In the recent years, Pakistan has witnessed a sharp increase in the demand of natural gas. The consumption of natural gas during 2004 was about 1,050 billion cubic feet, close to the level of production but still not enough to meet the total demand, mainly that of industrial and power sectors.

The country produces natural gas to the level of 1,343 billion cubic feet annually, or 3,680 mmcfd (million cubic feet per day), which translates into 28.20 million metric tons of oil equivalent (TOE).

The projected demand-supply position of natural gas indicates a deficit of 25 per cent of total gas requirement by 2010, as additional gas from indigenous production in coming years will rise by 10 per cent.

Gas import pipeline projects are planned. Nonetheless, their implementation will take a much longer period, given the present conditions.

Power sector is major consumer of natural gas, with over 40 per cent share in total national consumption. A number of new independent power producer (IPP) projects have been sanctioned recently, based on natural gas as primary fuel, with cumulative capacity of about 1,600 mw. In total, about 600 mmcfd gas has been earmarked for these projects, initially until 2010-11.

Gas is not committed for these power projects on year-round basis and it is not made available during 2-3 months of winter season. The power plants use alternate or back-up fuel for this period, depending on the technology applied for power generation. Generally, these are distillate (light) fuel oils, such as high-speed diesel (HSD), and residual (heavy) fuel oils, including low sulfur furnace oil (LSFO) and high sulfur furnace oil (HSFO).

Consumption of petroleum products by power sector at present is 2.74 million tons, mostly required for oil-based thermal power plants. Nonetheless, dual-fuel (gas-oil) fired power plants consume significant part of this figure. The up-coming gas-based/dual-fuel power projects in private sector will be a further strain on demand for petroleum products during winter when gas is not available.

In view of increasing cost of petroleum products globally and also Pakistan’s persistent high import bill of oil, it is advisable to consider economical options. Petroleum naphtha, commonly known as naphtha, has the potential to be considered suitable in replacing the above liquid oil fuels, due to naphtha being indigenous and comparatively of lower price. A few of the IPPs are reported to be exploring the possibility of using naphtha as an alternate/back-up oil fuel.

Naphtha is primarily used as feedstock in refineries and chemical/ petrochemical industries. The least expensive of oil fuels, it is used the world over for power generation, either as primary fuel or alternate fuel to natural gas. Leading manufacturers of gas turbines and diesel/gas engines have installed, a number of simple-cycle and combined-cycle units using naphtha in many countries, including China and India. With a total power generation capacity of 115,545 MW, India has the world’s largest experience of using naphtha on gas turbines.

Current naphtha production in Pakistan, as a by-product from the petroleum refineries, is around 833,000 tons per annum. The current production is enough to run at least six combined-cycle power plants of 100-mw capacity each, roughly, for a period of approximately two months when supply of natural gas would not be ensured. Only at one refinery the naphtha production is converted into high-octane gasoline, whereas all other refineries export the low-valued commodity, earning annually an amount of $160 million at optimum market price.

Unfortunately, Pakistan’s hydro-cracker/naphtha-cracker project, originally approved in 1982, could not be set up. In 1990s an UAE- based company had joined hands with Pakistan to establish joint venture, but it lacked professionalism and required financial credibility. Hence the plan was shelved.

Naphtha, a colourless, volatile and inflammable liquid hydrocarbon mixture, is composed of different grades. Petroleum naphtha, which is the unprocessed component in the production of petrol/motor gasoline, is intermediate distillate between the lighter gasoline and heavier benzene. It has a specific gravity of 0.76. Transfer, transportation and storage of naphtha may pose problems. Its very low viscosity results in poor lubrication to metal surfaces, and therefore lubricity improvement additives are used for naphtha-fuelled power generation facilities.

Naphtha requires special safety considerations for use in gas turbines and diesel/gas engines. Its high volatility can cause fire explosions, as in case of other liquid fuels, though only one major accident is reported.

In July 1996, a fire explosion occurred in Enron’s Telside (UK) power station, which is 1,875 mw capacity—perhaps the world’s largest gas-fired combined cycle heat and power plant. This was due to ignition of naphtha leak from a joint during fuel changeover. Since then the related technology has improved.

As regards environmental concerns, nitrogen oxide emissions burning naphtha are almost of the same levels as that for combustion of other heavy fuel oils, and the impact is effectively mitigated, by installing separators, bringing the same to acceptable and regulatory levels.

In fact, centrifugal liquid fuel treatment systems are installed, which significantly improves the quality of fuel before it enters gas turbine or diesel/gas engine, as the case may be.

There is no pricing policy for naphtha in Pakistan since it is not being sold in domestic market. It is however estimated that naphtha would be available to the IPPs at Rs40,643 per ton, or Rs28.39 per litre.

Based on this price, it is estimated that naphtha fuel component of power plant operation would be much lower in comparison to burning, for example, diesel (HSD) that currently costs Rs36.66 per litre. There is also no increase in cost of machinery and equipment, and the total cost of power plant. Using naphtha would significantly reduce power generation costs and resultantly electricity tariffs. In view of the foregoing, a feasibility study is needed to establish use of naphtha as alternate/backup oil fuel for gas-based power projects.

(The writer is on the board of directors, Private Power and Infrastructure Board, ministry of water and power)