by Dangote will alleviate the national and regional
shortages in petroleum products supply, it should be understood that the
problems that crippled the older plants are still in place, and by the sheer
size of the refinery, it may suffer the fate of the older ones if extensive
reforms are not implemented. Modular refineries, however, offer some unique
options that may be more suitable for emerging economies like Nigeria.
A modular refinery by
definition is a prefabricated processing plant that has been constructed on
skid mounted surfaces, with each structure containing a portion of the entire
refining process plant connected together by interstitial piping to form an
easily manageable process. Due to its manageability it is in my opinion better
suited for the Nigerian environment.
Its key advantage lies
in its size, cost differential and flexibility. It is constructed in a
controlled environment and properly tested before being shipped out. It is
relatively easier to fabricate and erect. Also, when an area becomes unsuitable
for business, it can be disassembled and reassembled in a more suitable
environment. For areas with non-cohesive geopolitics like Nigeria, modular
plants can be scattered throughout the country to each serve the needs of the
various regions of the country. The maintenance cost is low; considering that
it processes 2,000 to 15000 BPD of mainly light sweet crude, routine turn
around maintenance and on-stream inspections would require less personnel and
down time. Modular plants are easier to secure because of the reduced surface
area and perimeter; issues of internal monitoring of equipment and external
acts of sabotage can be better policed given the smaller area of operation, and
in a situation where one plant suffers an incident, the other smaller plants
scattered all over the country can still be operational.
The impact on the
environment is nothing compared to a large scale refinery. Environmental
pollution and regulation can best be controlled with small scale plants in
countries that may not have the industrial ethics to manage the huge amount of
pollution prevalent with large-scale refining. While a full conversion plant
can cost anywhere from 2 to 9 billion dollars, the same amount can be used to
spread the risk potential and build various modular plants all over the country
to cater to the needs of each geopolitical zone. Finally, while it may take
several years to build a large refinery, modular plants can be put to service
in a matter of months, and only cost about 250 million dollars.
In a volatile nation
like Nigeria, large scale refining has some profound disadvantages that has
over the years been proven by the non-functionality of plants and the heavy
dependence on fuel import even after the plants were built. This shows that
unlike developed countries, economies like Nigeria have not evolved to managing
large scale plants and maybe should look to smaller and flexible units. The key
reason here is maintenance. Large scale refineries are not easy to maintain and
require a stringent quality control and jurisdictional system to ensure longevity.
Global standards stipulate that process equipment be opened cleaned and
inspected at least every five years, and an on-stream mechanical integrity
programme be implemented and documented. While some refineries in America built
in the 1920s are still fully functional, Nigeria's oldest refinery was built in
1965 and operates at less than 15% capacity. The jurisdictional and industrial
ethics are clearly absent and such levels of operation do not suit societies
like Nigeria.
Because of this
lackadaisical culture of maintenance, the likelihood and consequence of failure
of having such huge process capacities cannot be overstated. In the event that
all the country's refining rely on a few giant plants, once those facilities
suffer a mishap, the country is immediately thrown into socio-economic shock.
However, if there are numerous small scale plants then the risk is spread and
environmental and economic impact reduced. Why spend $9 billion to build a
500,000 BPD behemoth, only for it to become epileptic in 10 years.
The Nigerian example is
the most extreme in all the third world in evaluating the problems that a huge
refinery can encounter. Due to the dependence in extensive interconnecting
piping, large-scale plants in Nigeria will find it very difficult to stay in
business if the pipelines are not protected.
Given the stratified
nature of the Nigerian population in terms of ethnic tensions, it may be
advisable for regional refining to be considered, where indigenous modular
plants are operated and overseen by indigenes of the region for their own
economic benefit.In this case, if they blow it up, then they are really hurting
themselves as opposed to seeing the facility as a symbol of government or
multinational domination.
At this stage of
national development, small scale modular plants will yield more economic
benefits and return on investments than their large-scale counterparts and with
the proper government incentives may solve the problem of fuel scarcity and
imports which a giant oil producing country like Nigeria should not experience.
SOURCE: THE GUARDIAN