Gas Flaring Reduction: OPEC Views

OPEC Secretariat
Outline of presentation

• Energy demand growth forecasts and impact on

associated gas volumes and flaring
• OPEC gas flaring history and progress and specific
examples of gas flaring reduction in OPEC Member
Countries
• Gas flaring reduction challenges
• Joint OPEC/ World Bank workshop on gas flaring and
potential role of GGFR in facilitating financing and
carbon credits
• Concluding remarks
 World energy demand by fuel type
(mtoe)

16000

14000 History Projection

Growth (% pa) Fuel shares (%)
2005-2025 2005 2010 2020 2025
Oil 1.6 39.7 39.5 39.2 38.9
12000 Solids 1.2 26.7 26.2 25.0 24.3
Gas 2.6 23.7 24.7 27.0 28.3 Gas
Hyd/Nuc/Ren 0.9 9.9 9.6 8.9 8.5
10000 Total 1.7 100.0 100.0 100.0 100.0
mtoe

8000
Oil
6000

4000
Coal
2000

Hydro/nuclear/renewables
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Oil supply outlook, mb/d (reference case)

2005 2010 2015 2020 2025

OECD 20.5 20.6 20.7 20.5 19.5
DCs, excl. OPEC 16.1 18.6 19.7 20.0 19.9
Transition economies 11.7 14.4 15.5 16.1 16.5

Total non-OPEC 50.1 55.8 58.3 59.4 58.9

OPEC (incl. NGLs) 33.1 34.9 39.7 46.2 54.3

World 83.2 90.7 98.0 105.6 113.1

 Evolution of gas flaring

250

OPEC Flared
Non-OPEC Flared
200
Global Gas Flared
Flared Gas - BCM per Year

150

100

50

Source: OPEC
 OPEC: An impressive reduction in gas flaring

900 70
Gross Gas Production
800 Flared Gas
% Flared Gas 60

700
50
600

500 40

%Flared
BCM per Year

400 30

300
20
200

10
100

0 0
1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005
Source: OPEC
A success story in gas flaring reduction
in Abu Dhabi

• Gas flaring reduced from 4000 mmscfd in 1977 to <500

mmcfd in the early 1980s, to <300 mmcfd in the mid-1990s
• Since 1995 many new projects have been implemented to
reduce flaring from 261 mmcfd to 70 mmscfd today - about
1% of the 6000 mmscfd gas production today
– Reduced the number of flares
– Re-injecting gas into oil reservoirs
– Modified plants to recover gas
– Zero flaring technology installed in some locations
• Flaring will be reduced to 37 mmscfd by 2007
• Goal is zero flaring

Source: Mr. Ihab Othman Tarmoon, ADNOC, presentation to the OPEC/WPC Workshop, 9 th June 2004.
 Abu Dhabi gas flaring trend
1995 - 2007

275 261
275 250

250
250

225
225
192
200
200

175
175 156
144
150
150 132

116
125
125

100
100 94

75 74
84
75 61
80
53
70
38
42 35
37
50
50

25
25

0
0
1995
1995 1996
1996 1997
1997 1998
1998 1999
1999 2000
2000 2001
2001 2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007
Source: Mohamed Al-Mehairy and Ali Al-Habshi, ADNOC presentation to the OPEC/World Bank Workshop, 30th June, 2005
 Gas flaring reduction challenges

• Associated gas is often produced in remote locations and sometimes in small

volumes
• Two options to reduce gas flaring – re-injection or market the gas
• Investment necessary to market the gas may not be economic
– Lack of infrastructure
– Low domestic demand for gas and/or electricity
• Re-injection of associated gas is not always economic due to high cost and low
incremental oil reserves
• A sudden call on spare oil production capacity may exceed capacities of
existing gas handling facilities, resulting in gas flaring
• The World Bank Gas Flaring Reduction Initiative was formed to support
national governments’ efforts to reduce flaring by providing
– Facilitation of local public-private partnerships and co-operation on gas infrastructure
and markets
– Links with existing World Bank instruments
– Assistance on carbon credits
• OPEC/World Bank joint workshop held in Vienna, 30th June – 1st July, 2005
 Workshop objectives

• To present an overview of the Global Gas Flaring Reduction

Partnership (GGFR), and its activities, with specific focus on
CDM and the Voluntary Standard for Global Gas Flaring and
Venting Reduction

• To discuss the financial resources and mechanisms, including

carbon credits, available by or through the World Bank
Initiative for gas flaring reduction projects

• To present success stories from OPEC Member Countries in

flaring reduction
 Role of GGFR

● Work with the CDM Executive Committee to remove barriers to

receiving carbon credits for gas flaring reduction projects
– Additionality criteria are stringent and inflexible, and can create perverse
incentives at times.
– Okpai power plant and West Africa Gas Pipeline in Nigeria will be important
tests
● Build CDM capacity in OPEC Member Countries
– Identify and develop CDM projects
– Develop institutional capacity to comply with CDM rules
– Assist with implementation issues such as carbon ownership and
downstream integration
● Facilitate collaboration between public and private sectors, and
between governments
● Help countries obtain World Bank financing and MIGA guarantees
● Facilitate access to World Bank carbon funds
– Source of additional cash flow
– Can make marginal projects economic
 Conclusions

• As oil production increases to meet growing demand, gas

flaring reduction efforts will have to be intensified if reductions
in actual flared volumes are to be realised
• Gas flaring reduction has not only environmental benefits but
also social and economic benefits
• Financing and carbon credits are often necessary
• Huge reductions in gas flaring have been achieved in OPEC
Member Countries during the last three decades
• OPEC Member Countries could further reduce gas flaring if
CDM methodologies could be established for these projects
• However, the CDM is a complex mechanism and has been
applied to only one gas flaring project to date – there is a
need to test the mechanism and possibly modify the rules
Thank You