1. Mini-Methanol Plant Tata MESSIRI
Senior Special Assistant (DTSG/OPTS Initiative)
to Governor of Delta State, Nigeria

2. What is DTSG/OPTS Initiative? Why methanol? Why small scale methanol?
Presentation format
What is DTSG/OPTS Initiative?
Why methanol?
Why small scale methanol?
Sustainability and sustainable development
Economics of methanol production
Methanol production process
Small scale methanol plant parameters
Multiplier effects associated with methanol
Project Partners
Next Steps

3. DTSG-Delta State Government
DTSG/OPTS Initiative
DTSG-Delta State Government
OPTS-Oil Producers Trade Section of the Lagos Chambers of Commerce
INITIATIVE=To bring about sustained and sustainable livelihoods for the people in the Delta State

4. Why Methanol?
ESTIMATED CAPITAL COST, GAS INPUT AND REVENUE GENERATION FOR PROPOSED PRODUCTION UNITS IN INDUSTRIAL ESTATE CLOSE TO OIL FIELDS
S/N
PLANT
ESTIMATED PLANT COST ($ MILLION
ANNUAL GAS INPUT
PRODUCTS
ANNUAL OUTPUTS
RATIO PRODUCT VALUE TO GAS INPUT
QTY (BILLION SCF) bscf
COST OF GAS($/SCF)
COST ($ MILLION)
QTY
UNIT
PRODUCT UNIT COSTS ($)
PRODUCT VALUE ($ MILLION) 1
LPG Plant 25
20.00
0.25
5.000
LPG (12.17%)
142,930
tonnes
150
21.440 7
Dry gas (85.10%)
17,000,000
000scf
0.5
8.500
Condensate (1.61%)
300,400
bbls 20
6.008 2
Methanol
1.13
0.50
0.565
32,000
180
5.760 10 3
Ammonia
1.05
0.525
200
6.400 12 4
Ammonia/Urea Complex 45
Urea
55,680
11.136 21 5
Carbon Black 80
2.40
1.200
Carbon black
40,000
1,000
40.000 33
Hydrogen
bscf
Energy 6
Direct Reduced Iron (DRI)
225
6.73
3.365
DRI
600,000
120
72.000
Off gases
Bio proteins
0.90
0.450
10,000
10.000 22 8
Cassava Starch, ethanol, methanol -
Cassava
Starch 9
Power generation (50 MW)
3.74
1.870
Electrical Power
438,000
MWh 50
21.900

5. Why small scale methanol?
It takes about 8years for permitting and construction of a large world scale methanol plant. A small scale methanol plant can be up and running in about 2 years.
The agitation and unrest in the Niger Delta will not wait to be resolved in 8years time.
Moreover, several small scale plants will employ more people than one large scale plant.
Small methanol plants are less sophisticated and therefore more appropriate for developing countries
However, there is a problem today for small oil fields in Delta (250 or more), some of which have to install gathering lines for associated natural gas at prohibitive cost. These fields with small natural gas (only 4mmSCFD) can support a 100tonne/day methanol production plant.
If a small plant were to have favorable financing and low-cost gas, it could in fact be competitive with the large plants in a local fuel market.

