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14ECONOMIC IMPACTS OF MODERN TECHNOLOGY IN THE OIL AND GAS SECTOR
IN NIGERIA
OLUWATAYO ENAHORO AGBEDE PhD candidate. Institute of Environmental Engineering, RUDN University,
Moscow, Russia.
Abstract: The oil and gas industry underwent a severe economic downturn, but in recent years, it has managed to recover. It was primarily due to price stability, consistent growth, and lack of modern technology. This study aims to evaluate the economic impacts of modern technology on Nigeria's oil and gas sector. The article analyzes the methodologies used in operations, exploration, integration, remote operations, intelligent fields, and opportunities for digital oil fields. The study identifies the critical technological advancements and demonstrates their importance in the industry and the need for companies to continue to invest in this area. The study analyzes the strategies employed by oil and gas companies to ensure the sustainability of their economic growth. It also examines the impact of their operations on the environment, highlighting the measures taken to mitigate the negative impact on the environment.
Keywords: Environment, Technology, Economic impact, Petroleum Industry, Government
Introduction
The oil and gas sector are among the nonrenewable energy sectors that contribute immensely to the economic development of more than 98 countries around the globe. Nigeria depends largely on revenue from oil and gas[6].
Nigeria is one of the leading exporters of crude oil and petroleum products, with over one million barrels per day exported to the United States in 2010, accounting for approximately 9% of the U.S. total crude oil and petroleum products imports and over 40% of Nigeria's exports.
Nigeria is home to significant oil reserves, with approximately 37.2 billion barrels at the end of 2011. The oil produced in Nigeria is of high quality and in high demand due to its light nature and small hydrocarbon content, which produces valuable fuels such as gasoline and diesel with less processing than heavier oils.
Mineral extraction, production, refining, and distribution have immediate impact on the environments and their host communities. Nigeria being an extractive economy with numerous cases of defiance by the host communities on the mining operating companies, several ways for advancing dealings with communities can be drawn to inform broader community dialogue in the extractive economy of Nigeria and countries with similar situations[1]
Nigeria is the world's twelfth-largest oil producer, accounting for 3% of the world's oil production. In 2011, Nigeria produced 2.5 million barrels of oil per day, equivalent to 160 Olympic swimming pools of oil. The total value of exported Nigerian oil in 2011 was nearly $100 billion.
The petroleum industry in Nigeria is the largest industry and mean generator of Gross Domestic product (GDP) in the West African Nation. Despite the huge financial investment made by the Nigerian government in the oil and gas industry of the economy, it has not resulted in significant benefits for most Nigerians. The local content (LC) in the industry is still very low as over 60% of the major activities, e.g exploration, drilling, production, well intervention and service provision remain primarily controlled and managed by multi-national oil companies[9]
Over the past five decades, Nigeria has experienced significant growth in operational activities in oil and gas exploration, exploitation, refining, and product marketing, making it the largest oil and gas producer in Africa. Since 1960, Nigeria's economy and budget have been primarily supported by income and revenues generated from the petroleum industry. As of February 2021, statistics show that Nigeria's oil sector contributes to approximately 9% of the entire country's GDP.
The oil and gas industry is a significant source of revenue and employment in Nigeria. The industry has attracted significant foreign investment, and the Nigerian government has implemented policies to encourage further investment. The government has also taken steps to address environmental and social issues related to oil and gas extraction, including the Niger Delta crisis.
Moreover, the development of advanced technology has led to more sustainable economic development within industry. It has enabled companies to improve their efficiency and effectiveness in various aspects of their operations. For instance, they can now use drones to survey oil and gas fields accurately, reducing the need for manual labor and increasing safety. They can also use artificial intelligence and machine learning to optimize their production processes, leading to increased productivity and profitability.
There is no doubt that the oil and gas industry is central to sustainable development in many national economies. Oil and gas are key pillars of the global energy system. As such, they are critical drivers of economic and social development. Although the industry contributes to sustainable development in several ways, its operations and products potentially have negative impacts on a range of areas covered by the SDGs, including communities, ecosystems, and economies. Within the context of sustainable development in Nigeria, the overarching aim for the Nigerian oil and gas industry is to do business responsibly by contributing to society, minimizing risks, and doing no harm[10]
Despite the significant contribution of the petroleum industry to Nigeria's economy, there have been calls for diversification to reduce the country's dependence on oil revenues. The government has launched initiatives to promote other sectors, such as agriculture, manufacturing, and technology, to reduce Nigeria's reliance on oil revenues and ensure sustainable economic growth.
However, very little of this money has gone towards social development or improvement to the lives of Nigerians. Despite the oil companies' claim that they are doing enough in terms of bringing development to the communities as part of their Corporate Social Responsibility, the host communities remain at variance with the oil multinationals, thus creating unconducive business environment[8]
From the foregoing, the missing ingredient seems to be a dismal lack of sustainability endeared approaches to guarantee a green petroleum industry, economic growth and poverty eradication which remain vital considerations for a developing state like Nigeria.
