Evaluation: Plan to set up power plants near gas fields shelved

Ministry finds raw gas unsuitable for electricity generation.

ISLAMABAD:

The government has shelved a plan to set up power plants with a production capacity of 1,000 megawatts at the mouth of gas fields, a proposal that was aimed at overcoming the energy crisis.

Officials said the Ministry of Water and Power, after an evaluation, learnt that raw gas from the fields could not be used for power generation.

“Raw gas needs further processing for its consumption in power generation. This process requires dehydration plants, the establishment of which needs more investment,” an official said.



The installation of power plants at the mouth of gas fields was supposed to produce 1,000 megawatts of electricity, reduce outages and add Rs100 billion to the national economy.

The Ministry of Petroleum and Natural Resources had initially indicated that 10 gas fields would be presented for an initial round of bidding for installing private power projects based on interim gas supply arrangements.

The primary objective of the policy was to utilise more than 200 million cubic feet of gas per day (mmcfd), which could not be added to the pipeline network.



The Economic Coordination Committee (ECC) of the cabinet had endorsed the policy. The acute shortage of electricity is said to erase three percentage points off economic growth every year in addition to plaguing the entire energy chain.

Pumping of gas into pipelines from a new well takes two and a half years, but by developing a power unit close to the well, electricity could be produced immediately.

Officials said the government was now focusing on re-gasified imported liquefied natural gas (LNG) which would be consumed for power production. An estimated 600 million cubic feet of LNG per day (mmcfd) will generate 3,600 megawatts of electricity.

An LNG terminal with a capacity of handling 600 mmcfd is being set up in Karachi on a fast track, which will start functioning in the next two months. Tender for another 400-mmcfd terminal has been issued and is being pursued vigorously.

The government is also focusing on exploration of indigenous gas reserves and their allocation for power generation plants.

It has implemented Petroleum Policy 2012 after obtaining approval of the Council of Common Interests (CCI). Under the policy, 44 new exploration agreements have been signed whereas 137 wells have been drilled and in the last 17 months 37 oil and gas discoveries have been made.

Oil production has hit the peak at 98,980 barrels per day (bpd). Against depletion of 19,000 bpd, 30,000 bpd has been added, causing a positive financial impact of Rs20 billion per year.

In the case of gas production, compared to the depletion of 490 mmcfd, 500 mmcfd has been added and the positive financial impact is calculated at Rs10 billion per year.

Published in The Express Tribune, January 28^th, 2015.

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