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François Régis MOUTON

World Bank GGFR Adviser

Rhonda ZYGOCKI

Chairperson, International Association of Oil and Gas Producers (OGP)

Global Gas Flaring Reduction: a Time for Action!

Rashad KALDANY

World Bank Group, Director Oil, Gas, Mining and Chemical Department

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Flaring and Gas Utilization in Kazakhstan: problems and solutions Nasipolla SULEIMENOV

Head of the Committee on Environmental Monitoring of the Ministry of Environmental Protection, Republic of Kazakhstan

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Utilization of Associated Gas in Russia

Alexandr SAVINOV Head of division on natural resources policy of the department of fuel and energy complex in the Ministry of Industry and Energy of the Russian Federation

Crude oil and associated gas production (2001-2005) (mln tonnes and bcm) 459 470

200 150 100 50 0 500 450 400 350 300 250

348,1

35,9

379,6

42,6

421,3

48,5 54,9 56,3

1 2 3 4 5

2001 2002 2003 2004 2005

Breakdown of associated gas usage in Russia for 2005

6,9% 1,6% 9,8% 55,2% 26,5% Processed Flared Used for own needs Sold to consumers Losses

Associated gas utilization in Russian Federation (2001-2005) 60 50 40

35,9

30 28,8 20 10

7,2

0 2001

42,6

31,5

11,2 48,5

37,4

11,1 54,9

40,2

14,7

2002 Production 2003 Flared 20004 Utilization

56,3

2005 41,4

14,9

Associated gas production and flaring by companies in 2005

Companies JSC “Surgutneftegas" JSC "ТNK-ВР holding" JSC “Rosneft" JSC “Lukoil" JSC “Gazprom Neft" JSC “Yukos" JSC “Slavneft” JSC “Russneft" JSC "Тatneft" JSC “Bashneft" Other TOTAL Associated gas production %

Mln m³ 15416,8 10699,2 8489,1 6151,3 5660,9 2605,3 1532,6 1555,4 770,7 429,0 2889,7

56200 27,4 19,0 15,1 10,9 10,1 4,6 2,7 2,8 1,4 0,8 5,1

100

Utilized

Mln m³ 14361,0 8302,3 5311,1 4767,8 1985,3 1964,4 994,1 1057,5 736,7 333,0 1486,8

41300 % 93,2 77,6 62,6 77,5 35,1 75,4 64,9 68,0 95,6 77,6 51,5

73,5

Flared %

Mln m³ 1055,8 2396,9 3178,0 1383,5 3675,6 640,9 538,5 497,9 34,0 96,0 1402,9

14900 6,8 22,4 37,4 22,5 64,9 24,6 35,1 32,0 4,4 22,4 48,5

26,5

Needed measures to improve associated gas utilization rate in Russia • Improvement of legislative and regulatory framework aimed at creation and implementation of conditions and mechanisms for complex utilization of associated gas, including at the stages of project design decisions concerning exploration and development of hydrocarbon reserves • Improvement of fiscal legislation aimed at attraction of investments into associated gas utilization projects • Improvement of system of payments for environmental pollution resulting from flaring, as well as for burning of valuable components with the objective to compensate for consequent damage/losses incurred by the state

Thank you for your attention!

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Gas flaring: The countries' experience and best practices

James A. Slutz

Deputy Assistant Secretary for Oil and Natural Gas, U.S. Department of Energy

Office of Fossil Energy ● Office of Oil and Natural Gas

U.S. Natural Gas History Overview

• The U.S. has a long history of best practices involving natural gas production. • Today 99.5 % of gas withdrawn in the U.S. is utilized.

• Projected global demand growth will encourage countries with stranded gas to develop LNG export capacity to supply our needs.

U.S. Natural Gas History Overview (continued)

• The U.S. continues to develop implement technology that reduces carbon intensity.

• The United States supports the following international programs to reduce global natural gas venting and flaring and to develop commercially viable projects: – World Bank Gas Flaring Reduction Initiative – Methane to Markets – Gas Star – The Asia Pacific Partnership

History of U.S. Production

• Discovery in 1859 • Current Production: – Third Largest Oil Producer – Second Largest Gas Producer • Context for Gas Flaring Estimates in the U.S.

Current Oil and Natural Gas Production in the United States

History of Conservation Regulation

• 1893 Supreme Court ruling that States have the right to regulate natural gas • Prevention of Flaring and Waste Gas • 1946 Texas Railroad Commission hearing asking operators of Seeligson field to show cause why gas flaring should not be stopped. A year later, the Texas Railroad Commission ordered Seeligson field shut in, except for “wells that were using casing-head gas for light, fuel or carbon black, or returning it to the production horizon.”

