Name of Organization or Individual

Government of Equatorial Guinea

CMS Energy

Samedan

Name of organization (original language)

Name of individual if unaffiliated with any organization

Government of the Republic of Equatorial Guinea

Name of organization (English)

Same

Acronym (original language)

None

Acronym (English)

GREG

Department

Ministry of Energy and Mines

Function(s) within the AIJ project activities

Financing

Street

C/o Embassy of the Republic of Equatorial Guinea

2020 16^th Street, NW

City

Washington

State

DC

Post code

20009

Country

U.S.A.

Telephone

(202) 518-5700

Fax

(202) 518-5252

E-mail

World Wide Web-URL address

Surname

Nsue

First name, middle name

Teodoro Biyogo

Job title

Ambassador to the United States

Direct telephone

(202) 518-5700

Direct fax

(202) 518-5252

Direct e-mail

Surname

Same

First name, middle name

Job title

Direct telephone

Direct fax

Direct e-mail

Name of organization (original language)

Name of individual if unaffiliated with any organization

Samedan Oil Company

Name of organization (English)

Same

Acronym (original language)

None

Acronym (English)

None

Department

Function(s) within the AIJ project activities

Project administration, and financing

Street

350 Glenborough
Suite 300

City

Houston

State

Texas

Post code

77067

Country

U.S.A.

Telephone

(281) 876-6200

Fax

(281) 876-6153

E-mail

World Wide Web-URL address

www.samedan.com

Surname

Cook

First name, middle name

Rodney

Job title

Manager of International Operations

Direct telephone

Same

Direct fax

Same

Direct e-mail

rcook@samedan.com

Surname

Same

First name, middle name

Job title

Direct telephone

Direct fax

Direct e-mail

Name of organization (original language)

Name of individual if unaffiliated with any organization

CMS Energy

Name of organization (English)

Same

Acronym (original language)

None

Acronym (English)

None

Department

CMS Oil and Gas Company
CMS Gas Transmission Storage Company

Function(s) within the AIJ project activities

Project development, administration, and financing

Street

Fairlane Plaza South
330 Town Center Drive
Suite 1100

City

Dearborn

State

Michigan

Post code

48126

Country

U.S.A.

Telephone

(313) 436-3600

Fax

(202) 223-6178

E-mail

World Wide Web-URL address

www.cmsenergy.com

Surname

Pickart

First name, middle name

George Anthony

Job title

International Affairs Director

Direct telephone

(202) 293-5794

Direct fax

(202) 223-6178

Direct e-mail

gapickart@cmsenergy.com

Surname

Same

First name, middle name

Job title

Direct telephone

Direct fax

Direct e-mail

Sector(s)

Energy

Primary activity(ies)

Utilization of flared gas

Country

Equatorial Guinea

Exact location (city, state, region)

Punta Europa, Bioko Island

Project starting date (month/year)

May 2001

Project ending date (month/year)

May 2026

Project lifetime (years)

25

Current stage of project

In progress

The Atlantic Methanol Production Company is constructing a methanol production facility adjacent to an existing gas processing facility on the northern coast of Bioko Island, Equatorial Guinea. Residue gas (dry methane) has been flared at the exit of the gas processing facility initially at a rate of approximately 88 million cubic feet per day (mmcf/d) to the current volume of approximately 125 mmcf/d. This flared gas will be converted by the new plant into methanol, which will be exported for sale on the international market.

The projected greenhouse gas reductions that result from the flared gas being manufactured into a useful product are 2.85 million metric tonnes of carbon dioxide equivalents per year for each year of the project. The project will monitor gas coming into the plant and methanol being produced. From this data, GHG emissions associated with the operation can be subtracted from the calculated GHG reductions.

The nature of the costs involved in developing the AIJ project include:

Nature of Costs

Specific Costs

Methodology for Costs Estimates

Application development

Technical personnel

Time and Materials

ERT consulting

Time and Travel

Travel to Washington D.C

Travel

Monitoring Plan Development

Technical Personnel

Time and Materials

Monitoring Equipment

Equipment

Bid Estimates

Monitoring Plan Implementation

Technical personnel

Time and Materials

Party(ies) that will be monitoring project activities

CMS Energy, Samedan, GREG, and Environmental Resources Trust, Inc.

Party(ies) that will be externally verifying project results

Environmental Resources Trust, Inc.

