The Global Gas Flaring Reduction (GGFR) partnership marked its tenth birthday in London last month with a call for a further 30% reduction in volumes flared by 2017.
World flaring volumes fell by 20%, from 172 bcm in 2005 to 140 bcm in 2011, according to GGFR estimates based on satellite data.
The saving, in part due to projects backed by the partnership, amounted to the prevention of the emission of 274 million tonnes of CO2, World Bank vice president Rachel Kyte told a press briefing. Taking the total below 100 bcm by 2017 is “a realistic goal”, she said.
The GGFR, a public-private initiative led by the World Bank and supported by many of the largest international oil companies, works towards global standards on flaring reduction, while supporting projects that boost associated petroleum gas (APG) utilisation. The forum last month discussed the persistent challenges and highlighted successes.
The reasons so much APG is flared are well known to the industry: without infrastructure to take gas away, and markets (preferably local) to sell it to, flaring was long seen as the cheapest, and often safest, means of disposal.
Reinjection to boost pressure in oil deposits may be an option, especially as fields mature. But flaring reduction has only begun to be addressed systematically to the extent that gas markets have developed, and that CO2 emissions reduction has become a political priority.
The booming oil prices of the last decade made flaring reduction much tougher, Hege Marie Norheim, Statoil’s senior vice president (climate), told the conference. “In countries where flaring is not banned, as the oil price went up, fields were developed so fast that there was no time to put solutions in place for APG.”
Russia, the world’s largest oil producer, flares the most APG (37.4 bcm in 2011), followed by Nigeria (14.6 bcm), Iran (11.4 bcm) and Iraq (9.4 bcm).
In Russia, the flaring blackspots are not all remote from gas infrastructure, Ioannis Papaioannou, a senior engineer at the European Bank for Reconstruction and Development, told the London forum. “Many gas flaring sites are close to infrastructure – and they could be the ‘low hanging fruits’ for reduction.”
Russian oil companies have in the past lacked incentives to bring APG to the gas transport network, though, because of the lack of clear third-party access rules and Gazprom’s reluctance to grant access. The situation is improving, due to political pressure on Gazprom – added to which a government decree of 2011 set a minimum APG utilisation rate of 95%, with sharply increased fines for non-compliance.
Aleksei Knizhnikov of World Wildlife Fund Russia, which publishes annual reports on flaring reduction, complained that some companies flouted such regulations.
Knizhnikov singled out Rosneft (56.2% utilisation rate in 2010) for criticism: the feasability study for its new Vankor oil field in eastern Siberia had not even mentioned APG utilisation, he complained – and Vankor is now flaring an estimated 4 bcm/year.
Only Gazpromneft had a lower utilisation rate (55.2% in 2010) than Rosneft – although Knizhnikov praised as a success the $270 million Vingapurovsky gas processing plant, a Sibur-Gazpromneft joint venture commissioned in September and slated to process 1 bcm of gas that otherwise would be flared.
Gennady Bukhtin, deputy governor of the Khanty-Mansiysk autonomous okrug, gave a presentation on APG utilisation in the Ugra district, which accounts for about half of Russia’s oil production and 36.6 bcm/year of APG.
The district’s overall APG utilisation rate is expected to hit 89.9% this year, up from 80.4% in 2004. Major projects include a gas-fired power plant at Surgut, and, crucially, an expansion of small-scale power generating facilities – from 206 MW in 2004 to 1243 MW in 2011 – that have provided a market for APG.
Nigeria flares the second largest volume of gas after Russia – while 50% of citizens have no electricity. The problem lies in developing a market, some speakers at the forum said. With a view to overcoming the difficulties in striking deals between gas producers and Nigerian power companies, the World Bank is now offering partial risk guarantees to investors in gas-to-power projects.
Rachel Kyte of the World Bank told the forum it is vital to act now on APG utilisation in the new African oil producers such as Tanzania, to ensure that infrastructure is included in field development plans. In sub-Saharan Africa, the gas currently flared is equivalent to half the total energy consumption.
The sharpest rise in flaring between 2010 and 2011 was in the USA, from 4.6 bcm to 7.1 bcm – largely due to the development of shale oil in North Dakota. Carlos Pascual, energy envoy at the State Department, told the forum that companies had not only drilled 2500 oil wells in a two-year period, but also invested $4 billion into gas gathering and processing. Pipeline construction on a build-own-operate-transfer basis is also being considered, he said.
