• Tuesday, September 16, 2014

Special Feature

An Impending Crisis?

Bangladesh must take immediate measures to face an impending energy crisis

Ananta Yusuf

There was a time, not too long ago, when Chittagonians would use clay-coated stoves for cooking. After the first off-shore gas field Sangu started its operation in 1998, this primitive method of cooking gradually disappeared from the kitchen. Fifteen years later, it seems the city is going back to the ancient method of cooking, with the premature demise of Sangu announced last year.
Salma Begum, a resident of Halishahar of Chittagong, echoes the predicament of most households of the port city. “Even though we are paying the gas bill, we are not getting the desired service, and we have to rely on clay stoves for cooking,” she says.  
A British company named Cairn Energy discovered Sangu Gas field in 1996 and it started production procedures in the field two years later in 1998. Later, the gas field was jointly managed by Cairn Energy and Santos Oil of Australia.
The exploration of Sangu brought hope to the people of Chittagong. Most residents of the city thought that the first off-shore gas field would bring economic prosperity in the region. However, their hopes soon gave way to despair after the gas field shut down in September 2013.  
During Sangu's golden age, gas production peaked at about 150 million cubic feet per day (mmcfd). A few years later the gas field showed signs of a downturn.  Gradually, the production rate reached rock bottom. The last measured rate recorded before it closed down last year was five to ten mmcfd.  
The reservoir experts of Petrobangla believe that the continuous acceleration of gas production has damaged the gas reservoir. The massive downturn eventually led to its shutdown. Badrul Imam, Professor of Geology Depertment of Dhaka University, believes that the decline of gas production in Sangu is not normal, as he says, “The gas field collapsed due to over production.”

Chittagonians’ hope gave way to despair after Sangu gas field shut down. Photo: Rashed Shumon
Chittagonians’ hope gave way to despair after Sangu gas field shut down. Photo: Rashed Shumon

Sangu became a subject of controversy, not only for its low performance but also due to several other factors related to reserve estimation and cost recovery. Badrul Imam explains that the government engages foreign oil companies in gas exploration and in return the company shares the produced gas. He says, “Foreign companies usually overestimate the exploration cost and that way Bangladesh's share goes back to the company and the country actually gets very little profit.” The same thing happened with Sangu as well.
An official from Petrobangla who wants to remail anonymous, says that the government had asked the foreign company to accelerate gas production since the country needs gas for power plants and industries. The bulk consumers of natural gas in Bangladesh are power plants, as almost 80 percent of these plants use natural gas as their fuel.  
According to the Bangladesh Gas Sector Master Plan 2006 prepared by Petrobangla and World Bank, gas production will continue to increase for some years and then it will start to decline. In a forecast of gas supply scene from the existing gas fields, production is expected to increase and reach its peak in 2016. As the demand for gas continues to grow, the gap between demand and supply will continue to widen as the production begins to decline after 2016. Gas production from the existing reserves is expected to continue to 2025 and beyond, although in short supply.
The government's decision for over production raises questions, since it came without measuring the capability for over production of a gas field. In 2009, when the Awami League came to power, the country's gas supplies hovered around 1850-1900 mmcfd, a few hundred mmcfd short of the demand. Over the next five years, the supplies increased up to 2,250 mmcfd due to increased production by the national gas companies. Chevron alone provided 250 mmcfd. And now it is investing half a billion dollars to increase Bibiyana Gas Field's production by 300 mmcfd by early next year to address the country's gas crisis. Experts believe that this might cause Bibiyana to collapse just as Sangu did in the past.
Besides over production, the lack of proper management and surveillance also poses some problem. An engineer of Titas Gas T & D Company Limited says that at this moment Gas Transmission Company Limited (GTCL) and Petrobangla do not have the proper equipment to inspect the gas fields. He says, “There are two flow metres to measure the gas production in Chittagong but right now both these machines are out of order.”  
Badrul Imam says that in our country gas fields are not well-maintained and for that reason we are forced to face the premature death of gas fields. He says, “A few years ago we observed that Titas, our largest gas field, kept leaking through different channels. The government formed a search committee but we have not observed any strategic changes emerging from the search committee report. This is a big example of irresponsibility. It shows the lack of good governance.”
Experts put more emphasis on searching for alternatives. However, alternative energy sources such as hydro-power, wind and solar power, biomass power, etc. are not sufficient to meet the daily demand of the power sector and industries. At this point, experts believe that coal can be a good alternative to meet the emerging gap. However, the government announced that it will not go for coal mining for now as it plans to rely on imported coal for producing electricity. Nasrul Hamid, State Minister for Power, Energy and Mineral Resources has said, "We have moved away from the decision to extract coal from any new field.” The recent decision for importing coal reflects the pursuit of commercial interest. Before following any prescription, Bangladesh should look for new ways to replace gas, as the day is not too far away when we will see more gas fields collapsing in the country.

Published: 12:00 am Friday, February 28, 2014

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