Date when the monitoring plan became (or will become) operational (month/year)

2^nd Quarter, 2001

Types of data that will be collected

Fuel flow and combustion efficiency

The monitoring will be performed by AMPCo plant personnel and verified by Environmental Resources Trust Inc. Monitoring will commence with plant start-up scheduled to begin in May 2001. Fuel flow at many strategic points within the plant will allow the determination of GHG emissions and reductions.

Please check one of the following.

This report is a first report.

This report is an intermediate report.

This report is a final report.

Please check one of the following:

This report is a joint report. Letter(s) of approval of this report from the designated national authority of the other Party(ies) involved in the activity is(are) attached in Section J, Annex.

This report is a separate report.

Additional comments (if any):

The project will help to build developmental capacity and have a substantial positive effect on Equatorial Guinea’s economic growth and social progress. The partners, for instance, have worked effectively to establish a new and productive dialogue between the Overseas Private Investment Corporation, the US State Department, and the Government of Equatorial Guinea to lay the groundwork for substantial progress in the areas of labor and workers rights. This dialogue has already produced both verbal and written commitments by the President of Equatorial Guinea to senior State Department officials that the government will institute new programs and policies to shore up labor and workers rights protections. These commitments are a direct result of the partners’ efforts and will be implemented, monitored and sustained through the life of the AMPCO project.

In addition, the advent of the AMPCO methanol project, the first large onshore facility in the country, brought expansive new opportunities to Equatorial Guinea for local employment. The project emerged as a foundation for new and progressive government policies and practices on local employment, which the partners have supported and embraced.

When operational, the plant will employ approximately 220 to 240 people total, of which roughly 140 will be skilled, professional staff. The partners will work very closely with the government of Equatorial Guinea to ensure that there will be a strong initial commitment to hiring local workers, and that the percentage of local workers will increase in significant fashion over the first five years of operation. As part of that effort, the partners have committed to a comprehensive training and education effort, which will produce a highly advanced, and technical labor pool, with an emphasis on vocational specialties, operations and maintenance, safety and language skills. These skilled workers will in turn be available for other US and foreign investors, and as additional investment accrues their ranks will grow.

The AMPCO and Alba partners are committed to good corporate citizenship and are undertaking a number of activities beyond their contractual obligations in Equatorial Guinea to benefit the community and its people. These projects are funded through corporate contributions, or are structured so that they will be funded from royalties from the project so that profits are returned directly to the people. As an example of some of these activities, the partners have:

• Developed, constructed and begun operation of a 10-MW power plant on Bioko Island to meet all power requirements for the island, at a cost of more than $12 million. The partners conduct ongoing meetings with the Ministry of Mines and the local power company to assist with electrical power for Malabo. The partners also have undertaken a program to clear and maintain all power transmission lines from the hydroelectric plant in Riaba, at a current cost of $20,000 per month;
• Made a $425,000 commitment to construct a local market on the mainland;
• Contributed $200,000 to construct a temporary bridge on the road between the airport and Malabo that was washed out by a flood, and contributed $750,000 for the construction of a permanent bridge. The partners have also agreed to participate in the reconstruction of the entire road;
• Purchased two vehicles at $36,000 and provided two drivers and chemicals to conduct a malaria spraying program in Malabo five or more nights per week;
• Provided $45,000 in equipment and in-kind assistance to construct facilities and provide street lighting and electricity in advance of an international conference;
• Initiated discussions with US universities for extension programs to supplement the company’s training and vocational education effort;
• Provided books and supplies for local schoolchildren.

The partners have supported and will continue to support international non-governmental and other organizations that promote democratic ideals and principles through education and support for democratic systems in Equatorial Guinea. CMS Energy provided a $10,000 grant to the International Federation for Electoral Systems (IFES) to support the establishment and operations of an Elections Observer Mission for Equatorial Guinea’s most recent presidential election. CMS Energy similarly provided $7,500 to the Institute for Democratic Strategies (IDS) in support of a multifaceted democratization program in Equatorial Guinea.

These projects are illustrative of the fact that the partners undertake a commitment to social responsibility in the community they serve. The partners exercise and encourage responsible and ethical business practices in all of dealings with customers, local partners, vendors, and suppliers. The partners continually seek to observe certain fundamental values in their interaction with local and national leaders, opinion-makers, and government officials, including adherence to the rule of law, tolerance, and respect.

