Transcript Gas Flaring Reduction: OPEC Views OPEC Secretariat Outline of presentation • Energy demand growth forecasts and impact on associated gas volumes and flaring •

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
History
14000
12000
mtoe
10000
Growth (% pa)
2005-2025
1.6
1.2
2.6
0.9
1.7
Oil
Solids
Gas
Hyd/Nuc/Ren
Total
2005
39.7
26.7
23.7
9.9
100.0
Projection
Fuel shares (%)
2010
2020 2025
39.5
39.2
38.9
26.2
25.0
24.3
24.7
27.0
28.3
9.6
8.9
8.5
100.0 100.0 100.0
Gas
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)
OECD
DCs, excl. OPEC
Transition economies
2005
20.5
16.1
11.7
2010
20.6
18.6
14.4
2015
20.7
19.7
15.5
2020
20.5
20.0
16.1
2025
19.5
19.9
16.5
Total non-OPEC
OPEC (incl. NGLs)
50.1
33.1
55.8
34.9
58.3
39.7
59.4
46.2
58.9
54.3
World
83.2
90.7
98.0
105.6
113.1
OPEC Flared
Non-OPEC Flared
Global Gas Flared
150
100
Flared Gas - BCM per Year
Evolution of gas flaring
250
200
50
0
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
Source: OPEC
OPEC: An impressive reduction in gas flaring
900
70
Gross Gas Production
Flared Gas
% Flared Gas
800
60
700
50
500
40
400
30
300
20
200
10
100
0
0
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
Source: OPEC
% Flared
BCM per Year
600
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
275
261
250
250
250
225
225
192
200
200
175
175
156
144
150
150
132
116
125
125
100
100
94
74
84
75
75
80
61
70
53
38
42
50
50
35
37
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
Source: Mohamed Al-Mehairy and Ali Al-Habshi, ADNOC presentation to the OPEC/World Bank Workshop, 30th June, 2005
2006
2006
2007
2007
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