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Ghana Gas Project is 33% Complete IMANI Report

We were pleasantly surprised when the Ghana Gas Company responded to our request to tour the
ongoing early phase gas infrastructure project (EPGIP) with immediate enthusiasm. We are not used
to that from government agencies, and certainly not from agencies involved in the energy sector.
GNPC, for instance, is shadowy and arrogant, and aloof and unresponsive to any sense of public
accountability or transparency.
Not so Ghana Gas, as we discovered to our appreciation.
The company promptly agreed to send a number of its personnel to meet us at the Takoradi airport
and conduct us around key components of the project. Joining IMANI was the public interest
researcher and local content [in the energy sector] specialist, Kwame Jantuah.
(Full disclaimer: he paid for his own air travel, just like IMANIs research team.)
Starting at about 8:00am, approximately half an hour after we arrived in Takoradi, the tour ended at
3:30pm, permitting a good 7 hours of site visits, briefings and evidence gathering.
Because we arrived in the Takoradi area from Accra, the tour was conducted back to front, with the
IMANI team beginning at the destination of the processed gas, the Aboadze-based Takoradi Thermal
Processing Plant (TTPP) and ending at the landing point in Atuabo where the offshore pipeline
bringing the raw gas from the Jubilee fields connects with the onshore pipeline that will carry the gas
first to the processing plant a few meters off the coast, and then to the power plant at Aboadze.

Fig 1. A back entrance to the Takoradi Thermal Power Station, which is the first port of call for
processed gas from Atuabo once the plant, auxiliaries, and pipelines are complete.
We found our guides, drawn from the government relations, community relations, and engineering
teams at Ghana Gas, confident in their mission and ready to show off the results of the intense
efforts their contractors have been putting in for several months now to integrate the various
components of the fairly challenging project.

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While we did not interact with any Chinese engineers from Sinopec, who are actually responsible for
the day to day execution of the project, except for a few minutes of pleasantries, we believe the tour
still offered a solid first-hand account of the project that can be built upon in subsequent reports.
We have already sent Ghana Gas a detailed questionnaire in order to obtain additional clarifications
of certain issues that we remain unclear about, and which may affect future conclusions.
In this initial report we make what we believe will become an interesting point of debate: that the
overall project is 33% complete if the end point is safe commercial delivery of processed gas from
Atuabo to the power-plant in Aboadze, and transport of LPG from the same site to Domunli for
onward evacuation to Accra by sea vessels.
At the current rate of completion we believe the project will be ready to deliver gas for power
production in Ghana sometime in early 2014. The project may still be fast-tracked for completion by
end of 2013 if the flow of funds were to be assured for any such acceleration. However, there is a
hard limitation on the ability of Ghana Gas to accelerate ongoing project execution: the gas
processing modules themselves, currently being built by a Canadian company.
The gas processing modules are being built to specifications and shall on completion be shipped to
the Gas Processing Plant site in Atuabo to be installed before going through a range of precommissioning and commission activities. During these activities the various modules will be
connected together so that they can work as an integrated whole. From our investigations, the
modular plant requires 20 months of fabrication and engineering, which makes it unlikely, despite
recent reports, that it can be completed and shipped before the third quarter of this year.
Though we understand from the engineers that no compressor system is required, the following
modules are relevant to any functioning gas processing system of the Atuabo kind: the processing
unit proper in the initial station, where natural gas liquids is removed from the raw gas; the amine
theatre, where certain contaminants are removed; the anti-freeze treatment unit; the sieve
dehydrators to remove moisture; flaring equipment; desulfurisers; liquid separators to fraction off
natural gas liquids; and quality testing units for chromatographic and other assurance processes. All
these units are being built in Canada for shipping to Ghana in the near future.
Before these modules arrive in the country for integration, the site should be ready for them. Utility
and auxiliary units need to be in place. These include everything from car parks, staff quarters, firefighting installations, boreholes, reverse osmosis equipment to treat water, powerplants,
connections to the main grid, communication systems (a fibre-optic line is being laid alongside the
online gas pipeline), LPG tanks, security systems, completion of outstanding earthworks and substructural elements, cooling equipment for the storage decks, and the frontend engineering for the
landfalls which is the point where the gas from Jubilee shall be fed into the processing plant in
Atuabo.
With the exception of the earthworks and foundational/sub-structural developments, the other
components of the site preparation to receive the gas processing modules are outstanding.