The partners also promote the establishment of greater transparency in business transactions, the development of sound and open regulatory regimes and practices, and the adoption of policies and laws that encourage free market principles.

• 1. AMPCO as part of its initial development is creating new environmental (or health and safety) policies or procedures. These are to be based on the current environmental, health and safety policies the two majority partners (CMS and SAMEDAN) have in place as individual companies and will be implemented through the Operational and Maintenance Manual for the plant once construction has been completed. These policies and procedures will reflect recognized environmental, health and safety standards and industrial codes of good practice as specified and agreed to in the Manufacturing and Marketing Agreement with Equatorial Guinea.

  The Turnkey Agreement for the methanol plan project sets out contract and requirement for the design, construction and test operation of the plant. It outlines, a minimum compliance with the following standards and specifications:

• OSHA (Occupational Safety and Health Association, US Department of Labor),
• NFPA (US National Fire Protection Association); and
• World Bank environmental guidelines

• 2. The procedures specifically developed for environmental protection on construction sites include hazardous waste management, pollution prevention, spill prevention, control and countermeasure (SPCC); spill response; storm water management; used oil management; recycling; and waste management. AMPCO’s contractor requires that all of their sub-contractors operate within the construction, environmental, health and safety policies and procedures unless the company operates under a more stringent system.

  3. Daily site walkovers are undertaken by the Environmental, Health & Safety (EH&S) Officer to monitor the implementation of general safety procedures throughout the project site and to ensure that good "housekeeping" is generally maintained. Weekly meetings attend by all on-site company representatives are held where, in addition to progress assessment, environmental and health and safety issued are discussed.

  4. Currently setting up procedures, work practices and standards for application at managerial and working levels on site - including plant modifications/design safety procedures, site safety procedures; environmental procedures and health and hygiene. The environmental procedures will address, for example, the control and disposal of wastes, effluent discharges and emission to air, protection of sensitive areas, spill prevention and response, soil protection, storage and disposal, environmental monitoring and assessment, noise surveys.

  5. Project medical facilities will contribute to local medical infrastructure.

  6. The Project has provided to the USIJI a copy of the Environmental Impact Assessment (EIA) that was developed to support the project. The EIA has been posted on the Overseas Private Invest Corporation’s web page for the required 60-day period in which no third party comments were received. A copy of the EIA has been provided to the USIJI Technical Review Committee under separate cover.

  7. In terms of localized air quality the methanol plant is predicted not to represent a significant adverse effect on the adjacent area, due to the predicted pollutant concentrations being well within air quality criteria, the isolation of the site, the sparse population present and prevailing wind direction. Dust generation will be minimal once construction has ceased. In addition, the large reduction of GHG associated with the extinguishing of the existing ground flare will yield a substantial positive local and global impact.

  With regard to water quality, there will remain a risk of some form of surface water and marine water contamination through unexpected events such as failure of water treatment units, containment measures, and emergency situations. However, methanol has low acute toxicity to aquatic organisms. Application of good environmental management practices, maintenance of equipment and protective structures and training should help minimize the occurrence of a release and the significance of the consequences. A full time environmental engineer will be employed to implement best management practices and follow plant environmental procedures aimed at protecting the environment.

  8. The consequences of accidental release of methanol to the ground are considered insignificant. Biodegradation is the major route of removal of methanol from soil. Several species of methylobacterium and methylomonas are capable of utilizing methanol as a sole carbon source.

  9. Increased shipping will be expected to have a moderate overall net adverse effect in terms of risk of impacts associated with spills of substances such as oil, methanol and discharges of ballast/bilge water. Minor or major methanol spills are expected to have limited short term and long terms adverse environmental effects on account of the chemical properties of methanol which facilitate rapid dilution and biodegradation.

  10. It is predicted that there would be no adverse noise impact at Mongola village or at the property boundary. A minor adverse impact is likely to remain within the site from plant activity, in particular at the nearest accommodation blocks (these are expected to be moth-balled until the maintenance/shut down periods) and administration office to the methanol plant, after accounting for additional mitigation measures.

  11. Due to the potential negative health effects of methanol exposure, all employees will be given awareness training.

  12. Disposal of solid waste will be at approved facilities by qualified contractors or carriers, both during construction and throughout the operating life of the plant.