History of Conservation Regulation

• Gas System/Infrastructure – Natural gas is delivered to customers through a safe, sound, 2.2-million mile underground pipeline system that includes: – 1.9 million miles of local utility distribution pipes (1.1 million miles of utility mains, plus 800,000 miles of utility service lines); and – 300,000 miles of transmission lines.

• Gas Storage

A Vast Network of Pipelines Provides Interstate Transportation

Natural Gas Costs Around the World ($USIMMBTU)

Updated mid-September 2005 Source: American Chemistry Council

Global LNG Facilities

Source: ChevronTexaco (April, 2005)

President Bush’s National Climate Change Technology Initiative

• The NCCTI recognizes the central role technology needs to play in responding to global climate issues.

• Areas of focus include: – Carbon Capture – Carbon Storage / Sequestration – Hydrogen Systems – Methane Recovery and Methane Utilization – Energy Storage Systems

Technology Support & Development

• Improved Oil Recovery – DOE is researching the mobility and the sweep of injected CO2 in order to maximize miscible displacement of residual oil in the reservoir. Efforts focus on the innovative use of foams, chemical jells, and other thickening agents.

– Recently initiated CO2 field test in Alabama • Gas to Liquids – DOE has partnered with Air Products and Chemicals to develop an ion transport membrane to reduce the cost of syngas production from natural gas.

– DOE also supports small businesses working on new catalysts and reactor designs.

• Distributed Generation • Liquefied Natural Gas

Source: EOR = Shell

International Programs

• World Bank Gas Flaring Reduction Initiative • Methane To Markets Partnership • Gas Star • Asia Pacific Partnership

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Gas flaring: in the context of Sustainable Development Joanne DISANO

United Nations' Director for Sustainable Development

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François Régis MOUTON

World Bank GGFR Adviser

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Kristalina GEORGIEVA

Director for Strategy & Network Operations, World Bank

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Gas Flaring: Energy Security and the Environment H.E. François LOOS

Minister delegate for Industry, France

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Gas Flaring : the view from a Major IOC

Christophe de MARGERIE

President Exploration-Production, TOTAL

The Global gas picture : Gas resources are abundant Nevertheless, energy efficiency & conservation are real issues 6,340 2,000 2,000 ~2,000

Proved reserves Probable reserves Undiscovered reserves Conventional gas Estimated resources Non Conventional

Tcf p.a.

200 180 160 140

EIA 2006 +2,0% p.a.

120 100 80 60 40

Proved reserves

20 0 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Demand + 1.8% p.a.

Demand + 2.3% p.a.

• • • Proved conventional reserves equivalent to 65 years of today’s demand Proved + probable conventional reserves equivalent to 80 years of today’s demand Potential of non conventional resources difficult to assess 2,000 Tcf is no more than an order of magnitude

The Global gas picture : Gas is environment friendly

• Global power generation : 17,400 TWh*

Nuclear 16% Hydro 16% Oil 7% Coal 41% Source: IEA Gas 20%

• CO2 emissions, kg per MWh – – Heavy Fuel Coal (FBC) – – Gas oil (diesel) OCT (open cycle) – CCGT (combined cycle) – CHP (combined Heat & Power)

Source : IEA + DIDEME

844

815

815 582

354 269

The Global gas picture : Flaring is the most obvious and urgent issue to tackle Bcm p.a.

2005 figures 4 000 3 500 3 000 2 500 3570 Bcm 400 Reinjection 180 Shrinkage : LPG & Condensates Recovery 150 190 150 Flaring Upstream cns.

Mid-Downstream cons.

165 Fertilizers + Methanol 2990 Bcm 2500 Bcm 2 000 1 500 1 000 500 0 2145 Gas Pipe 190 LNG

• Energy efficiency & conservation efforts for the Oil & Gas Industry can be applied to ~500 Bcm p.a.

• Flaring reduction : ~150 Bcm (GGFR fig.) – – The only "wasted"gas within our industry Environment & Image issue • Energy efficiency  used by the industry – – Technology needed : process & equipments Increased gas prices will help • 400 Bcm are reinjected – – Maintain reservoir pressure to improved recovery Delayed (not lost) gas production

sources : IEA - Cedigaz - GGFR - Total

Flaring : a common issue for the Industry Wasted energy, Environment & Image

The path to gas flaring reduction

• E&P installations are large, complex and costly – Re engineering or modifications are difficult • • First Priority : Design new development with no flaring Total company rule since 2000 • Our real issue now is to

reduce flaring on existing fields

– Existing gas markets / outlets are favorable conditions • Examples : North Sea (no more flare), Nigeria (Ofon ph2) – More difficult and lengthy when new gas outlet has to be created • Examples : Angola (ALNG), Cameroon..