6. Sustainability and Sustainable development
Helping mitigate CO2 emissions (global environment)
Improving health & standards of living, reducing poverty (social pillar)
Increasing local employment and productive use (economic pillar)
Reducing deforestation and improving indoor air quality (local environment)
Energy interacts with people’s lives in many different ways, from the basic survival activities to increasing productivity.
Productivity can be increased by extending the working day with lighting and by mechanization.
It can free up their time, improve their health and well-being, and open up opportunities.
Energy services can contribute in a number of ways to the efficient performance of healthcare delivery system, for example, through ensuring reliable heating, lighting, sterilization and refrigeration, as well as safe disposal of medical waste.
Use of biomass fuels for cooking and space heating creates indoor air pollution, which has been linked with increased rates of acute respiratory tract infection (ARI) in children
Why can methanol be the bridge to sustainability?
Methanol can be made at low cost from natural gas
There is enough flared gas in Nigeria to supply every family in Sub-Saharan Africa with methanol for cooking fuel.
Methanol is a splendid cooking fuel, and there has been in use for decades a very efficient stove in which to burn it.
Methanol can eventually be made from biomass by known technology when we learn to produce enough biomass sustainably at low cost.
Methanol is a nearly ideal fuel in internal combustion engines or for fuel cells, and an equally ideal fuel to replace the still enormous consumption of wood as a cooking fuel in developing countries.
Its use will eliminate the smoke and soot produced in the household when wood is burned, and will reduce household CO2 and greenhouse gas (GHG) production by about 5/6 when compared to using non-replaced forests for fuel.
It is also very attractive as a replacement for the more expensive and valuable kerosene, which has enormous liabilities as a household fuel.
It is handled as a liquid but burns as a gas
It does not require expensive cylinders and regulators to be deployed.
Biomass vs. Commercial Energy in Nigerian and Sub Saharan Africa
Biomass(mtoe) Oil Products(mtoe) Electricity(mtoe) Biomass(%) O ilProducts(%) Electricity(%)
Nigeria ,
Sub Saharan Africa (12) ,043 2,016 1,
Source: IEA: Energy Statistics and Balances of Non-OECD Countries, 1997 (1999 Edition)

7. Economics of Methanol production
Projected Plant Price for Current 5000 tpd Plants Under Construction
Capital
Battery limits ($233/annual ton) $384,000,000
Off Sites (58/annual ton) ,000,000
Total ($291/annual ton) $480,000,000
Plant Price $/ton ¢/gal ¢/liter
Capital charge
Feed and Fuel
Plant operating and maint
Selling & Admin
Total Plant Price
This plant price assumes 330 days per year operation at full capacity. Capital charges are based on 30% equity, 70% loan at 10% interest per annum payable over 10 years (usual commercial rates).
A more likely scenario would be 80% of the above assumed capacity This raises the plant price to $94 per ton (28 cents/gal, or 7.4 cents/liter). This is at the plant gate. If cognizance is taken for transportation from far from small users and repackaging into small lots, we arrive at cost closer to twice this amount say 56¢ and over per liter. This costs we already have where refined petroleum products are costing 2 – 3 times in the riverine areas what it costs in the urban centers.
Projected cost for methanol from modular plants
¢/gallon ¢/liter $/ton
Salaries
Feed and Fuel
Purchased Power
Catalyst and Chemicals
Maintenance on Plant
Raw Water
Insurance and Taxes
Capital Charges
Total
Small scale plant is built on a modular skid mounted basis and so does not obey the 0.67 capacity factor rule but is in fact about 67% of what using the factor rule would have cost.
Capital charges assume 30% equity, 70% loan at 8% interest per annum payable over 15 years. This is a leveraged loan through multilateral aid organizations, GGFR or other mechanism. Even at this capital charges are still about 150% that for a large scale plant.
When transportation fees and lower than100% capacity utilization is taken into consideration, price to consumer would be between 40¢ and 70¢ per gallon or 10¢ to 18¢ per liter.

8. Methanol Production Process
TPD
Hydrocarbon Feed
Feed Pretreatment
Steam Reforming and Heat Recovery
Cooling and Compression
Methanol Product
Methanol Distillation
Methanol Synthesis

9. Small scale methanol plant parameters
Process
Desulfurization of natural gas
Catalytic Steam/Hydrocarbon Reforming
Heat Recovery from Process Gas
Synthesis Gas Compression
Synthesis Gas Loop
Methanol Distillation
Units
Reforming System and Heat Recovery
Methanol Synthesis Loop
Offsites
Feed – Natural gas composition
Methane 79.62%(v) approx.
Sulfur 10ppm(v) max
LHV 9,104kcal/ncm
HHV 10,054kcal/ncm
Product – methanol composition
Methanol 99.85%(wt) min.
Water content %(wt) max.
Specific gravity max
Utilities requirements
Natural gas 1,008 ncm/mt
Raw water 2,069 kg/mt
Nitrogen(startup)75ncm/hr for 8hrs
Electrical power kwh/mt

10. Methanol fuelled cookstove
Methanol fuelled absorption cooling
Methanol fuelled lantern
Methanol fuelled cookstove
Methanol fuelled microturbine

