The burning question of gas flares
It is one of the bitter ironies of the Gulf energy industry that it burns huge volumes of natural gas as waste despite a power crisis in the region and increasing global pressure on natural resources and the environment.
The Middle East as a whole ranked second in the world last year for wasting natural gas by burning it off instead of using it for power stations and industry. Each year, countries surrounding the Gulf flare 27 billion cubic metres, according to satellite data from Global Gas Flaring Reduction, an international organisation supported by the World Bank. That staggering sum is 30 per cent more than the UAE imports from Qatar through the Dolphin pipeline and is sufficient to supply a liquefied natural gas (LNG) plant with enough gas to produce 18 million tonnes per year for export, worth more than US$9.6 billion (Dh35.2bn) at current prices in Japan, the biggest market.
As countries in the region face gas shortages and international criticism for their emissions of greenhouse gases, eliminating the waste should be the first logical step of any energy policy, experts say. "Gas flaring reduction is not just a technical issue that oil producers have to deal with, but it's a relevant solution in today's energy debate," says Paulo de Sa, the manager of the oil, gas and mining division at the World Bank.
"Some countries use heavy fuel oil for power generation while still flaring associated gas. Generating electricity with gas that would otherwise be flared contributes to improving access to energy in the most efficient way possible." The practice of flaring only increases the region's carbon footprint, emitting about 80 million tonnes of carbon dioxide per year, based on World Bank figures, slightly more than the carbon emissions of Austria.
Ending the practice in Iraq alone, which is planning to increase oil production as much as five-fold in the next two decades, would prevent forecast emissions of tens of millions of tonnes of carbon from entering the atmosphere, says Mounir Bouaziz, a vice president for new gas business at Royal Dutch Shell, the oil giant. "There are one or two elephants we can chase," he says. "The example of Iraq, we are talking about the equivalent of taking more than 4 million cars off the road, or reducing the amount of cross-Atlantic flights by 100,000 flights per year."
Globally, flaring emits 400 million tonnes of carbon dioxide, roughly equivalent to the carbon emissions of France. Russia and Nigeria are the worst offenders, followed by Iran and Iraq. The oil industry is well aware of the arguments against flaring and is often quick to agree that action is needed, but say economic and logistical challenges stand in their way. Oil companies flare or vent gas when they lack the pipelines and other infrastructure to move it to where it can be used. Often, they say they are forced to flare because the source is a remote oilfield that is too small or far away from major infrastructure to make it practical to capture the gas.
In such cases, additional investment is needed to make the capture of gas possible, they say. Gas also is flared at refineries as well as LNG and chemical plants as a safety mechanism to prevent a sudden rise in pressure. At Oman LNG, which operates a plant near Sur, flaring remains "a very important element of ensuring process safety", said Brian Buckley, the chief executive of the company. Oman is responsible for about 1.5 per cent of the gas flared worldwide, putting it in the top 20 flaring countries. It is joined on the list by Iran, Iraq, Kuwait, Qatar and Saudi Arabia.
The sultanate has reduced the practice by 25 per cent in the past five years, Mr Buckley says. John Malcolm, the managing director of Petroleum Development Oman, the country's largest oil company, plans to halve flaring in four to five years. In Qatar, Maersk Oil Qatar, a joint venture between the Danish company Maersk and Qatar Petroleum, has cut flaring from 5.6 million cu metres to 1.1m cu metres on the Shaheen oilfield, even as it expanded production, said Sheikh Faisal Al Thani, the acting managing director.
"It shows you can [produce] more oil and less flaring," he said. Qatar Petroleum would encourage more flaring reduction projects, but was not ready to set a firm target at all its fields, said Saif al Naimi, the company's director of health, safety and environment regulation and enforcement. The UAE is the only major oil producer in the region not on the top 20 list, following the success of a dogged government policy in Abu Dhabi that has reduced flaring by the Abu Dhabi National Oil Company (ADNOC) by 98 per cent since 1990, said Ali al Jarwan, the general manager of Abu Dhabi Marine Operating Company (ADMA-OPCO), an offshore division of ADNOC.
"If the gas plant is not available, we do not flare," he said. "If we don't have facilities we shut down production and we think about recovering production the next day or next week." Now ADMA-OPCO is looking to shift from minimal flaring to a zero-tolerance approach in five to seven years, he said. Initial rapid gains were a result of simple fixes such as better co-ordination between drillers and gas plant operators, but extinguishing the last flares will require large capital investments. Some of those investments may not prove cost-effective on their own, Mr al Jarwan noted, but were required by government policy.
Across the wider region, many flaring reduction projects need an extra funding stream to offer sufficient returns to investors. International carbon credit schemes organised by the UN Clean Development Mechanism are one option, but the process is cumbersome and the rewards too uncertain for investors. So far only two flaring reduction projects having received credits since the programme began in 2005.
Ultimately, projects across the region need another boost, which could and should come as part of a new international treaty on climate change under discussion this year, says Sam Nader, the director of Masdar Carbon, a division of the Abu Dhabi Government's clean energy company. "Gas-flaring reduction should be among the first to be considered for finance by the international treaty under the global agreement," he says. "The two most important goals in this decade are energy efficiency and energy access, and gas flaring meets both. You have energy access, access to saved gas and mainly these are developing countries that can make use of the gas for their communities ? secondly, energy efficiency, optimising your hydrocarbon production."
For Abu Dhabi, one of the largest oil exporters in the world, gas flaring reduction also meets a third priority, he says, which is to clean up the hydrocarbon industry. "Prolonging the life of the hydrocarbon industry is of prime concern to us in Abu Dhabi," he says. email@example.com
Published: May 22, 2010 04:00 AM