• Enablers : – Gas outlets and valorization – Stakeholders alignment : State, National Company, Partners..

– Adequate contractual –fiscal –legal gas frameworks – Project Financing, Technology

Flaring reduction Priority to Continuous Flaring reduction

• Split of 2005 flaring – Total operated figures other type of flaring

36% 64%

continuous flaring • ~2/3 is continuous flaring • ~1/3 is due to – Operational availability

(unexpected shut downs…)

– – Safety Start-up operations

OFON field redevelopment Launched thanks to the alignment of all stakeholders Gas export 100 Mscfd Oil export

50 Mscfd

1.Ofon Phase 1 in 1995 – A typical offshore development of the 90’s in the Gulf of Guinea 2.New context after Phase1 – Gas outlet : NLNG onstream – Field redevelopment opportunity – Growing concern on GHG emission – Nigerian objective to stop flaring by 2008 3.Ofon Phase 2 Project – Expansion of the fields – Installation of gas facilities – –

No more flare

Laying of gas export pipeline

Angola LNG mindset from a gas flaring concern to a gas valorization scheme

• Common Goal : scheme ensure sustainable oil developments & address gas flaring concerns through a gas valorization • Strong Commitment &

Alignment of all Stakeholders :

partnership Sonangol - Oil companies • Pooling of gas resources • Legal & Commercial Framework suiting the project characteristics • Strong partners to overcome commercial and technical challenges • Start-up : 2012 Arranging a stable gas supply of 1Bcfd

Phase I :

LNG plant

AG pipelines Kizomba C Kizomba A Kizomba B Bloc 0/14 200 m phase II 1-4 NAG fields phase III Gas Caps blowdown NAG Soyo Block 2 GIRASSOL Greater Plutonio DALIA

Cameroon from a gas flaring concern to a gas valorization scheme

• Difficult to reach a

good technical solution

because of scattered installations • A

regional approach

with LNG plant in Equatorial Guinea and gas from Cameroon & Nigeria • All Cameroonian E&P players involved • Positive involvement early as 2003 of GGFR as

Nigeria Cameroon Eq. Guinea

New gas conversion technologies being developed might also be part of the solution GTL micro technologies DME : another GTL option

• Aiming at efficiency improvement on : – – – CO2 emissions Flexibility Safety

Partnership with Velocys to develop an improved catalyst process

• A simple molecule (CH3-O-CH3) burning without any soot => clean fuel • Easy to transport and store (comparable to LPG) • Premium fuel for diesel engine • Competitive production process

Direct Synthesis Process developed since 2001 by Total and a Japanese consortium New Technologiesmay help create new gas outlets for limited gas flows

Gas flaring reduction is a must but still a difficult issue requiring efforts by all Parties

• Gas flared : Wasted energy, harm to the environment & image issue • After the first and most obvious steps have been taken,

issues are becoming and will be more and more

complex, sometimes requiring solutions beyond a single company capabilities • Enablers : – Mainly stakeholders alignment, Common Will Adequate contractual –fiscal –legal gas frameworks, Gas outlet and valorization, Financing, Technology • GGFR / World Bank : – a welcome initiative to rise global awareness foster stakeholders alignment, disseminate good practice and help securing gas outlets

Efforts are rewarding : Total operated flaring will continue to decrease despite rising operated production 200 180 160 140 120 100 80 60 40 20 0

• Total’s operated fields

98 2005 2012 Production Flaring

• No flaring on new development • Flaring Reduction on existing fields – Acute Monitoring of flaring – Dedicated team – Elaboration of Technical & Business solution • Issues discussed with Partners and Governments • GGFR Standard & Support quite useful

Total target : -50% 2005-2012 Beyond 2012 : Efforts are to be maintained and amplified if we want to keep reducing flaring

Partnering with Host Countries Beyond Gas Flaring reduction : Going Beyond Old Petroleum Practices

Injury rate, Group and contractor employees TRIR* per million man hours worked 15

