Economic Analysis of GTP, GTL, CNG, NGH for Offshore Gas Development in Nigeria

Abstract

ABSTRACT Natural gas consumption is globally increasing as it is one of the most important energy resources today. Its consumption is accelerated because of the growing environmental concern. To respond to this world demand, the alternatives of gas usages and technologies should be investigated and compared in terms of economic feasibility. The economic viability of Gas-to-Liquid (GTL), Gas-to-Power (GTP), Compressed Natural Gas (CNG) and Natural Gas Hydrates (NGH) depend on the following factors namely; Capital expenditures (Capex), Operating expenditures (Opex), Prices (natural gas price), Net present value (NPV), profitability index, internal rate of return and Payback time. From the above mentioned factors, at 15% discount rate, CNG has NPV of $16.2 billion, IRR of 54%, profitability index of 7.2 and payback time of 1year and 3 months. GTP has a negative NPV (indicating loss), IRR of 54%, profitability index of 0.8 and payback period 3 years and six months. GTL has NPV of $6.5 billion, IRR of 50%, profitability index of 2.2 and payback period of lyear and 3 months. NGH has NPV of $7.0 billion, IRR of 42%, profitability index of 1.1, payback period of 2 years and 4 months. These results show that Compressed Natural gas is preferred to others because CNG has the highest net present value (NPV), highest profit to investment ratio, highest internal rate of return, lowest initial expenditure (CAPEX) and a shorter payback period. From the economic aspect of this work compressed natural gas is the most economical and viable.