Cost–Benefit Analysis of Associated Gas Flaring in the Niger – Delta Area of Nigeria (a case study of 1958 – 2004

Abstract

CT: Associated gas flaring has been revealed as a significant contributor to the warming of the local climate
of the communities where these flare stacks are located. Associated gas flaring has also been revealed as a major casual
factor to the degradation of the environment, air pollution and consequent health effects of the inhabitants of these host
communities. This study goes a step further to assess the economic benefit of total utilization of associated gas as an ante
dote to these problems as it is been argued that flaring this gas is cheaper than total utilization. The research uses as its case
study the Niger – Delta region of Nigeria a West African country with 1958- 2004 been the years under review. The study
adopted the Cost – Benefit approach/ Method of analysis as well as relied on secondary face to face interview. Results from
the study revealed that the economic benefit of total utilization of associated gas far outweighs the cost of flaring associated
gas. Results from the study also reveal that if Nigeria had utilized the associated gas from crude oil exploitation from 1958
-2004; the country would be $32 billion richer. This is without the estimation of the multiplier effect of reinvesting these
monies. The research further reveals that the country requires another Liquefied Natural Gas (LNG) plant 1.4 times the
capacity of the Bonny LNG plant to totally processthese associated gases for onward utilization. In the light of these
revelations the study recommends a strategic legal framework for the formulation of an act for the operation and governance of the Nigerian Liquefied Natural Gas (NLNG) be put in place by the government as this is a major bottleneck to the development of the sector. Also in the development of strategic plans and policy guidelines for the enactment of the act, the host communities should be in full participation. This is to ensure transparency and equity which will further result in total cooperation and compliance by all stakeholders. Furthermore, the study recommends a time frame be set for routine review of the plans and policy guidelines so as to update lapses for further and future development.

Keywords: Cost – Benefit Analysis, Gas flaring, Total Utilization, Non Utilization, Utilization Economic Cost