EanZ aE0 /20 Public Disclosure Authorized ETHIOPIA Public Disclosure Authorized CALUB GAS DEVELOPMENT PROJECT Environmental Assessment Public Disclosure Authorized March 1993 Public Disclosure Authorized Public and Pri-ate Enterprise Division Eastern Africa Department Preface This EnvironmentalAssessment was conductedas part of the preparation for the Calub Gas DevelopmentProject in Ethiopia. The Project Team comprised: Luciano Borin (Team Leader), Paul Ballard (Private Sector Development), Carine Du Marchie and Gerda Heyde (WID consultants),Tom O'Connor (Gas Field Geology), Thuvara Nayar (Refinery Operations), Harry Sasson (Privatization, consultant) Maurizia Tovo (Regional Development), Salman Zaheer (Financial and Economic Analysis, consultant). The project will be located in the part of Region 5 traditionally known as the Ogaden. In view of the project implicationsvis-a-vis the fragility of the Ogaden's environment, both human and natural, a special sub-team, coordinated by Maurizia Tovo, was established to prepare an EnvironmentalAssessment. The sub-teamincluded the following consultants:Mohamoud Ayan (RangelandEcologist), Richard Hogg (Anthropologist)and Marino Martin (IndustrialPollution Specialist). A number of visits to key areas and communitieslikely to be affected by the Calub Gas DevelopmentProject took place between May and December 1992. Discussionswere held with government agencies, donors and NGO's working in the region, as well as with traditional leaders, local authorities, women's groups and community members. The resulting report, therefore, reflects the knowledgeand wisdomof a large number of individualsthoroughly familiar with the area under study. The draft report was submitted to the Government for review and approval, and it benefitted from the contributions of the Water Commission, the Ministry of Environmental Protectionand Natural ResourceDevelopment, the Ministry of Planning, and the Third Livestock Project (Ministry of Agriculture). The Oil and Gas Explorationand DevelopmentOrganization (Ministry of Mines and Energy) provided invaluable assistance throughout. Government's approval was given during Mr. Borin's visit to Ethiopia in February 1993. The report outline follows closely the recommendationsof the World Bank's Operational Directive on EnvironmentalAssessments -(OD 4.01). The Mitigation Plan described in Chapter 5, however, goes probably beyond what was intended in OD 4.01, in that it containsplans for the establishmentof a special Calub CommunityDevelopment Fund. The purpose of the Fund will be not only to provide compensationfor any adverse environmentalimpact of the project, but to build on its positive impacts so as to spread benefits to as many local residents as possible. The MonitoringPlan presented in Chapter 6 and envisagedas an integral part of the Project, will pay attention to changes in the biophysical and socioeconomicenvironment, and at the same time represent an instrument of feed-back and evaluationfor the Fund. iii Contents Executive Summary ....................................... vi Chapter 1 Institutional Framework ............................ i Government ...................... 1 Non-GovernmentalOrganizations ....................... 1 Chapter2 Project Description .................. 3 Overview ......................... 3 Components .. 5 Gas Field Exploitation ........................ 5 Plant Constructionand Operation ................... 6 TechnologicalProcess .................... 6 Plant Description ........................ 7 Townsite for Plant Employees ........................ 9 Road Rehabilitation ................................ 10 Chapter3 Baseline Data ......................... 11 Setting .. 11 Bio-PhysicalEnvironment . 13 Climate . .13 Geology and Soils .. 14 Gas Field Geology .. 15 Natural Vegetation .. 15 Wildlife Resources .. 16 Land Use and Land Tenure . .16 Surface Water .. 17 Ground Water . .17 Socio-EconomicEnvironment .. 21 Demography . 21 Economy . 21 Socio-CulturalOrganization .. 23 Outside Interventions .. 24 Needs Expressed by the Population . .26 Infrastructure .. 27 Roads .. 27 Industrial Facilities .28 Chapter 4 EnvironmentalImpacts and AlternativeChoices . .35 Gas Field Exploitation .. 35 Plant Constructionand Operation. .37 Alternatives for Water Supply to the Plant and Townsite ........ 39 Alternatives for Townsite Location ........ .. 40 iv Townsite for Plant Employees .. ........................ 42 Road Rehabilitation. .. 43 Indirect Impacts: Socio-Economic Changes .. 44 Chapter 5 Mitigation Plan.. .. 47 Bio-Physical Environment . .. .. .. ... ... .. .. .. ... 47 Gas Field Exploitation. .. 47 Plant Operation and Construction.. .. 48 Townsite for Plant Employees. .. 49 Road Rehabilitation. .. 50 Socio-Economic Environment . .... .. ..... ... ... ... 