Answering the challenges
Scale is a key to APG utilisation projects, and many of the biggest successes have been achieved where companies and governments worked out coordinated programmes. Such was the case in two examples highlighted by the GGFR:
- Azerbaijan, where flaring has been reduced by half, to 0.3 bcm/year, after the partnership helped provide measuring equipment and training, and, armed with better data, the national oil company Socar and BP drafted a gas recovery plan; and
- Mexico, where flaring was cut by 66%, mainly due to a project in the Cantarell field, by Pemex, the national oil company, under which compression units were installed on production rigs and excess volumes aggregated.
Rhonda Zygocki, executive vice-president of Chevron, pointed to the Angola LNG project – which will gather gas from Sonangol’s offshore production that would otherwise be flared, and produce a projected 5.2 million tonnes/year of LNG – as a key flaring reduction project.
But even Angola LNG will be dwarfed by the Basrah Gas project, a joint venture between Shell, Mitsubishi and Southern Gas Company of Iraq, that at capacity will buy up to 2 billion scf/day (20. 6 bcm/year) of APG from some of Iraq’s largest oil fields – Rumaila, Zubair and West Qurna – and process it.
Basrah will be “the biggest flaring reduction project in the world”, Hans Nijkamp, Shell Iraq country chairman, told the London forum.
But it is with smaller volumes of APG that the economics get complicated, speakers at the forum pointed out. Ahmed Al Sa’adi, vice president (gas) at Saudi Aramco, said that the company used a rule of thumb that an APG stream of 1 million scf/day, or more, could be monetised.
Berend van den Berg, project director at Petroamazonas of Ecuador, said the challenge in that country was “a large number of flares, many not only smaller than 1 million scf/day, but even smaller than 200,000 scf/day”.
Although the government had thrown political weight behind a scheme to develop gas capturing and handling, transport infrastructure, and power generation facilities using the gas as fuel, overcoming commercial hurdles remain challenging.
Van den Berg said corporate culture that focuses solely on production targets and “uses energy efficiency as a marketing tool, that makes it all about perception rather than substance” was at fault.
Other oil company representatives spoke of the need to change such culture. Christophe de Margerie, Total’s chief executive, said bluntly in a video message to the forum, “gas flaring is stupid” – which became something of a catchphrase during the event.
Manoelle Lepoutre, senior vice president for sustainable development at Total, elaborated: by 2014 the company plans to reduce its flaring volumes to half the 2005 level. Total has not started new fields with a continuous flaring option for more than ten years, she added.
One of the GGFR’s successes has been the publication of estimates of flaring volumes based on satellite data collected by the US National Oceanic & Atmospheric Administration (NOAA), that have been broadly accepted by many governments and international agencies.
The partnership’s officials hope to move towards effective international standards for flaring regulation, and presented the results of a consultants’ study of the issue at the London forum.
The problem is highlighted in Russia, the world’s largest flarer: the GGFR’s estimates (52.3 bcm flared in 2007 and 37.4 bcm in 2011) are in a higher range than those cited by president Vladimir Putin (20 bcm in 2007) – and higher still than the numbers issued by the state statistics agency (15.6 bcm in 2011).
Clearly standard methodology and reporting requirements would help.
Venting: flaring’s evil twin
Carlos Pascual, energy envoy of the US state department, told the conference that, in line with the UN’s new Sustainable Energy Initiative, the US government will seek to align anti-flaring initiatives with those aimed at reducing cold venting of methane.
The US Environmental Protection Agency (EPA) has estimated that in 2010 the oil and gas industry was responsible for 112.6 bcm of methane emissions – either cold-vented or leaked – more than one-third higher than the 2005 level. The greenhouse gas effect is much greater than that of flaring (equal to 1165 million tonnes of CO2 equivalent in 2010, according to the EPA), because methane’s greenhouse effect is much greater than CO2’s.
The figure includes APG cold-vented at oil fields, fugitive natural gas volumes that escape in production and methane leaks from natural gas infrastructure.
Pascual told the London forum that he hoped to see the Global Methane Initiative, a new public-private partnership launched with the support of the US and other governments, grow as the GGFR has done.
A version of this article was published in Gas Matters, November 2012