World Bank, GGFR Partners Unlock Value of Wasted Gas
A disgruntled worker tries to board the oil rig “Auntie Julie the Martyr” off the coast of Sanghana town in the Niger Delta|Photo: Ed kashi
“Gas flaring wastes resources and harms the environment, and that’s why it is important to step up the efforts in reducing flaring and increasing gas utilization.”
December 14, 2009
As the international community takes part in meetings at Copenhagen and weighs options to reduce greenhouse gas emissions and mitigate the impact of climate change, the World Bank Group is supporting initiatives that are already making concrete contributions towards reducing CO2 emissions and improving energy efficiency.
One such initiative is the Bank Group-led Global Gas Flaring Reduction partnership (GGFR). Through this public-private partnership, the Bank Group is working with oil producing countries and companies to reduce the waste of natural gas that is being burned or flared at about 150 billion cubic meters per year by bringing down the barriers that prevent a higher rate of associated gas utilization.
Why is Gas Flared?
Distance from significant gas markets
Reliability of supply from associated gas
Gas infrastructure constraints (lack of, or access to it)
Risks of gas re-injection in oil reservoir
Limited institutional, legal & regulatory framework for gas, including associated gas
Underdeveloped domestic market for gas/products (LPG, CNG, methanol, power, etc)
Funding constraints and the need for coordinated actions by multiple stakeholders
The estimated 150 billion cubic meters of natural gas that are being flared and vented annually is equivalent to about 25 percent of the United States’ gas consumption or 30 percent of the European Union’s gas consumption per year. And the annual 35 bcm of gas flared in Sub-Saharan Africa alone could generate half of that continent’s power consumption. Gas flaring also has a global impact on climate change by adding some 400 million tons of CO2 in annual emissions.
“Gas flaring wastes resources and harms the environment, and that’s why it is important to step up the efforts in reducing flaring and increasing gas utilization,” says Somit Varma, Bank Group Director for Oil, Gas, and Mining. “Gas flaring also deprives developing countries of an energy source that is cleaner and often cheaper than others available, and reduces potential tax revenue and trade opportunities.” Varma is also chairman of the GGFR’s Steering Committee.
In brief, the goal of the GGFR partnership is to unlock the value of currently wasted natural gas to improve energy efficiency, expand access to energy, and contribute to climate change mitigation, hence promoting sustainable development.
The good news is that volumes of gas flaring are coming down. In addition, GGFR partners recently decided to expand the work of the partnership into a third phase, which will kick off in 2010 and see a strengthened initiative.
Global gas flaring has declined by a total of 22 billion cubic meters (bcm) over the past three years despite a 5 percent rise in crude oil production over the same period, according to the latest satellite study commissioned by the Bank Group-led GGFR partnership.
Satellite estimates indicate that gas flaring peaked at about 162 bcm in 2005 and declined to 140 bcm in 2008. The survey, which was funded by the GGFR partnership, was executed by scientists at the US National Oceanic and Atmospheric Administration (NOAA). The decrease in gas flaring corresponds to a reduction of some 60 million tons of CO2 emissions between 2005 and 2008.
In the oil town of Afiesere, Nigeria, local Urohobo people bake "krokpo-garri", or tapioca in the heat of a gas flare. | Photo: Ed Kashi
According to these satellite estimates, the ranking of top 10 flaring countries include: Russia, Nigeria, Iran, Iraq, Algeria, Kazakhstan, Libya, Saudi Arabia, Angola and Qatar. Most of the gas flaring reduction is coming from Russia and Nigeria. (See table for top 20 countries)
“These latest satellite results are certainly encouraging, but it is still too early to celebrate because much natural gas is still being wasted around the world,” says Bent Svensson, program manager of the Bank Group-led GGFR partnership. “Over the next two to three years we will continue to collect and evaluate data to confirm whether this downward trend is continued.”
Flaring or burning of gas occurs to dispose natural gas liberated during crude oil production and processing, most often in remote areas where there is no gas transportation infrastructure or local gas markets. Since its inception in 2002 the GGFR partnership has encouraged more vigorous efforts to eliminate flaring, such as re-injecting it into the ground to boost oil production, converting it into liquefied natural gas for shipment, transporting it to markets via pipelines, or using it onsite for generating electricity.
The first major challenge for GGFR is that a significant reduction of global gas flaring still needs to be achieved to complete the mission with the desired impact.
Initial achievements already demonstrate that gas flaring and venting reduction efforts are not only relevant in today’s energy context but also viable as demonstrated by several countries and companies, and desirable for its environmental and economic benefits.
Gas flaring, Nigeria. | Photo: Ed Kashi
Another major challenge for the third phase of the GGFR partnership (2010-2012) is to bring other key players on board. Although more than 80 percent of global venting and flaring occurs in fewer than 20 countries (and GGFR has worked with most of them in one way or another), some important flaring countries and oil companies still are to join the GGFR partnership. These countries include Brazil, China, Kuwait, Libya, Russia, and Saudi Arabia.
Qatar, Maersk Oil & Gas, Masdar initiative (UAE), and Mexico (Pemex) are some of the newest partners who have joined the GGFR partnership in 2009; more are expected to join in 2010.
A third challenge is the need for faster implementation of gas flaring reduction projects so that countries and companies can deliver concrete results and global gas flaring continues to decline in greater volumes.
For this to occur, all relevant stakeholders need to do their part to “unlock” the value of this wasted gas. And “unlocking” the value of wasted gas requires a concerted effort by governments and industry, as well as other stakeholders, including multilateral financial institutions and technology developers.
In today’s climate change debate, it is important to see the gas flaring and venting issue not only in its technical and economic dimensions. But rather, all stakeholders should look at the gas flaring reduction challenge as an opportunity to make a concrete contribution to climate change mitigation. This can be done by improving energy efficiency and expanding access to a cleaner source of energy for the people who most need it.
Thus, it is necessary that each relevant stakeholder – government, industry, technology developer and financial institution- does whatever it takes to unlock the value of wasted gas because actions will always speak louder than words.