Foreign Policy Blogs

Gas Flaring Back in the Spotlight

                                                             Source: Guardian.com/Friedrich Stark/Alamy

At the 10th anniversary meeting of the Global Gas Flaring Reduction (GGFR) partnership in October, members agreed to decrease global gas flaring by 30 percent over five years. Gas flaring is a global phenomenon that is harmful environmentally and depending on the situation economically. The practice is implemented when oil producers burn the natural gas that is associated (known as associated gas) with the crude oil during extraction rather than efficiently capturing the gas for storage or reuse. It is quite common, in fact. The quantity of associated gas flared annually is equivalent to 30 percent of the E.U.’s and 25 percent of the U.S.’ gas consumption.

 

According to the World Bank, the GGFR partnership is an entity led by the organization and composed of major public-private partnerships, but it is not globally inclusive as of yet. It is tasked to support oil producing countries and companies to use natural gas more sustainably, rather than spew vast amounts of greenhouse gases into the atmosphere.

 

The GGFR partnership says it has already helped reduce gas flaring by 20 percent from 2005 to 2011. This cut translates into an estimated equivalent of taking 52 million cars off the road. The group did this by establishing a global standard for gas flaring reduction, sharing best practices on regulation and technology deployment, and by identifying and supporting gas utilization projects.

 

New World Bank data shows that $50 billion in gas is wasted every year due to flaring. The issue of waste, aside from the immense environmental and economic aspect, is important considering 2.7 billion people are considered to be in energy poverty, according to the International Energy Agency. Efficiently harnessing the gas could be a factor in enabling access to energy for those devoid of it, thus providing a bridge to expand socio-economic opportunities.

 

Flaring is a dirty and polluting process. The ensuing emissions are comprised of methane, sulfur and nitrogen oxides, benzapyrene and dioxin, particulate matter, carbon dioxide, and organic compounds such as benzene, toluene, xylene and hydrogen sulfide. In sum, the pollutants greatly increase health risks ranging from respiratory problems to cancer, they degrade soil preventing vegetation from growing, and many believe acid rain.

 

Despite the environmental degradation and missed financial opportunities, flaring can still be an economical method in areas that are remote and/or lacking appropriate infrastructure to act sustainably. Re-injecting the gas into the ground for reuse in oil production, converting it to liquid natural gas, transporting it via pipelines, or converting it to generate electricity on-site is needed for a more sustainable industry.

 

Nigeria, the second largest global gas flarer and GGFR, has policy aimed along this outline. In 1984, flaring of associated gas was formally banned, and in 2005 it was declared unconstitutional by the Nigerian Supreme Court, but the practice actively persists at a reduced rate.

 

A Petroleum Revenue Special Task Force recently found that none of the oil companies, such as Shell and Total, operating within its borders have paid any of the penalties associated with gas flaring. An estimated $4.1 billion in penalties has not been collected largely because the Department of Petroleum Resources has failed to carry out its job.

 

Mr. Osten Olorunsola, Director of the Nigerian Department of Petroleum Resources (DPR) said the government may shut down some oil fields to reduce gas flaring, despite possible lost revenue. He continued that gas flaring has been reduced recently, but not at the desired pace. He noted the industry currently flared between 1.3 and 1.4 billion cubic feet a day (bcf/d) of gas—about 18 percent of gas produced, down from roughly 2.5 bcf from early 2011.

 

Nigeria sits atop vast oil and gas resources. Its natural gas reserves are seventh largest in the world and the largest in Africa totaling 93 trillion cubic feet (tcf) of associated gas and 90 tcf of non-associated gas, according to Mr. Olorunsola; only Russia flares more gas. It is also the top oil producer in Africa and in 2011 it produced 2.5 million barrels per day (bpd) of total liquids, according to the U.S. Energy Information Agency (EIA). With such vast sums, it is clearly evident that the practice needs more oversight and penalties need more enforcement, so the nation benefits rather than international oil companies.

 

As mentioned, only Russia ranks above Nigerian flaring totaling 1,244 bcf in 2010, according to the U.S. National Oceanic and Atmospheric Administration (NOAA). The country, a non GGFR member, has this enormous ability as the second-largest producer of total petroleum liquids in 2011, second only to Saudi Arabia, averaging more than 10 million bpd, according to the EIA. The government has set a target for oil companies to flare only 5 percent of its associated gas and it has increased financial penalties. An official from the Ministry of Natural Resources and Environment said the penalties to be paid by oil companies in Russia this year will total $500 million.

 

A growing actor in the oil and especially natural gas landscape, the United States, leads the world in growth rates of flaring mainly thanks to vast expansion of the Bakken shale oil field in North Dakota and western Montana. Companies there find it cheaper to burn the associated gas rather than build the pipelines for more sustainable use of the gas. Every day more than 100 million cubic feet (mcf) of natural gas is flared this way—enough energy to heat half a million homes for a day. All told, 30 percent of the natural gas produced in North Dakota is burned as waste.

 

There are concrete measures of progress for flaring reduction. A few examples from the World Bank show Azerbaijan has cut flaring by 50 percent in two years,Mexico by 66 percent and Kuwait now only flares 1 percent of its excess gas. Other countries, including Qatar and the Democratic Republic of the Congo, now use large volumes of previously wasted gas to generate electricity.

 

The GGFR partnership’s members have agree on a pathway for reduced associated gas flaring which nonmember actors can evaluate and act to implement for the benefit of their interests, the surrounding areas and the global community as a whole.