Talking Transition: Putting a stop to flaring

Flaring is the most visible part of the decarbonization challenge in the oil and gas industry. It causes both carbon dioxide and methane emissions, it wastes valuable energy – and aside from unavoidable safety measures it can be stopped.

Some flaring is essential for safety and maintenance reasons, particularly at the start of operations, during repair or in sudden shutdowns. Here the solutions are better design, process optimization or equipment upgrades. But the more important problem globally is routine flaring. That means burning off gas that is found when drilling for oil rather than using, reinjecting or selling it – and it points to the crux of the issue which is a lack of infrastructure, regulations, markets and incentives. When these are not in place, it’s far simpler and cheaper to flare the gas – or even worse, vent it – than find a way to use or sell it.

Every OGCI member explicitly supports the aims of the World Bank’s Zero Routine Flaring by 2030 initiative. That means they design the infrastructure to bring to market, use or reinject associated gas as they develop new oil fields and are committed to finding viable solutions to eliminate routine flaring in existing fields by 2030 at the latest.

OGCI is also supporting the Payne Institute and the World Bank to improve the quality, accuracy and, in particular, public accessibility of satellite flaring data. But it will take a broader global effort to ensure that routine flaring becomes unthinkable by the end of the decade – as required to meet Paris climate goals. The IEA’s sustainable development scenario sees greenhouse gas emissions from flaring falling to less than 10% of the 2018 level (274 Mt CO₂e) by 2025.

How big is the problem?

The World Bank recently published its latest annual Global Gas Flaring Tracker report, drawing on the Payne Institute’s data from 2020. The good news is that the volume of flaring declined 5% in 2020 to 142 billion cubic meters – but that drop was less than the reduction in oil and gas production during the pandemic and the volume of gas flared is still enough to power the whole of sub-Saharan Africa.

Since satellite tracking of flaring began in 2012, seven countries – Russia, Iraq, Iran, the US, Algeria, Venezuela and Nigeria – have accounted for the bulk of flaring. In 2020, they contributed two-thirds (65%) of global gas flaring. But this grouping masks a broad range of different challenges and also some real progress.

The US challenge

The US, for example, is the fourth largest flarer by volume and there are thousands of individual flare sites in Texas and North Dakota, often operated by smallish companies running on tight margins, and in remote locations that are difficult to connect to a market. On the other hand, the US has a relatively low flaring intensity overall (measured by volume of flare per barrel of oil equivalent produced), and its flaring volume fell by 32% in 2020, according to the World Bank, despite a production fall of just 8%, due to efforts to build gas infrastructure in some regions.

OGCI member bp recently pledged to end routine flaring by 2025 at its US onshore oil and gas assets. It has already decreased the very high intensity of flaring in the Permian Basin assets it bought in 2018 from 16% to 2% and is now focused on building new infrastructure to collect and commercialize the gas instead of flaring it.

A recent study by the Environmental Defense Fund noted that Chevron and Occidental, both leading operators in the Permian, have brought their flaring intensity down to 1% by building a governance structure and culture focused on eliminating flaring, and by improving flare functionality where it cannot be avoided. “What you hear a lot from a company level, is ‘well, we don’t have the infrastructure to move this gas to market’ or ‘it doesn’t make any sense to go to market with product that is trading near zero,’” says Morgan Bazilian, director of the Payne Institute, who was a guest on a recent OGCI podcast on flaring. “Those arguments are valid, but there’s going to be movement at the regulatory and policy space to say, ‘Whether it affects your overall revenue, or means that we’re going to have to work together to figure out infrastructure issues, then that’s going to be the direction of travel.’”

Tackling large flaring sites

In other major flaring countries, however, the problem is not multiple small sites but a small number of large flaring sites – indeed, globally, just 12% of sites caused 75% of flaring volumes in 2020. There are signs of improvement in some regions as governments and companies collaborate on solutions. In parts of Russia and China, for example, gas infrastructure is being expanded. OGCI member, CNPC, for example, has recently set up dozens of gas recovery stations in the Tarim and Changquing oilfields to collect and compress low-pressure gas so they can use or sell it.

Nigeria, too, continues to show improvement, with flaring volumes falling 70% over the past 15 years, despite oil production remaining steady. OGCI member company, Eni, has played a role in that improvement, investing over $130 million in flaring reduction projects in its Nigerian assets to build new pipelines and install compression trains.

The challenge is not just infrastructure, but markets. “Building pipeline is important,“ says Vanessa Ryan, manager, climate change and carbon policy for Chevron who leads OGCI’s workstream on the role of natural gas. “There needs to be somebody to take and use the gas at the end of the pipeline.” In Angola, for example, both flare volumes and flare intensity have fallen sharply over the past few years, in part due to the Angola LNG project, which involves OGCI members Chevron, bp, Total, Eni and the Angolan oil and gas company Sonangol. This project uses associated gas as a primary feed source for LNG, creating a market for gas that would otherwise have been flared during oil production.

For some flaring reduction projects in Africa, the gas is used to fuel combined cycle gas power plants, stimulating an internal market for gas in a region where access to power is still limited.

What is OGCI doing now?

OGCI is working to take a proactive role in helping the global oil and gas industry eliminate routine flaring. It:

• Reports jointly on total flared volumes and routine flared volumes, and is exploring a collective flaring target that can become a standard for the industry.
• Has carbon intensity and methane intensity targets that include reducing emissions from flares.
• Is supporting Methane Guiding Principles to expand their best practice guidelines on flaring to develop a practical toolkit that will improve the reporting and measurement of methane emissions from flares.
• Is exploring with local partners and stakeholders how to develop and implement on-the-ground action plans to reduce flaring in global hotspots where members have operations.
• In addition, OGCI Climate Investments has invested in Andium, an industrial Internet of Things company providing continuous remote monitoring of flare activity.

Putting a stop to routine flaring in the next few years requires an integrated focus on infrastructure, technology, processes, policies and regulations. OGCI is working on all these fronts to make Zero Routine Flaring by 2030 a reality.