The Nigerian State perception of the region as a satellite resource for the inflow of oil rents and for the consolidation of the economic interest of the ruling elites is making the implementation of the report problematic[3]
Research results and Discussion
Methodology
The methodology used in the study is a qualitative approach to explore the systematic techniques of Nigeria's various oil and gas operations. Clamp-on gas flow measurement technology with cutting-edge technology is used to measure gas flow through pipelines using ultrasonic sensors attached to the outer surface of the channel. The technology offers bi-directional flow measurement with high dynamics and precision. The technology is wholly wear-free, and it is suited for high-pressure applications. Directional drilling technology in horizontal drilling allows for greater access to unconventional resources. The research software solution portfolio also offered a range of interpretation and modelling tools to help develop a better understanding of the subsurface area of exploration. Discussion A. Operations
Oil and gas operations use Clamp-On Gas flow measurement technology to measure gas flow through pipelines using ultrasonic sensors attached to the outer surface of the channel.
This technology offers numerous advantages over conventional methods. It is non-invasive, wear-free, and can measure bi-directional flow with high precision in high-pressure applications.
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Furthermore, it is impervious to high moisture content or dust. Overall, the Ultrasonic Clamp-On Gas flow measurement technique is reliable, accurate, and non-invasive for measuring gas flow in various oil and gas operations.
B. Explorations
Horizontal drilling is a sophisticated method that extracts oil and gas from unconventional resources. It involves drilling a wellbore at an angle from the vertical axis, extending horizontally into the reservoir.
This technology allows greater access to previously inaccessible reserves, increasing the recoverable resource base while reducing the required wells and cutting costs. Precise wellbore placement and faster drilling rates make drilling more efficient and effective while reducing nonproductive time.
Moreover, horizontal drilling meets the increasing demand for drilling practices with lower environmental impact. By minimizing the environmental footprint of the drilling process and the potential for environmental contamination, it achieves more accurate targeting of the reservoir, reducing the likelihood of damage to surrounding rock formations.
C. Integrations/workflows
The software solution portfolio provides a comprehensive range of tools for subsurface analysis, including advanced seismic processing and imaging features. It also offers interpretation, modelling, reservoir evaluation capabilities, and well-planning and drilling engineering tools for cost-effective production.
D. Remote operations
The oil and gas industry in the Niger Delta area of Nigeria faces security concerns, causing a decline in production. Operators can use remote operations to address this issue. Remote operations offer cost savings, better staff utilization, and secure remote plant and site control. Specialists can monitor critical equipment from a central location, saving time and resources. Remote operations have various applications, such as onshore and offshore facilities, wellheads, pumps, gauges, valves, flow meters, and instrumentation/sensors. Deploying remote operations can optimize production costs and improve efficiency while ensuring safety.
E. Smart fields
Smart fields combine E&P technology with communication protocols for real-time management of oil wells. They ensure optimal production, cost savings, and improved workflow cycles. Shell has achieved sustained improvements in production, recovery, and operating costs. Smart fields are a game-changer in the oil and gas industry.
F. Opportunities for digital oil fields
Digital Oilfield Technology provides real-time data, allowing companies to make better-informed decisions. It bridges the gap between subject matter experts and local assets and enables real-time production and equipment data to be viewed from remote locations. This technology offers several benefits, including optimized supply chain management, outsourcing of critical equipment maintenance, and consistent application of maintenance strategies. Digital Oilfield Technology is a cutting-edge solution that helps oil and gas companies achieve greater efficiency, cost savings, and better risk management in a competitive market. Modern technology in the Oil and Gas industry in Nigeria
The software industry has significantly advanced the oil and gas sector by developing new technologies. Implementing new oil and gas production software has enabled many companies to keep a better inventory and supply management system. The latest software solutions have also contributed to reducing costs and saving money for oil and gas companies.
Over the years, the oil and gas industry has witnessed several significant developments due to technological advances. The current technological solutions used in the industry include artificial intelligence, big data analytics, electric monitoring, and drone technology. The integration of these technologies has allowed companies to optimize their operations, make informed decisions and increase productivity.
The oil and gas industry has always been technology-driven, starting with Edwin L. Drake's 71-foot drilling of an oil well in 1859, which produced 400 gallons of pure oil every 24 hours. The development of technology that separates oil and water further reinforced the industry's technological advancement. Hence, the oil and gas industry continue to evolve, leveraging technology to extract more significant quantities of petroleum from increasingly complex geological structures. The advent of new technologies in the sector has made it possible to explore, discover and extract oil and gas resources from previously inaccessible areas, ushering in a new era of growth and development.