Target : - 60% over 4 years

$/boe West Africa typical deep-offshore rent sharing

Net margin

10

Realization : - 59%

Host country

5

Opex Capex

0 2001 2002 2003 2004 2005 •Safety is key for the valuation of management performance • New targets for 2009 •Safety policy homogenously applied worldwide • Contractors safety managed as for Total’s employees 40$ partnerships 60$ • Balanced risks / profitability sharing with host countries • Development of local industry • Strengthening strategic Local Communities Issues & Acceptance • Evaluating local impacts embedded in Total’s decision making process • Developing local employment • Creating partnerships with communities * TRIR : Total Recordable Injury Rate

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Sonatrach’s Efforts to reduce flared associated gas

Mohamed MEZIANE Chairman and Chief Executive Officer of Sonatrach

Vulnerability of Algeria to Climate Change effects

• Sonatrach integrated the Sustainable development in its strategy. • Vulnerability of Algeria to Climate Change due to its geographical position.

• Sonatrach’s commitment to reduce GHG emissions

HSE Sonatrach commitments

• Environmental protection has always been a key issue for Sonatrach • This commitment has been formalized in its HSE policy adopted in April 2004

Atmosphere Protection at Sonatrach

• In the field of the reduction of air pollution, Sonatrach does its best to : – Limit the impact of its activities on ambient Air quality – Tackle Climatic changes – Reduce the use of substances responsible of ozone layer depletion … etc

after before

Flared gas Reduction: Sonatrach’s permanent objective

• Since the early seventies, Sonatrach has set up as an objective to reduce gas flaring in its main fields, through different schemes: – Gas reinjection in oil producing fields to enhance oil recovery – Gas reinjection in wet gas fields to maximize liquids recovery – Closing up of gas lifts systems – Using gas for utilities – Constructing a gas transport network to monetise gas

Policy to reduction associated gases flaring, the significant results

• Many projects of gas flaring recovery were carried out since 1973 • While volumes of produced associated gases have practically Quadrupled these 35 last years, the rate of flaring passed from 80% in 1970 to 07% in 2005 • Medium-term objective is to recover the totality of produced associated gases (0% forecast of fence 2010) • An investment of million US$ were allocated for the reduction of flared gases projects are registered with the PMT 2007-2011

Flared Associated Gas 1970 - 2005

20 15 10 5 45 40 35 30 25 Produced gas Flared gas Recovered gas

Produced & flared associated gas 1970-2005

0 Produced gas Flared gas Recovered gas 1970 9.5

7.5

2.0

1971 7.2

5.7

1.5

1972 9.3

7.5

1.8

1973 11.2

1974 10.2

9.4

1.7

8.3

2.0

1975 9.8

7.3

2.5

1976 12.8

1977 14.5

9.1

3.7

10.7

3.9

1978 18.0

13.3

4.7

1979 17.5

12.5

5.0

1980 15.6

1981 12.0

10.5

5.1

6.7

5.3

1982 10.4

4.8

5.6

1983 10.4

4.3

6.1

1984 11.8

1985 12.5

5.5

6.3

6.3

6.2

1986 13.3

8.0

5.2

1987 12.6

6.1

6.5

1988 12.6

1989 14.1

4.1

8.6

4.6

9.5

1990 16.0

5.5

10.5

1991 16.8

5.1

11.7

1992 18.2

1993 20.6

6.2

12.0

6.2

14.3

1994 21.5

6.5

15.1

1995 22.9

1996 23.5

7.6

15.3

7.2

16.3

1997 24.8

7.2

17.6

1998 25.7

5.9

19.9

1999 27.0

2000 30.7

5.5

21.5

5.4

25.3

2001 32.4

4.1

28.3

2002 35 2003 38.47

2004 2005 39.60 41.32

4.4

30.6

4.271

3.62

3.00

34.199 35.97 38.32

Flared Associated Gas 1995 - 2005

45 40 35 30 25 20 15 10 5 0 Produced gas Flared gas Recovered gas 1995 22.9

7.6

15.3

Produced & flared associated gas 1995-2005

Produced gas Flared gas Recovered gas 1996 23.5

7.2

16.3

1997 24.8

7.2

17.6

1998 25.7

5.9

19.9

1999 27.0

5.5

21.5

2000 30.7

5.4

25.3

2001 32.4

4.1

28.3

2002 35 4.4

30.6

2003 38.47

4.271

34.199

2004 39.60

3.62

35.97

2005 41.32

3.00

38.32

Rate of Flared Associated Gas 1970 - 2005 Flaring & recovering rates of associated gas 1970 - 2005

