Energy Bangla - Natural Gas Crisis in Bangladesh- Possible Remedy

Natural gas based economy of Bangladesh is in the grip of serious crisis due to growing deficit in national gas grid. Predominantly Mono fuel Power Generation can not remedy power crisis in short term, fertilizer production is also suffering for lack of supply to fertilizer plants. Not only industrial grown has completely stalled, operation of existing industries has become extremely difficult. Gas crisis has hit domestic and commercial consumers over gas distribution network. The national gas production capacity is about 2000MMCFD but the demand is about 2400MMCFD and is still growing. Transmission and distribution capacity further restricts gas supply. Gas and power crisis have also adversely impacted upon local and foreign investment. But a nation can not keep all fingers crossed like this indefinitely. Something needs to be done and done toady.

Before we suggest remedial measures to overcome present crisis let us have a bird’s eye view of the Gas system of Bangladesh. Government still controls almost 100% of the Gas system planning, development and operation. Energy and Mineral Resources Division (EMRD) of Power, Energy and Mineral Resources Ministry controls every affair. There is a so called Bangladesh Energy Regulatory Commission (BERC) which has mandate to regulate independently all energy sector activities excepting upstream of the petroleum sector. But for several years after commencement of activities BERC is not fully operational. Consequently private sector is not allowed level play ground in infrastructure v development and operation. BERC also remains old man house for retired beauracrats of the past. EMRD owns 100% share of several exploration, production, transmission, distribution & marketing companies of gas and two mining companies. Some International oil companies operate some gas fields in their assigned blocks under PSC with Petrobangla and Government.IOCs share Production with PB. PB has to buy IOC share of gas at much higher than Bangladesh price of gas. IOCs upfront investment is recovered from PB share of gas. Market price of gas is comparatively lower than IOC price which creates discomfort for PB companies in earning profit and reinvest in exploration and development activities. PB companies have to rely on fund from Government ADP or bilateral donor agencies and development partners. Service conditions are poor in Gas industries. For various reasons hundreds of qualified and competent well trained professionals have left PB company jobs for better opportunities abroad. Consequently all SOEs of gas sector have become weak and sick. These can hardly plan and implement any major projects or operate system professionally.

Petrobangla system operation is unbundled on functional lines. But there is o defined gas market structure. Petrobangla buys gas from IOCs. But marketing companies buy gas from national producers. PB Transmission Company GTCL owns, operators, develops and maintains National Gas Grid. It evacuates gas from national producers and IOCs. But GTCL has no contract with any one. Government arbitrarily decide wheeling charge for GTCL with out any economic basis. National Production companies doing same kind of works get much less price than IOCs for the gas produced. The following companies carry out specific tasks.

Exploration & Production

Bangladesh Petroleum Exploration & Production Company (BAPEX)

Production:

Sylhet Gas Fields Ltd (SGFL).

Bangladesh Gas Fields Company Ltd (BGFCL)

Transmission

Gas Transmission Company Ltd (GTCL)

Distribution & Marketing Company.

Titas Gas Transmission & Distribution Company Ltd (TGTDCL).

Bakhrabad Gas System LTD (BGSL)

Jalalabad Gas Transmission and Distribution System Ltd (JGTDSL)

Paschimanchal Gas Company Ltd (PGCL).

CNG & LPG from NG:

Rupantarita Gas Company Ltd (RPGCL)

Two new Companies are in the Offing

Karnaphulli Gas System Lid (KGSL) in Greater Chittagong

Sundarban Gas Company in Greater Khulna d Division.

Production Secnario:

According to Petrobangla Daily Gas & Condensate Production and Distribution Report 11-12 January 2010 the production capacity of 78 producing wells of 17 gas fields is 2000MMCFD. The production on the day was 1976.2 MMCFD. This production is about 276MMCFD higher than same time last year. Of the above 4 IOCs from 31 wells 6 gas fields produced 1050MMCFD of which Chevron alone from 20wells of 3 gas fields produced 895 MMCFD. Bibiyana alone produced 665.7MMCFD although PB states its capacity as 600MMCFD. Shangu Gas filed which until recently used to be main source of supply to Chittagong area producing about 140MMCFD now produces only 34MMCFD.Experts say unprofessional rate of production from Shangu has led to accelerated depletion of recoverable reserve of Shangu.

Three PB Production Companies on the other hand from 47 producing wells of 11 gas fields produced 925MMCFD against stated capacity of 957MMCFD.

Over the last 10 years very limited exploration activities have been carried out by IOCs and Petrobangla. The only discovery is a small Bhagura Gas field. BAPEX failed to explore any. Cairn and Chevron Spend 7 years cooling time over block 5, 7 and 10. Cairn deliberately delayed exploration at Magnama and Hatiya

Over the same period gas demand increased by 1000MCFD from 1400 in 1999. But gas production could only increase as Bibiyana, Moulavibazar and Bhangura came into operation. These deliver about 800MMCFD but production from several other fields Shangu, Benaibazar, Rashidpoor have gone down. The effective addition to national production is 600MMCFD. So the present capacity is now 2000MMCFD against coincident peak demand of 2400MMCFD.

