Financial assessment of commercial extraction of sulphur and carbon dioxide from geothermal gases in Menengai, Kenya

Abstract

This study presents a financial viability assessment of commercial extraction of elemental sulphur and carbon dioxide (CO2) from non-condensable gases (NCG) in Menengai geothermal field, Kenya. A brief overview of the geothermal gases in geothermal production and technology options for sulphur removal and carbon dioxide purification and liquefaction suitable for the field are presented. An Excel based profitability assessment model was applied to determine the profitability using gas chemistry data from 11 production wells and budget information received from technology suppliers. It is found that the capital cost of setting up the plant with annual production capacity of 5,655 tons of elemental sulphur and 17,382 tons of industrial liquid CO2, equivalent 5%, is approximately US$9,779,415. The project´s Net Present Value (NPV) and NPV of Net Cash Flow are $2,033,178 and $2,028,446, respectively, while the equity Internal Rate of Return (IRR) is 31%. These numbers indicate that extraction is viable from the financial point of view and would provide a second option for the power company to generate an additional stream of revenue, and also eliminate the environmental effects of hydrogen sulphide (H2S) and CO2. It is found that production of sulphur as a single product is financially unattractive. Market analysis carried out indicates that Kenya is a net importer of sulphur and the Menengai production could provide an alternative local supply source. According to a risk assessment analysis the biggest risk that the production faces is the significantly high sensitivity of IRR to changes in prices both of sulphur and CO2.