100% 90% 80% 70% 60% 50% 40% 30% 1970 : 80 % % Flared gas % Recovered gas

93%

20%

7%

10% 2005 : 7 % 0% 1970 1971 1972 1973 1974 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 % Flared gas 79% 79% 80% 84% 81% 74% 71% 73% 74% 72% 67% 56% 46% 41% 46% 50% 61% 48% 32% 32% 35% 31% 34% 30% 30% 33% 31% 29% 23% 20% 17% 13% 13% 11% 9% 7% % Recovered gas21% 21% 20% 16% 19% 26% 29% 27% 26% 28% 33% 44% 54% 59% 54% 50% 39% 52% 68% 68% 65% 69% 66% 70% 70% 67% 69% 71% 77% 80% 83% 87% 87% 89% 91% 93%

Flaring gas reduction Objective 0% in 2010 35% 30% 33% 31% 29% 25% 20% 23% 20% 17% 15% 10% 13% 13% 11% 9% 7% 5% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Associated gases Production and flaring, Comparison between 1970 and 2005 45 40 35 30 25 20 15 10 5 0

Gaz associé produit gaz associé récupéré Gaz associé torché

9,50 2,04 1970 7,46 41,32 38,32 2005 3,00

Flaring gas reduction, a reality

24th September 1992

Tunisia

20th march 2002

Tunisia

Algeria Algeria

Sonatrach, an important gas player in the Mediterranean area

• Regarding the existing and projected gas infrastructures, Algeria is one of the main • Natural gas suppliers to Europe, Tunisia and Morocco – GEM (Algeria-Tunisia-Italy) and GPDF (Algeria-Morocco-Spain) – MEDGAZ (Algeria-Spain) and GALSI (Algeria-Sardinia-Italy)

Sonatrach, an important gas player in the mediterranean area

• On the international level, Sonatrach is the : – 3rd worldwide natural gas exporter – 2nd worldwide LNG exporter – 2nd worldwide LPG exporter

Sonatrach, an important gas player in the in the African area Trans-African gas pipeline (TSGP) Nigeria - Algeria – Europe

• 25 billions of m3 • From Warri (Nigeria) to Algerian Mediterranean coast – Diameter: 56’’ – Length : 4400 km • Trajectory : Nigeria-Niger-Algeria Europe – Nigeria: 1000 Km – Niger: 800 Km – Algeria: 2600 Km

Sonatrach Participation in the GGFR

GGFR Program in Algeria

• Two studies were launched in 2004 with the GGFR partnership in association with the World Bank – First study: Clean Development Mechanism (CDM) Capacity Building for gas flaring reduction in Algeria – Second study: Assessment study of flared Gas utilization in Algeria

History of the CDM pilot project

• An inventory of flaring sites was carried out • Three regions : TFT, Ohanet and In Aménas were identified as candidates projects for CDM • Ohanet was selected to elaborate the CDM pilot project • After the integration of the flared gas reduction option in the Ohanet integrated project GTL of Tinhert, TFT was chosen as a 2nd option • Promulgation of the new hydrocarbons law which prohibit flaring • TFT project is now in progress Algeria Tunisia Libya

Evaluation study for the utilisation of associated flared gas in Algeria

Ohanet TFT In-Aménas • the study explored different options to recover flared associated gas such as: Gas Reinjection, Gas-lift, Power generation, Gas or Electricity Supply for local populations, small scale GTL and gas exportation; • Gas exportation through the existing transportation network” was the most suited

Conclusion

• Sonatrach commits itself to continue participating in the GGFR activities.

• Sonatrach will sustain its efforts to eliminate gas flaring by 2010. • Sonatrach commits itself to communicate with transparency about flared or vented gas quantities • Sonatrach will pursue its investments to promote the use of the Natural Gas as a cleaner energy and as a feedstock to produce cleaner fuels such as GTL products. • Sonatrach will use CDM to reach its objectives of 0% Flaring. • Sonatrach has registered the Carbon Capture and Storage in partnership contracts on the new mega-projects such as Gassi-Touil and In Salah Gas (reduction of 1 million tons CO2eq/year).

• Sonatrach calls for a more active international exchange, and a more concrete sharing of gas flaring technologies & best practices.

Thank you for your attention

Sonatrach

– www.sonatrach-dz.com

– Djenane El Malik Hydra – Algiers- Algeria – Tel. : 213 21 54 80 11 / 213 21 54 70 00 – Fax : 213 21 54 77 00 – e-mail : [email protected]

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