The issue of gas
flaring and venting is incendiary (pun intended) in most places of the world.
Not least because of health and environmental challenges it poses but also
because gas which is flared is a finite energy resource that be put to other
uses. The fact is to produce oil which has driven a large part of recent human
civilization, one has to accept flaring as an associated risk.
Gas flaring and
venting occur during production (primarily for safety reasons), start-up
of oil and wells/platforms, drilling of new wells, upsets in platforms and shut
downs. Flaring involves the controlled burning of natural gas produced in
association with oil in the course of routine oil and gas operations. Venting
is the controlled release of unburned gases directly into the atmosphere. How
much flaring/venting is good enough is a burning matter (another pun intended
by the way).
Historically, compared
to other countries, Nigeria has had a high rate of gas flare as a share of its
gross natural and associated gas production – close to 24%. For context, the
amount of gas flared in about 4 months is what the United Kingdom consumes in a
month for both domestic and industrial usage.
The above flaring figures for Nigeria are quite high considering
that just about 2% of the world’s total gas production comes from Nigeria.
Clearly, there is a scope to improve.
Reasons High Gas Flare Rates in Nigeria:
The reasons for the
very high flare rates are varied. They are:
-
Historically, gas was not seen as a valuable resource. Gas transportation is a
very tricky business and there has to be ready (domestic/regional) markets for
it. These markets were not in existence when the fields were developed.
The domestic market is too small to handle volume of oil produced. Also, there
is no commercial pricing policy in existence.
-
Most of the oil facilities were built in the 1960s and 1970s when the main
focus was getting oil out with little consideration paid to the associated gas.
-
The reservoirs are not conducive for gas re-injection for pressure support and
storage.
-
Inadequate pipeline infrastructure, underinvestment in gas transportation and
the lack of capital to develop these facilities.
-
Government policies and guidelines were not clear on consents and limits to gas
flaring. Where they were in existence, they were not complied with. For
example, the PIB is not clear on deadlines to which flare reductions are
to be worked to. Neither is it clear on how much flare it seeks to reduce.
Scope
for Flare Reduction:
- No doubt, the oil and operators in Nigeria are doing
quite a lot to reduce flares. There is scope for improvements as new technology
come up, this can be used on older assets or on new assets. For
example, Total Nigeria
minimised continuous flaring in its new asset, Akpo which
came on stream in 2009. Same with other new assets.
Some of the reduction
in flare seen are due to the Soku gas-gathering and condensate
plant shutdown in November 2008.
The UK Example
Flaring in the UK has
reduced from very high rates in 1980′s (140 billion cubic feet) to about 22
billion cubic feet in 2011. These reductions in gas flare rates have to do with
a combination of policy enactments, improved technology and companies becoming
more environmentally conscious.
The reduction in flare
seen in the UK comes even with an increase in the natural gas production over
the decades (1980 – 2000). Gas production has started dropping as has
oil, but UK gas production is still at the 1980s level with less gas flared.
Reason for increase in gas even with lower oil production is because a lot of
the oil assets are mature and pressure decline is causing more gas to be
produced out of oil.
Flare Reduction Initiative
There are a few things
lessons that can be applied from the United Kingdom in addition to other local
schemes/initiatives to reduce gas flaring.
- The need for adequate data collection is paramount to
know the scope of the flare problems. Close, is the need for proper accounting
and auditing. Sharing of data between regulatory authorities and oil operators
should be encouraged.
- The regulatory authorities for the oil and gas would need
to invest heavily in human capital to allow them carrying out the work of
overseeing the oil and gas operators.
-
Field development plans should include plans to minimise flares. This should be
followed through and monitored by the responsible organisation. On field to
field basis, there should be a re-evaluation of gas re-injection for pressure
support and ability of operators to export gas or dispose gas safely without
recourse to flaring. If it is not economical to export gas produced, other ways
of utilizing gas should be explored with the operators.
-
Consents (amount of flare allowed within a period for different fields) should
be placed on operating assets with fines applied based on amount of flare over
the consent. Such practices as flare trading should be encouraged between
different operators.
- The
policies in place to deter flaring is seemingly inadequate. The recent
Petroleum Industry Bill proposed looks laughably inadequate when it comes to
acting as a disincentive for flaring. I do think there is need to be conscious
that flaring cannot completely eradicated (at least with current technology)
without attendant huge losses in oil production and revenue. There needs to be
a balance between what is reasonable flaring and what is practical.
-
The issue of transportation, distribution and access to markets for Nigerian
gas is being addressed by the Gas Master plan. This plan needs to be
accelerated. The Gas Master plan has been floating around for quite a while
with limited progress made in its implementation.
- The LNG projects which have come online
over the past decade have allowed for more utilization of gas, however, there
is not enough usage to reduce amount of gas flare very significantly. Without growth in the domestic and regional gas markets, gas would
continue to be treated as a byproduct of oil rather than as a
resource which can be utilized for growth within the country and as a revenue
earner.
There are a lot of growth areas which would require gas in the
future: the power generation and distribution sectors, manufacturing sectors,
fertilizer plants. All these require huge in infrastructural investments. There
are plans already in place for these (Energy Master Plan, Gas Master Plan and
Petroleum Industry Bill) – these policies need to move from paper to reality to
allow growth in the gas usage would in turn reduce amount of gas flared.
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