Government needs to do some soul-searching over the gas sector

The Power Division under the Ministry of Power, Energy and Mineral Resources and other concerned agencies did a praiseworthy job by ensuring almost uninterrupted power supply during the Ramadan and the 2014 FIFA World Cup. There was hardly any complaint about power failure except some isolated problems with power distribution arising out of technical glitches.

Power generation reached its peak at 7,403 MW on July 16 last. Power generation is increasing despite fuel supply constraints. A significant portion of the power generation capacity remains unutilised because of gas supply constraint. Petrobangla can supply only 950-1000 mmcfd gas against the power sector's demand for 1378 mmcfd. Petrobangla can supply this amount of gas only after suspending supply to five of the seven urea fertiliser factories and rationing gas to CNG (compressed natural gas) refuelling stations. It is not that gas production is not increasing, but one wonders where this additional production is going. The Chittagong region continues to remain gas-starved to the frustration of all end users.

Below are given two charts on gas production. The charts available from Petrobangla as of July 22-23 last give a picture of the existing gas production in the country:

It is interesting to note that while the international oil companies (IOCs) are allowed to produce gas at the rate of 1269 mmcfd from 28 wells in four gas fields against the capacity of 1160 mmcfd, the Petrobangla-owned companies produce 1068 mmcfd gas against the capacity of 1137 mmcfd. A question may arise as to whether Petrobangla is taking a calculated risk of over-production from IOCs' fields. What will happen, if reserves in major IOC fields like Bibiyana and Jalalabad start depleting soon?

In any event the gas production has remained at a level higher by about 650-700 mmcfd since 2009. But why is there no tangible impact on the major consumers, the power and fertiliser factories, after this increase? The power sector gets 968 mmcfd against the demand for 1,378 mmcfd and fertiliser factories get only 51 mmcfd gas against the demand for 289 mmcfd. On July 23 last the following units remained shut down mostly because of a gas crisis:

WHAT THE ONGOING GAS PROJECTS CAN ACHIEVE: After a prolonged delay, the Gas Transmission Company Limited (GTCL) is in a position to commission its Ashuganj and Elenga gas pipeline compressor stations. But the changed scenario of the poorly-planned Bibiyana-Dhanua expensive pipeline has created a new challenge for operation of both the compressor stations. The pipelines upstream of the Ashuganj compressor station-North-South Pipeline and Rashidpoor-Ashuganj Loop Line-now transport about 1420 mmcfd. The Ashuganj compressor station we believe can compress 1800 mmcfd at its full capacity. Compressor stations for efficient operation require enough gas on the suction side. Without the Bibiyana-Dhanua pipeline in operation the existing highest production cannot ensure the sustained supply of 1500 mmcfd to Ashuganj for compression.

What will happen, when Bibiyana will be required to feed about 175-200 mmcfd gas to feed the power plants near the gas field and supply another 400-500 mmcfd gas through the Bibiyana-Dhanua Pipeline? Will it be wise to keep the multi-million dollar compressor stations idle? Where will the additional gas come from? Bibiyana is currently producing about 830 mmcfd gas. Let us assume it will add another 300 mmcfd. How long can the Bibiyana gas field maintain the high production rate of about 1200 mmcfd? Even that production will not be enough to keep the Ashuganj gas compressor station operational most of the time. An operational Bibiyana-Dhanua pipeline will neutralise the utility of the compressor station at Elenga almost completely. When enough gas will flow through the Bibiyana-Dhanua Pipeline, the pressure at the Elenga Compressor Suction side will remain high enough nullifying the necessity of compression. Why did not the GTCL bring the matter to the notice of the policy makers?

While Bangladesh suffers investment constraints, the big investment in the largest cross-country Bibiyana-Dhanua gas transmission pipeline will become a chronic pain in the neck of the gas sector. Gas transmission professionals have serious reservations about the Bibiyana-Dhanua pipeline as it was ill-conceived. Now this big investment of GTCL will make it bleed financially.

Construction of the Bakhrabad-Shiddhirganj Pipeline was completed before the onset of the monsoon. For some ancillary work, it could not be commissioned. The Bibiyana-Dhanua pipeline may be commissioned soon. The Ashuganj compressor station is ready for operation. The Ashuganj-Bakhrabad loopline will also be ready by the end of the year. But for lack of gas supply, most of the capacity will remain untapped. The people of Kushtia, Jessore and Khulna have no good news as the Padma River Crossing at Pakshey continues to remain unaccomplished. Experts had warned that this project would be like putting the cart before the horse. That is what has exactly happened.

None of the above, however, will meet the interest of the gas-starved Chittagong region much. The Ashuganj compressor station could yield a marginal benefit but because of lack of gas supply from upstream and absence of the Bakhrabad-Chittagong Loopline gas crisis in Chittagong will continue for at least the next three years until the very expensive LNG can be imported for the region. Fertiliser production is already facing a crisis. The KAFCO management is becoming frustrated. The BCIC fertiliser factories are also slipping into a deep crisis. Why should Bangladesh have to drain out foreign exchange by importing fertiliser while its own gas can be used? The country in the past earned foreign exchange through export of urea from KAFCO.

The government is planning to set up several exclusive economic zones for Chinese, Japanese and Korean investors. But one wonders how much enthusiastic the foreign investors will be to make investments if gas and energy supply situation is not streamlined. Will the government do some soul-searching over the gas sector?

Engr. Khondkar Abdus Saleque is a Non-Resident Bangladeshi (NRB) energy professional. [email protected]