Policy News - November 10, 2004

Environmental impacts of gas flaring, venting add up

The natural gas regularly burned and released into the atmosphere during the production of oil and gas amounts to a double whammy against the environment—wasted resources and additional greenhouse gas emissions. To combat this, the World Bank launched a voluntary global standard earlier this year to provide more incentives for getting this gas to market, particularly in Africa and the Middle East, where most flaring and venting occurs. As of this fall, countries accounting for more than 70% of flaring and venting globally had signed on to the partnership.

The gas released when crude oil is brought to the surface is known as associated gas. Drilling companies routinely flare or vent this material for safety reasons or where no infrastructure exists to bring it to market. This practice has been dramatically curbed in developed countries, partly as a result of the recent rise in natural gas prices. However, the World Bank estimates show that more than 100 billion cubic meters of gas is still flared or vented worldwide annually.

“That’s enough fuel to cover the combined annual gas consumption of Germany and France,” says Jacob Broekhuijsen, an advisor to the World Bank’s oil, gas, mining, and chemicals department. Put another way, this amount is equivalent to roughly 12% of the emissions reductions that developed countries committed to under the Kyoto Protocol for 2008–2012.

Just how significant an overall environmental impact flaring and venting has is unclear, because reporting data, when they exist, don’t distinguish between flaring, where the gas is burned and emitted as CO₂, and venting, where the gas is simply released to the atmosphere as methane, according to a U.S. Government Accountability Office (GAO) report released in August. Methane has a global warming potential 23 times higher than that of CO₂.

In spite of efforts by countries and companies to capture more of this gas for energy use, global flaring and venting levels have remained fairly constant over the past 20 years, World Bank statistics show. Increased oil production and the corresponding rise in associated gas production, as well as a lack of stakeholder collaboration among industries, governments, and consumers, have offset any reductions, Broekhuijsen says. The economic incentives to flare or vent no longer exist because of methane’s value in the marketplace, says Russell Jones, an economist with the American Petroleum Institute. But too often, “there are no pipelines or markets for it because societies aren’t set up to use it.”

Part of the problem has been that historically oil and gas companies have developed production while others have built the pipelines and refineries, Jones explains. This is slowly changing, with help from the World Bank initiative, he says, citing a ChevronTexaco project in Africa as an example of a company building the gas pipeline.

Another solution could be to liquefy the gas and pump it through existing oil pipelines, Broekhuijsen notes. “That would address the transport problem, but this technology is still under development and very expensive,” he says. “Sometimes, it’s not a matter of technology but rather pure cost.” For example, although Algeria has worked hard to reduce flaring and venting, it still occurs at locations deep in the desert where no local markets exist and there is no way to bring the gas to the coast. “You need fairly large quantities to pay for that infrastructure,” Broekhuijsen explains.

The World Bank program focuses on ways to commercialize associated gas, including developing domestic markets and access to international markets, creating legal and fiscal regulations for associated gas, and capacity building for the pursuit of carbon credits under the Kyoto clean development mechanism for flaring and venting reduction projects. The aim is to significantly cut venting and flaring in partnership countries over the next 5–10 years.

Eight countries—Algeria, Angola, Indonesia, Iran, Mexico, Nigeria, Russia, and Venezuela— account for 60% of flaring and venting worldwide, according to World Bank estimates. In fact, Nigeria (16%), Russia (11%), and Iran (10%) alone are responsible for more than a third of global flaring and venting. In contrast, the United States flares or vents about 0.4% of its production, according to the GAO report; this represents about 3% of the global total.

Nevertheless, the GAO recommends that the U.S. Department of Energy improve its data collection on flaring and venting, because even in the United States “the data are incomplete, inconsistent, and not as useful as they could be from an environmental perspective,” because no distinctions are made between amounts flared and vented. In addition, the GAO recommends that the Department of the Interior consider regulatory changes for federal leases to reduce the most harmful emissions and improve regulatory oversight.

The GAO report Natural Gas Flaring and Venting: Opportunities to Improve Data and Reduce Emissions can be accessed at www.gao.gov/cgi-bin/getrpt?GAO-04-809. —KRIS CHRISTEN