Rising environmental concerns and high gas prices are finally forcing oil companies to confront one of the industry's most intractable problems: how to deal with unwanted gas production. Traditionally, much of the gas that accompanies oil to the surface has been burnt. The practice, known as gas flaring, is still common, but also wasteful and polluting. The World Bank, which sponsors a global gas flaring reduction partnership, has estimated that each cubic metre of flared gas releases two kilograms of carbon dioxide into the atmosphere. Total annual carbon emissions from gas flaring amount to about 400 million tonnes.
The US National Oceanic and Atmospheric Administration (NOAA), which conducted a 12-year study of gas flaring using satellite imaging, estimated that 168 billion cubic metres of gas was flared in 2006, the last year of the study. That amount is equivalent to 5.5 per cent of global gas consumption. It estimated the gas could have fetched US$69 billion (Dh253bn) if captured and sold. In the global energy market, an equivalent volume of gas would fetch significantly more.
"Gas flaring reduction is very relevant in today's important debate on energy issues," said Ngozi Okonjo-Iweala, the managing director of the World Bank. "Everyone is looking for win-win solutions that avoid climate change and provide access to energy, and thus increase economic growth. These should be sufficient reasons to step up our efforts in reducing global gas flaring and increasing gas utilisation."
The World Bank reports that the Middle East and North African region has the second-highest concentration of gas flaring in the world, after Russia and the Caspian region. The roughly 30 billion cubic metres of gas flared annually in the Middle East alone could feed a liquefied natural gas (LNG) plant processing 20 million tonnes, the bank has calculated. That is almost four times the annual LNG exports from the UAE.
What is worse, the NOAA's satellite observations show that several Middle Eastern countries - including Iraq, Oman, Qatar, Saudi Arabia and Yemen - increased gas flaring between 1994 and 2006. The UAE was one of 16 countries worldwide that decreased flaring in the same period, the NOAA reported. Michael Keogh, the environmental manager for Abu Dhabi Marine Operating Company (Adma-opco), said his company was spurred to reduce gas flaring by Abu Dhabi's environment protection laws, provisions of the Kyoto Accord on climate change and a corporate code of conduct developed by Adma-opco's parent, Abu Dhabi National Oil Company.
During a presentation to an Abu Dhabi oil and gas industry conference last week on reducing air emissions, Mr Keogh said: "We want to cut our costs by reducing the amount of product we are losing." The steps that Adma-opco took were hardly rocket science. To reduce total emissions from flaring - which in addition to carbon dioxide include noxious acid gases such as sulphur and nitrogen oxides, and choking particulates - the company upgraded to cleaner burning gas incinerators. It also consulted with an affiliate and customer, the Abu Dhabi Gas Liquefaction Company (Adgas), to ensure maximum gas sales.
Whenever Adgas curtailed its operations for maintenance, Adma-opco would temporarily have no buyer for the gas it produced, along with oil from offshore fields, so it would burn the gas. Now, to minimise the problem, it co-ordinated production cuts with Adgas, Mr Keogh said. The company has installed vapour recovery units as part of its ongoing efforts to reduce flaring. This is a financial challenge due to space and weight restrictions on offshore platforms, but higher gas prices have been making the economics more favourable.
Adma-opco's ultimate goal is to reduce the gas it burns to a minimum number of pilot flares required for safety. "Flaring is the last defence in the plant for any over-pressure situation," Mr Keogh said. "We do not flare routinely." Saudi Arabia, where flaring has been on the rise along with oil production, is also starting to take a hard look at the practice. Hiffi al Alawi, a senior project engineer at a Saudi Aramco gas processing facility, told the Abu Dhabi conference that a project to reduce flaring at the company's Uthmaniya gas plant "has resulted in revenue enhancement".
Additional benefits included improving Saudi Aramco's environmental image, reducing the amount of plant maintenance required, and qualifying for a carbon-dioxide tax credit, he said. Elsewhere in the Middle East, one of the biggest gas flaring offenders, Iraq, has recently joined the World Bank's flaring reduction partnership. Qatar is also a member of the group and the bank has said it hoped to soon welcome Kuwait.
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