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Fig 2. A substantial amount of work remains to be done to complete the earthworks and substructural work, finish the utilities, and prepare the Atuabo site to receive the modular units from
Canada for the initial station, and erect the auxiliary buildings.
Perhaps in recognition that the completion of the modular plant and its shipping from Canada
represents a hard limitation on the speed with which the on-site activities in Atuabo can be
accelerated, Sinopec has currently not ramped up manpower on the sites.

Fig 3. Artists Impression of Gas Processing Plant of the EPGIP when completed.
In addition to the Gas Processing Plant site, work has started on the other components of the early
Phase Gas Infrastructure Project (EPGIP).
As part of the EPGIP, Sinopec is putting up a metering and regulating station in Inchaban, Takoradi
near the Aboadze power station. In simple terms, this facility shall measure and regulate the flow of
the processed gas coming from the Atuabo plant before it is fed into the power plant. At the site of
the metering station, early stage earthworks can be seen.

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Fig 4. The existing metering and regulating station at Aboadze which conducts the flow of gas from
the West Africa Gas Pipeline (left picture), and the greenfield site of the Inchaban Metering and
regulating station, which when complete will regulate gas flow from Atuabo to Aboadze (right).

Also in the early stages of construction are two block valve stations at Anagyi and Kwekutsiakrom
that the IMANI team was unable to inspect, but which it was told are at the same stage of early
earthworks development as the Inchaban metering station.
The critical Esiama Distribution Station; the Domunli LPG gas tank farm, 20km from Atuabo, which
shall be fed by another 20-inch pipeline with LPG isolated from the gas treated at the Atuabo plant;
and the Amansuri basin LPG take-off points, are some of the other major outstanding components of
the EPGIP that are at the very initial stages of construction.
Of all the components of the project, it is the pipeline system that most justifies the confidence of
the engineers we spoke to at Ghana Gas. We could of course not tour the offshore part of the
system, but we saw the landfall point where the concrete-coated offshore section has been
integrated with the epoxy-coated onshore steel pipe.

Fig. 5. The pipeline system is the part of the project that has most advanced. The picture on the left
shows the complex horizontal drilling feat on the bank of the Ankobra river. But as can be seen in the
picture on the right, there are still extended sections of the pipeline to be buried.

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The onshore pipeline measuring about 111 kilometers from Atuabo through Pumpuni to Aboadze is
about 65% to 70% complete, and accounts for the bulk of project work completed to date. The
engineers literally beamed with pride when they showed us a site on the banks of the Ankobra
where to bypass the river, horizontal directional drilling, similar to techniques used in deepwater oil
drilling, was employed to transport the pipeline underneath the riverbed, thus limiting the ecological
impact. The steel pipes were shipped into Ghana in short sections that are being welded together to
form longer sections in trenches along the corridor.
We noticed that in several sections the pipes were yet to be buried, though in some cases the
trenches have already been dug. Some work also remains to be done to test the welded joints of the
steel pipes and apply the approved coating. More cathodic protection units and ventilation pipes are
required at various points to measure corrosion of the buried pipelines over time and evacuate any
gas buildup.
When the pipeline system has been completed and the modular plant from Canada has been
installed and configured, a few months of pre-commissioning and commissioning work is necessary
to prepare for test transmission before full commercial commencement.

Fig 6. A few hundreds of meters from the gas processing plant site, the concrete-coated shallowwater section of the offshore pipeline that will bring the raw gas from the FPSO has been landed and
is being integrated with the onshore pipeline that will carry this gas to the Atuabo initial station for
processing and then onward transport to the Aboadze thermal plant. Note its smaller size in
comparison with the onshore pipeline.

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A workforce strategy is required to ensure that when the engineers brought in by the vendors,
whose equipment shall be installed in the different components of the project, leave, following
successful commissioning of the equipment, the project does not become wholly dependent on the
EPC contractor, Sinopec, whose mandate, strictly speaking ends after the commissioning. If the plan
is to outsource the technical and operational management of the plant to another or the same
company, the preparatory work, including the complex legal, financial negotiation, regulatory and
political work needs to begin now since that could become another source of delay.

