Five percent of world's gas wasted says GE Report

Report calls on governments and O&G industry to help reduce flaring

The GE report finds that low natural gas prices in the Middle East and higher costs related to capturing flare gas inadvertently encourage the wastefu
The GE report finds that low natural gas prices in the Middle East and higher costs related to capturing flare gas inadvertently encourage the wastefu

GE on Monday released a study, Flare Gas Reduction: Recent Global Trends and Policy Considerations, which estimates that 5% of the world’s natural gas production is wasted by burning or “flaring” unused gas each year—an amount equivalent to 30% of consumption in the European Union and 23% in the United States. Gas flaring emits 400 million metric tonnes of CO2 annually, the same as 77 million automobiles, without producing useful heat or electricity. Worldwide, billions of cubic metres (bcm) of natural gas are wasted annually, typically as a by-product of oil extraction.

The study finds that the technologies required for a solution exist today. Depending on region, these may include power generation, gas re-injection (for enhanced oil recovery, gathering and processing), pipeline development and distributed energy solutions. Nearly US$20 billion in wasted natural gas could be used to generate reliable, affordable electricity and yield billions of dollars per year in increased global economic output.

“Power generation, gas-reinjection and distributed energy solutions are available today and can eliminate the wasteful practice of burning unused gas. This fuel can be used to generate affordable electricity for the world’s homes and factories,” said Michael Farina, programme manager at GE Energy and author of the white paper.

“With greater global attention and concerted effort—including partnerships, sound policy and innovative technologies—large-scale gas flaring could be largely eliminated in as little as five years. It’s a win-win outcome,” continued Farina.

The report provides a region-by-region analysis of gas flaring trends which finds that in the Middle East, low natural gas prices and higher costs related to capturing flare gas inadvertently encourage the wasteful burning of unused gas.

Within the Russian Federation, by some measures the world’s largest source of flare gas emissions, as much as 50 billion cubic metres of natural gas produced is wasted annually. If half of this flare gas (25 bcm per year) was captured and sold at prevailing domestic prices in Russia, the economic opportunity may exceed $2 billion (65 billion rubles). A significant portion of this waste could be avoided with modest policy efforts and greater emphasis on investments in power generation and gas processing technologies.

Although Nigeria has reduced flare gas emissions by 28% from 2000 levels, the country’s oil industry still wastes 15bcm of natural gas every year. While nearly half of the population has no access to electricity, the country spends nearly $13 billion per year on diesel-powered generation and perhaps 10GW of potential electricity is flared away. Successful capture and flare gas utilisation could potentially triple per capita electricity consumption for this nation of 155 million people.

Elsewhere in West Africa, Angola, Equatorial Guinea, Gabon, Congo and Cameroon collectively waste about 10 billion cubic metres of natural gas every year.

“Making better use of vented and flared gas is a tremendous opportunity. It will help slow global warming while also saving scarce natural resources. While this issue has been on the radar screen for some time, many countries still waste massive amounts of gas through flaring and venting,” said David Victor, director of the Laboratory on International Law & Regulation at the University of California San Diego.

The study highlights the following recommendations to reduce gas flaring:

Strengthen International Commitments

The next phase of flare gas eradication requires a coordinated effort from central and regional governments, oil and gas producers, technology providers and the international community. These efforts must include both proper punitive actions and incentives to encourage investment.

Advance Local Solutions

Local efforts are critical to flare gas reduction. Governments, producers and technology providers across the globe must cooperate to communicate the value of gas, including greater efficiency; highlight the financial benefits associated with gas flaring reduction. Other solutions include securing local government support for monitoring and enforcing flaring regulations; and build capacity that helps local investors and contractors develop, operate and service distributed power generation.

Expand Access to Financing

Local efforts require capital support, including investments in pipeline, processing and storage, which make it economically efficient to gather and utilise flare gas. Various forms of credit enhancement, including partial risk guarantees, are one option to support investment while policy reforms are underway. Targeted technology funds and carbon partnerships also can facilitate projects, along with carbon financing and expanded eligibility for flare gas reduction within the United Nations Clean Development Mechanism.

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Oil & Gas Middle East - September 2020

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