This deficit situation could be avoided in PB Companies could complete their assigned gas field development works of ADB assisted Gas Transmission Development Project in Titas, Bakhrabad, Habiganj, Rashidpoor and Kaillastilla. Cairn should have completed exploration works at Magnama and Hatiya. BAPEX should have completed exploration at Sreekail, development of Semutang, Salda, and Meghna. About 300-400 MMCFD additional gas from all these efforts was very much possible from honest professional efforts. This gas by this time could allow generation of at least another 1000MCFD power and could supply gas to all other connected consumers.

Transmission System:

GTCL operated National Gas Grid Capacity started getting saturated by 2003. Sensing present situation in advance and acknowledging the development efforts of Chevron at Bibiyana GTCL suggested for setting up of Pipeline Compressor stations by early 2008 at Muchai and Ashuganj to evacuate additional production of northern Gas fields. There were specific reasons to set these up by 2008. GTCL in early 2005 also planned to carry out on-stream pigging of North –South Transmission Pipeline and R- A l Loop line to retrieve transmission capacity of the system. But unfortunately neither the Compressor stations could be set up nor were the lines pigged. Evacuation of 650MMCFD gas in congested transmission Grid partially filled with condensate has caused massive low pressure problem on entire gas system.

We should try to understand natural gas unlike water is a compressible fluid. The transmission pipelines are designed to operate certain conditions. For N-S Corridor pipelines in National Gas grid these are

MAOP: 1076 PSIG and Terminal Pressure at Ashuganj Gas Manifold Station 850PSIG. Under this condition N-S Pipeline and R-A Loop Line can handle 420 +500 =920MMCFD gas without any pressure depletion at Ashuganj is pipelines were pigged regularly. Now two things have not been done pipelines were not pigged at all and no compressor station is available. In efforts to transport 1175 MMCFD through N-S Corridor Pressure at Ashuganj drops down to around 750PSIG. This causes low pressure at every load centre causing panic in gas franchise area.

Chittagong Area:

Anticipating the present situation in Chittagong judging from depletion of reserve from Shangu experts recommended constructing Loop Line from Bakhrabad – Chittagong in early 2000. The other option was to push Cairn complete exploration at Magnama and Hatiya. But none of these happened. Shangu depleted from 140MMCFD to 35.Chittagong demand grew beyond 300MMCFD. National grid. National grid scenario can support only about 215 MMCFD to be diverted to Chittagong. So against a demand of 310-320MMCFD only 250MMCFD can be supplied to Chittagong. Moreover Chittagong Ring main capacity can only be partially utilised as a 20 inches Kalurgaht River Crossing section of the ring main has not be refurbished yet.

About 60MMCFD gas deficit of Chittagong is partially confronted either by shutting down CUFL or Raujan Power plant alternately. All kind of new connections have been kept suspended. Still the situation is deteriorating every day.

We can criticise BNP – Jamat past regime for their non actions during their time. Yes they did not enough. But they could manage Chevron to develop Bibiyana and Moulavibazar Gas Fields, Manage Tullow to develop Bhagura Gas Field. But they neglected exploration; they did not give attention to Gas infrastructure projects. BNP- Jamat also pollicised gas sector management placing their own corrupt people displacing committed professionals.

But the present government in one year also failed to create any momentum in Gas sector. No credible movement are in view to increase gas production or expedite transmission infrastructure implementation. Present gas crisis is unbearable it is due to failure and inefficiency of Gas sector managers and political leadership.

In the last one year gas production has been theoretically increased by 200MMCFD. Demand must not have grown unless smart people added unauthorised connection. But then why consumers have to bear the burnt? Why CNG stations have to be shut down 2 days every week, why industries have to ration gas use? PM Hasina as Energy Minister must get reply from his Gas Sector managers and then tell people.

As Contingency measures the following actions must be taken immediately

Contingency Measures

Arrange to carry out On-stream Pigging of N-S, R-A and A-B Loop lines by March 2010. These will significantly improve Grid Pressure. Some Pig Cups can be flown in from Singapore or Dubai. Some fabrications at Scraper Stations can be accomplished within two weeks.
Professionally asses the reserve capacity of Bibiyana. It can supply @800MMCFD if some additional wells are drilled.
Shut down PUFF and ration gas supply by 5MMCFD each from ZFCL, UFFG and JFCL.
Carry out intensive drive in Titas system to disconnect delinquent Consumers.

These works must be done immediately as summer following the irrigation time will create more challenges.

For Chittagong there are no immediate relief. CUFL and Raujan are to be kept shut down alternately. But some mid term actions can be taken.

Resolve dispute with NIKO. It should increase production from Feni or quit returing the gas field to BGFCL.
Complete works of Semutang expeditiously.
Make Cairn Expedite exploration at Magnama and Hatiya.
Carry out feasibility of setting up Floating LNG Terminal beside Shangu Offshore platform

Mahajote Government and the nation must realise what damage militarisation and beauracratisation and finally politicisation of gas sector management has done.. If they follow the same route they can not bail out the sinking economy from the edge of ruins. Will any one listen to our SOS?