Technology in the Nigerian oil industry has also witnessed considerable development as drilling is extended to the deep-water frontiers. Whereas only straight holes with modest deviation from the vertical were considered in the 1970's, wells now have complex architectures, reaching down to over two miles and horizontal well as long as 7 miles[2] The robust nature of the industry is also seen in the growth in the number of players. The president of Nigerian Association of Petroleum Explorationists (NAPE's) Ajibola Oyebamiji, at 37th yearly conference and exhibition's pre-conference workshop in Lagos, stated that with the new era of disruption blowing across virtually all industries, now is the time to embrace new technology, as sustained low oil prices is driving the adoption of digitalization across the oil and gas industry.
The author emphasized the pivotal role of technology in the oil and gas industry, stating that it has been the driving force behind significant achievements. Evolutionary technologies have revolutionized the way hydrocarbons are discovered, developed, and produced since the industry's inception in 1859 with the Drake well.
However, the author also highlighted the challenge developing countries like Nigeria faced, which is how far they have come in embracing technology. To address this challenge, the speaker emphasized the importance of all stakeholders, including the government and policymakers, clearly understanding how technological advancements can be deployed and sustained in developing countries like Nigeria.
Furthermore, the author stressed that developing relevant technologies suited to the Nigerian market is crucial in ensuring energy security and diversification. This, in turn, would promote industrial development, which is essential for the country's economic growth. By embracing technology and developing locally relevant solutions, Nigeria can take advantage of the opportunities presented by the ever-evolving oil and gas industry[7]
Economic Impacts of Oil and Gas sector activities in Nigeria
Despite the implementation of safety measures, accidents can still occur throughout petroleum products' production, refining, and distribution. These accidents can result from various factors, such as equipment malfunction, human error, lack of maintenance, or even deliberate acts of vandalism. Accidental discharges can cause substantial harm to the environment and can be expensive to clean up. In contrast, deliberate acts of vandalization can lead to loss of life and property damage. Proper maintenance and adherence to safety protocols can help mitigate such accidents' risks[4]
During exploration and production, wastes generated include atmospheric emissions, drill cuttings, drilling fluids, deck drainage and well treatment fluids in addition to accidental oil spills. Several environmental problems have resulted in the Niger-Delta region and the country in general. These oil related environmental problems include water and air pollution and land degradation and deforestation[5] which have multidimensional implications and multiplier effects on the 3 people.
Environmental Problems of Oil and Gas Sector in Nigeria
Nigeria's oil industry is the most significant contributor to its gross domestic product, accounting for 5.8% of its GDP in 2019. However, the industry's environmental impact has been devastating. Since the discovery of oil in Nigeria, over 10 million barrels have been spilled, causing gradual environmental degradation and severe health and environmental pollution problems for the country and its communities. The pollution of water and destruction of aquaculture, vegetation, and agricultural land during petroleum operations have made the environment increasingly uninhabitable.
Gas flaring, the burning of natural gas released during oil production, is also a significant problem in Nigeria. It releases large amounts of greenhouse gases with high global warming potential
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and contributes to climate change. The absence of any impact assessment at the beginning of oil activities led to extensive environmental degradation in Nigeria. It was not until 1991 that awareness of the need for Environmental Impact Assessment (EIA) for significant oil projects became gradually entrenched. The Environmental Guidelines and Standards for the Petroleum Industry in Nigeria provided details of the process and procedure of EIA by the Government in Nigeria.
Although Nigeria's government has implemented environmental policies for the oil and gas sector, the industry remains fraught with challenges. The number of indigenous oil and gas firms has grown, as has the number of oil-producing countries in the region. Militancy in oil-rich communities, while reduced, remains an issue. Concerns over climate change have fueled aggressive efforts to reduce global consumption of fossil fuels, driving divestment from oil and gas by companies, institutions, and countries.
Nigeria's Petroleum Industry Bill (PIB) is an attempt to reform the country's oil industry in response to changing global circumstances. The PIB would overhaul the regulatory framework for the industry, which has not been updated in over a decade. If approved, the PIB would provide a more stable and predictable investment climate for oil and gas companies operating in Nigeria. It would also create a framework for environmental protection and remediation, which is needed considering the industry's environmental impact. Conclusion
The oil and gas industry has seen a significant transformation over the years, primarily due to the development and adoption of modern technology. The utilization of advanced technology has led to sustainable economic growth within the sector. One of the most significant benefits of modern technology in the oil and gas industry is its ability to address environmental challenges through environmental policy.
With the help of technological advancements, oil and gas companies can now use more innovative and efficient methods to approach environmental issues. For instance, they can employ better waste management techniques to minimize the negative impact of their activities on the environment. They can also use more sustainable energy sources to power their operations, reducing their carbon footprint.
The adoption of modern technology has played a pivotal role in the oil and gas industry's turnaround. It has not only increased its efficiency and effectiveness but also enabled it to address environmental challenges effectively. As the industry continues to evolve, technology will remain a key driver of its growth and sustainability.
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