Fig 7. The open-plan office style complements the barrack-style outdoor layout to create a Spartan
feel to the nerve-center of the project field operations in Atuabo. Ghana needs to think through how
the gas plant and supporting infrastructure are going to be operated. Will a Ghanaian workforce be
mainly responsible for the technical operation and maintenance or will that be outsourced to a
foreign company? With the project yet to ramp up staffing, now is the time to strategise carefully.
Observations of all parts of the project combined together, and notwithstanding the valiant work
Ghana Gas and its contractors have done on the pipeline system, leads us to conclude that 66% of
the work remains outstanding, with the most realistic timeline for delivery of gas to Aboadze being
early 2014. We have asked for more information from Ghana Gas for the validation or modification
of this initial assessment.
One curious area of confusion in determining the state of project execution, however, is whether
remote monitoring of the pipeline is planned.
The engineers are confident that this is not necessary since the pipeline is not as lengthy as those
found in some parts of the world. Though we noticed that fibre-optic lines have been laid along the
pipeline, which itself utilises the GRIDCO right-of-way for about 85% of its path through Western
Region, the engineers maintained that this is solely for communication purposes, and will not be
used for strain gauge and other sensor-based measurements of the health of the pipeline, as is done
elsewhere. The absence of continued remote monitoring might delay efforts to investigate and
mitigate a suspected leakage.
Another area of interest is pressure management. The engineers were of the opinion that the length
of the pipeline and the quantity of gas being transported suggest minimal pressure challenges.

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IMANI was curious seeing as the pipeline has been designed for carriage of about 400 million cubic
feet of gas.
Readers may already be aware that at current production, Jubilee can only supply around 100
million cubic feet. In fact, Jubilees operators intend to continue re-injecting up to half of all the
associated gas produced in order to maintain the pressure in the field. If due to fractionating and the
flaring of some of the heavier molecules, the lean gas yield of the plant reduces to below 70%, we
could well be seeing just about 30 million cubic feet of gas delivered through the gas pipeline. To the
IMANI team, this presents an important operational risk associated with pressure. The engineers
disagree, so we have asked for more information.
Because our tour guides were emphatic that finance, procurement and economic impact questions
could only be answered at the headquarters, IMANI deferred those discussions. Some of the key
questions we have asked Ghana Gas are the overall viability of the plant until more gas come
onstream sometime in 2015 or even beyond. With a plant capacity of 150 million cubic feet (and
plans to double this capacity), operating at 30%, which is the most likely scenario for more than a
year after commissioning (which we believe will happen in 2014) might represent financial risks. For
the project to be viable, it appears Ghana Gas has the urgent task of finding other sources of raw gas
for the plant aside from Jubilee or hope for a quick ramp-up and early success of Jubilee phase 2.
Also of interest is the commercial understanding between VRA, the initial buyer of the fuel, and
Ghana Gas, the seller. Given the unreliability of the West Africa Gas Pipeline, the EPGIPs only real,
short-term, competitor, it would seem that Ghana Gas would be negotiating from a stronger
position come 2014. Yet, with the Henry Hub prices for natural gas hovering around $4 per thousand
cubic feet, one wonders how much premium Ghana Gas can charge for its gas, and how long it will
take to break even on the $850 million investment.
In fact, based on the plants 25 year lifespan, and the fact that raw gas from Jubilee will only be costfree in the short-term, there will be serious financial pressure on Ghana Gas if Jubilee fails to triple
current production by 2015. Thereafter, new sources of raw gas such as Tweneboa-Enyera-Ntome
shall be critical to the long-term sustainability of the entire enterprise, and in particular to plans for a
phase two of the EPGIP with a distribution hub at Prestea for lean gas delivery to other buyers in
Ghanaian industry apart from VRA.
So in addition to actual construction work, Ghana Gas has its work cut out for it on the strategic and
business modelling front too. This is on top of the financing anxieties associated with the slow
disbursement of the CDB loan. We do not doubt the energy, confidence, and enthusiasm of the
leadership and frontline supervising engineers of Ghana Gas to keep their contractors on their toes,
but as if to signal how much work remains to be done, we went to the organisations website only to
discover that it is also still pending completion:
http://www.ghanagas.com.gh/
This is the second of a series of reports on Ghanas emerging natural gas industry, and the first to
be completed with assistance from Ghana National Gas Company, the state agency responsible for
the sector. Visit www.imanighana.org & www.africanliberty.org to learn more about IMANIs
work.