11. Deforestation can be arrested by the use of methanol cookstoves
Flaring reduced from conversion of associated gas to methanol
Power generation can be fuelled with readily available methanol
Agro-processing can be increased from availability of commercial energy

12. Methanol in our lives

13. Desirability of small scale methanol processing for oil producing areas in Nigeria
Methanol can be in made in small scale modular plants from stranded flared gas that would be difficult or uneconomical to transport for processing to LNG or other facilities by pipeline thereby achieving faster flare down
Methanol burns as efficiently as a liquefied petroleum gas
Methanol would be cheaper to produce and is more available than kerosene
Methanol is soluble in water and therefore easy to extinguish in households
Methanol is easier to transport and market than liquefied petroleum gas; and does not require pipeline infrastructure like natural gas
Methanol will therefore act as a replacement for both wood and liquefied petroleum gas
Methanol can be mixed with ethanol to achieve the ongoing Federal Government initiative to link rural development to the energy sector
100t/d methanol plant will provide cooking energy for 125,000 families
Each 100t/d methanol plant will mop up 4mmcfd of flared gas
100t/d methanol plant will prevent the cutting of 500t/day of wood, replace about 100t/day of kerosene or liquefied petroleum gas.
Methanol availability and use will improve productivity in the rural areas where over 70% of our population live.
Methanol use as a household fuel will improve indoor air quality, reduce deforestation and reduce flaring.
Nigeria with a population in excess of 120 million can accommodate 200 nos 100t/d plants. There are over 250 small oilfields in the Niger Delta and this is an opportunity to generate economic activity and employment in these communities.
The fuel methanol industry will improve power availability through micro and mini power generation
Methanol availability will jumpstart the chemical industry based on methanol-formaldehyde, synthetic glues, acetic acid, vinyl acetate, etc.

14. Delta State Government, through its Ministry of Power and Energy
Project Partners
Delta State Government, through its Ministry of Power and Energy
Bayelsa State Government
Centre for Household Energy and Environment (CEHEEN), a Delta region NGO specializing in stoves and household energy
Local business interests
Methanol production
Stove production
Lantern production
Refrigerator production
Internal combustion engine modification
Dometic AB, a Swedish company, alcohol stove and appliance manufacturer
HydroChem, a Division of Linde AG and producer of small-scale gas synthesis equipment
SASOL Chemicals, a producer of synthetic ethanol and methanol in South Africa
The United States Environmental Protection Agency (USEPA) "Partners for Clean Indoor Air" (PCIA)
United Statas Agency for International Development (US AID)

15. Preliminary indications from pilot study
LOW-/MEDIUM-INCOME SECTORS
Kerosene will be displaced because it is more expensive, less efficient, indoor air quality is impaired when used, etc.
Fuel wood will also be displaced because of its convenience, better indoor air quality.
Price of the stove and fuel will be a deterrent.
Use of micro-credit could offset this deterrent.
CERs can play a decisive role and it would be innovative with consumers being the actual beneficiaries of their savings to the climate
HIGH INCOME SECTOR
LPG will be displaced because of unavailability of product and disadvantages associated with packaging in heavy pressurized cylinders.
Electric cookers will also be displaced because of regular and unpredictable power outages.
Cost is not an issue.
If a CDM methodology can be developed CERs due from the project can be applied for the purchase of stoves for low income users.

16. Next Steps:
The GGFR Initiative should support WIN-WIN scenarios related to the 3 pillars of sustainable development – economic, social, environment.
Developing small-scale use of methanol at local / regional level will take advantage from use of flared gas,
helping mitigate CO2 emissions (global environment)
while
improving health & standards of living, reducing poverty (social pillar)
increasing local employment and productive use (economic pillar)
reducing deforestation and indoor air pollution (local environment)
Economic empowerment of the oil producing communities will reduce the unrest and restiveness thereby improving operating profits and image of IOCs and government
Sign MOU with all Methanol Alliance parties
Carry out detailed feasibility studies and business plan
Identify stranded associated gas fields
Put in place political and other necessary risk guarantees
Match local and international investors and partners
Develop a CDM Methodology for the project
Develop a micro-credit scheme for the financing of purchase of the stoves
Need support from GGFR partners active in Nigeria
Federal Government of Nigeria
Shell Petroleum Development Co.
ChevronTexaco
World Bank/IFC