We are warming up an overheated house by burning money.
A total of 153 billion cubic metres of unwanted natural gas went up in smoke worldwide last year, and another 167 billion cubic metres leaked into the air — equivalent to 8 per cent of global gas consumption and conservatively worth $45 billion.
Why is it taking so long to stop flaring, venting and leaks?
Methane, the main constituent of natural gas, is, when used well, a valuable and relatively clean fuel. The world is currently short of it, because of disruptions to Russian gas flows, and prices have soared to unprecedented levels — the equivalent in Europe of more than $360 per barrel of oil.
Methane is also a powerful greenhouse gas — its warming effect over a century is, tonne-for-tonne, almost 30 times that of carbon dioxide. But it breaks down quickly in the atmosphere — half is gone within nine years, meaning that action now will soon reduce warming.
Despite gas’s value and its global warming contribution, too many companies and countries still burn off the by-product from oil production or allow it to vent into the air directly or through leaks from pipes, valves and storage tanks. The bright flares are an unmissable landmark for air travellers over Iraq, Siberia or Texas. They do not burn gas completely — between 2 per cent and 10 per cent of the methane escapes, worsening the global warming effect.
The industry is well aware of the problem — but it is not getting better. Flaring last year was close to 2016’s high and has been rising overall since the early 2000s. The flared gas in Europe and its immediate neighbours alone is enough to replace a quarter of Russian imports.
Some of the major offenders are riven by war, sanctions or dysfunction: Venezuela, Libya, Iran and Iraq. Nigeria was the world’s leading waster of gas until 2007; now it has reduced flaring considerably and stands only ninth, an impressive though incomplete achievement. It has boosted domestic use as well as supplies to its neighbours and exports of liquefied natural gas.
Since the construction of Saudi Arabia’s master gas system in the late 1970s and early 1980s, and the UAE’s LNG export plant in 1977, their flaring has been low in relation to the large volumes of oil production.
But others have no excuse. In Russia (now the world’s number one flarer), the US (fourth), Algeria (sixth) and Mexico (seventh), flaring has been on the up over the past decade. This is particularly odd in Algeria, short of gas for export and well-connected to the European market. Americans will claim their flaring per unit of gas produced is not high by world standards and that much production is in relatively remote areas such as west Texas and North Dakota.
But this is not a good excuse. The world’s largest gas market, with extensive pipeline infrastructure and a huge and entrepreneurial set of operators and service providers, should have no trouble in capturing nearly all of its gas. The recently passed Inflation Reduction Act intensifies monitoring of methane emissions, sets a fee on methane leaks escalating to $1,500 per tonne and aims to plug neglected old wells.
There is now no place to hide. Satellites monitor flaring and methane leaks worldwide, while drones can spot emissions from individual facilities. These have been instrumental in highlighting massive plumes of gas emanating from pipelines in Russia, Turkmenistan, Algeria and the US.
Recent advances have allowed the tracking of offshore methane leaks and found the US Gulf of Mexico was a worse offender than the industry onshore. From next year, the Environmental Defence Fund’s MethaneSat will be the most advanced satellite keeping an eye on emissions.
The oil industry is not the only methane offender — 40 per cent comes from agriculture, such as rice paddies and burping cows; 20 per cent is released from waste dumps, which also show up brightly on the satellite pictures in cities such as Delhi and Buenos Aires; and 11 per cent from coal mines. But petroleum, a quarter of the problem, gets most of the publicity and blame.
There is a long-term place for oil and gas in the world energy system — to replace coal in Asia and Russian gas in Europe, produce petrochemicals and plastics, make the clean fuel “blue” hydrogen, and be combusted with carbon capture.
But this only works if other emissions are minimised. Otherwise, hydrogen and LNG face the accusation that they are “worse than coal” for the environment — usually a hyperbolic assertion, but one that undermines public support for them. Europe’s border tariffs will penalise imports of fuel from countries that do not control their carbon footprint.
In 2014, a group of major oil companies, including Saudi Aramco, Shell, China National Petroleum Corporation and others, formed the Oil and Gas Climate Initiative, with $1bn of funding. Last April, the US Department of Energy led on creating the Net Zero Producers Forum, including Canada, Norway, Qatar, Saudi Arabia and later the UAE. Reducing flaring and methane leaks is a key part of both organisations’ approach.
To be a little cynical, we might think the oil industry’s enthusiasm since 2019 for reducing methane is because they can control it — unlike the carbon dioxide from their products’ end use. But this only works if emissions are actually coming down — and, as we have seen, they are at best flat.
If Europeans could get over their fossil fuel aversion, they would realise that promoting the capture and use or export of flared gas is a win for the environment and for their energy security. The work to stop flares and leaks is painstaking and unglamorous, but not technically difficult, and will often be profitable at today’s gas prices.
The gas industry — both private and state companies — needs to stop being lazy, complacent or careless. Otherwise, it will squirm under the unwelcome microscope of eyes in the sky.
Robin M Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
