Energy Capital & Power

The Alen Backfill Project: Tracking Key Milestones

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Since announcing its vision of a regional Gas Mega Hub two years ago, Equatorial Guinea has shown no signs of slowing down in the implementation of its first phase: the Alen gas backfill project The project remains ahead of schedule to deliver first gas by the end of 2020.

May 2018: Announcement of Gas Mega Hub

Equatorial Guinea’s Ministry of Mines and Hydrocarbons announced its plans to transform the country into a Gas Megahub by developing several offshore gas hubs and monetizing neighboring gas reserves, driving industrial development and economic growth in the process. Aggregating gas from upstream producers and delivering it to onshore industry, the Mega Hub would create new efficiencies and safeguard the steady production of liquified natural gas (LNG) in the face of declining reserves from the Alba field.

The first phase of the project targeted the implementation of a new gas supply agreement between the Ministry and Noble Energy, operator of the Aseng and Alen fields. Located approximately 32 km off the east coast of Bioko Island, the Alen field is a liquid-rich gas and condensate field. Since it began operating in 2013, the field has functioned as a condensate production and natural gas recycling project, as well as produced and reinjected natural gas into the reservoir to support enhanced liquids recovery. Through the agreement, primary condensate would continue to be produced and transported to the Aseng field production, storage, and offloading vessel for sale. Leveraging current infrastructure, the Alen gas monetization project would serve as a high-return and capital-efficient development by utilizing three existing high-capacity production wells on the platform.

April 2019: Definitive Agreements with Noble Energy

One year later, the first step toward creating an offshore natural gas hub in Equatorial Guinea was taken, with Noble Energy signing definitive agreements with Marathon Oil and the Republic of Equatorial Guinea to develop gas resources from the Alen field via the Alba LPG plant and EG LNG production facility located in Punta Europa. Noble Energy serves as the operator of the offshore Aseng and Alen fields in Blocks I/O, while Marathon Oil represents the majority shareholder in both the Alba LPG plant and the EG LNG plant and terminal. The agreement also increased the shares of state-owned Sonagas in the EG LNG plant from 25% to 30%.

The implications of the agreement were extensive. Located north of Bioko Island and close to countries such as Cameroon and Nigeria, the project would facilitate a cross-border link with gas projects in those countries and open the door for establishing new hubs to service the region. The Gas Mega Hub reduces dependency on single upstream producers for industrial development, and combined with new subsea pipelines linking the Aseng, Alen, and Alba fields, the agreement would replace gas production lost and allow gas to be re-directed to where it finds efficiencies. Utilizing the new Punta Europa-Alba-Alen infrastructure, the Gas Mega Hub would be able to connect to new gas discoveries, driving monetization of stranded gas, increasing fuel exports, and boosting revenues.

November 2019: Contract Award for Pipeline Installation

For a total value of $90 – 100 million, the Ministry of Mines and Hydrocarbons approved a contract award to Italian multinational Saipem for the installation of pipeline infrastructure, following the reinjection of gas into the Alen field to extend the life of its LNG Train 1. To transport natural gas from the Alen platform approximately 70 km to the onshore facilities at Punta Europa, a pipeline with a capacity of approximately 95 million cubic feet per day is required. At Punta Europa, the gas would be processed and transported for export and sale on the global market, with natural gas sales from the Alen field projected to fall between 200 and 300 million cubic feet equivalent per day. As a result, the export of Alen gas could generate between $1.5 billion and $2 billion in additional revenue for the country for the duration of the project.

November 2020: Projected First Gas

Despite project delays and slowdowns in final investment decisions across the continent due to COVID-19, the Ministry of Mines and Hydrocarbons stated in April 2020 that the Alen backfill gas project is one of two projects that remain on track for timely and successful completion. Reinforcing the country’s continued prioritization of downstream developments and monetization of its crude resources, the other project is the construction of a small-scale, 5,000 bpd refinery in Punta Europa. According to the Ministry, gas fed from the Alen field to backfill the EG LNG plant at Punta Europa is projected to come online by November 2020, which would be ahead of schedule and initial projections of the first quarter of 2021.

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