52 Employment Policies .52 Community Development .53 Chapter 6 Enviromnental Monitoring Plan ................... 55 Monitoring System.. ....................... 55 Natural Resources Component ........................ 56 Socio-Economic Component ........................ 57 Monitoring Unit.. .................... 59 Duration. ...................... 61 Budget. ...................... 62 Annexes 1. Geofogical Maps and Cross-Section .64 2. Calub Community Development Fund .68 v Summary Project Description 1. The Calub Gas DevelopmentProject will exploit the fossil fuel resources located at Calub, in South-EastEthiopia (Region 5, commonlyknown as Ogaden). Natural gas and associatedliquid reserves have been estimatedat 2.7 trillion cubic feet. The project will extract and commercializeliquid petroleumproducts (LPG, gasoline, keroseneand diesel), and re-inject dry gas into the reservoir for future gas use in a secondphase. The yearly output of liquid petroleum products from Calub is expected to be equivalent to about 10 percent of current petroleum imports. In addition to contributing to import substitution, the LPG and kerosene introduced into the market through the project are expected to mitigate the current fuelwoodconsumption, thus easing the pressure on the tree cover and possibly slowing down deforestation. 2. For purposes of environmentalassessment, the project can be divided into four componentsas follows. (a) Gas Field Erploitation. The Calubfield has major reserves of natural gas in two reservoirs named Adigrat and Calub. The shallower Adigrat reservoir is composed of two thick sandstone beds named Adigrat A and Adigrat B (gas-in-placeis estimated at 13.8 billion m3 and 6 billion m3 respectively). The plan is to produce the Adigrat A reserves, maintaining the reservoir pressure by the addition of make-up gas from the deeper Calub reservoir. Initial gas production will be at a plateau rate of 1.4 million m3 per day for fifteen years. Condensaterecovery from this gas is estimated to start at around 180 m3 per day, declining to 150 m3 after fifteen years; LPG recovery is projected to be around 115 m3 per day, decliningto 85 m3 per day after fifteen years. Of the existingwells (drilledby the Soviets), four are planned to be producing wells and three will serve as reinjection wells; an additionalproduction well will be drilled to obtain needed make- up gas from the Calub reservoir. (b) Plant Constructionand Operation. Althoughdetails of plant construction and operationwill be finalizedby the contractor selected, the design of the plant will have to follow certain specifications. To begin with, because of the remote site and Ethiopia's lack of experience with this industrial process, only field proven processes and equipmentwith low maintenance requirements will be considered. And because of the arid climate, plant design will depend on air cooling and pressure changes to effect most temperature control, so as to minimize reliance on water for cooling purposes. As a result, the plant is forecast to require no more than 50m3/day of industrial water. vi The gas collected from the Adigrat field reaches the separationplant at a pressure of 166 atmospheres and 1580 C temperature. To obtain LPG, the gas will be cooled to 200 C temperature, and condensed water removed, usingknockout drums initially,and a simplifiedJoule-Thompson system and molecular sieves later. The gas is thereafter fractionatedinto lean gas, LPG and condensatein a two-stageflushing column and a two- stage fractionating column. The condensate will be refined in a conventionalatmospheric distillation section, with productionof gasoline, kerosene and diesel oil. (c) Townsite for Plant Employees. About 100 employees will be needed for day-to-day plant operation. Because housing conditions in the area are very poor, it has been proposed to build a townsitefor all permanent plant employees, where they could live with their families. The townsite will consist of about 100 single-familyhouses, plus a guest house. All houses will have the same basic features, including water and electricity (the latter, will be available at low cost from the plant). Some 500 people are expected to take up residence in the townsite, at least initially. Their water consumptionhas been calculated at about 70 m3/day. (d) Road Rehabilitation. The remotelocation of the gas reservoir impliesthat a part of Calub products will have to shipped over long distances (Harar, the closest main town, is 595 km to the north). At thie.moment, any commercializationof petroleumproducts will have to rely on the Shilabo- Harar-Dire Dawa road. But the existing road is in a bad state of repair. Road rehabilitationis therefore essential. Under the project, the first 257 km (Harar-DegahBur)