  13. Small amounts of hazardous materials may be generated. They will be disposed of through licensed disposal services.

Based on the information contained in the EIA and the Operating and Maintenance procedures, the project is confident that the environmental impacts are negligible compared to the positive impacts of GHG emission reductions.

The project will engender social progress consistent with the development impacts described above, and will contribute to the development of the capabilities and professionalism of the indigenous workforce.

The project will have a substantial positive economic impact by creating a productive use for gas for which there had been no market and that previously had been flared as a by-product. The project will establish a new industry in Equatorial Guinea and help to strengthen and diversify the country’s export base.

Site number (order of presentation in this report)

1

Site name/designation

Atlantic Methanol Production Co. (AMPCO)

Project sector

Energy

Primary activity(ies)

Flaring Natural Gas

Has the reference scenario changed since the last report? (If yes, explain any changes below.)

Yes

No

This is the first project report.

Description:

Rich natural gas is extracted from the Alba field, off the coast of the island of Bioko, Equatorial Guinea, and the condensate removed at an onshore processing plant. The resultant natural gas is disposed of by flaring. To utilize the natural gas the AMPCO Methanol Plant is being constructed. To support the plant, the Alba field was expanded to provide additional natural gas and to provide additional LPG. 30.67 Mtonnes/yr of methane was flared in the Reference case. Diversion of the flared gas to the methanol plant is assumed to occur for the next 25 years.

Primary activity(ies)

Utilization of Natural Gas Previously Flared

Description:

The construction of the Methanol Plant on the island of Bioko, Equatorial Guinea will allow the termination of flaring of natural gas from the Punta Europa LPG plant. The operation of the Methanol plant is scheduled to commence in May 2001. At this time, the utilization of previously flared natural gas will used to manufacture methanol. Greenhouse gas emission reductions will occur as a result of the termination of the ground flaring of natural gas. Some greenhouse gas emissions will occur as a result of the methanol plant operation.

Primary activity(ies)

This information is not yet available

Description:

Site number

1

Project sector

Energy

The GHG emissions associated with the flaring of waste natural gas in a ground flare were calculated based on the ideal gas law and an assumption that the ground flare was 85% efficient. Assuming 29 bcf/yr of natural gas is combusted in the ground flare;

0.85 * 29 bcf/yr * 44lb CO₂/lbmole = 1.36 Mtonnes CO₂/yr

0.15 * 29 bcf/yr * 16 lb CH₄ lbmole = 0.088 Mtonees CH₄/yr

(0.088 Mtonnes CH₄/yr * 21 GWP) + 1.36 Mtonnes CO₂/yr = 3.20 Mtonnes CO₂ eq/yr

GHG emissions associated with the Project scenario include emissions from the methanol plant flare and miscellaneous equipment resulting in emissions equal to 0.193 Mtonnes CO₂ eq/yr.

Emissions associated with the construction and deforestation is equivalent to 3.98 Mtonnes CO₂ eq. These emissions are divided by 25 and spread out over the life of the project.

This information is not yet available.

GHG emissions that result indirectly from the use of methanol were not considered in this AIJ project. It is estimated that approximately 66% of the chemical grad methanol is bound up chemically in products or feedstock. The other 34% (27% MTBE, 2.3% fuels and 4.1% solvents) is used to meet market demands and offset other less economical supplies of MTBE, fuels and solvents.

Production of methanol in a new facility that burns natural gas for a majority of it’s steam and energy needs allows the GHG emissions associated with such a process to be minimized, as natural gas emits less GHG per energy unit than any other fossil fuel used in energy or steam production.

Future losses of GHG reductions could occur if the natural gas supply should end prior to the estimated life of the methanol plant (25 years).

The strategy for reducing the risk of loss of natural gas supply to the plant will involve well monitoring and plant operation to determine if the gas supply and the plant economics justify well field expansion.

CMS Energy

Samedan

U.S.A.

$15 mm

$15mm

50%

Total

Overseas Private Investment Corporation

CMS Energy

Samedan

GREG

Total

None

The project will demonstrate to Equatorial Guinea and to other countries in the West/Central Africa region the potential benefits to utilizing stranded gas. The project will build capacity by creating a highly skilled and professional work force among the indigenous population. The project will introduce technology and knowledge by introducing the production of methanol to the country.

The project is under construction and expected to be completed in the second quarter of 2001.

None.

None