More than 2,500 business leaders, government officials and individuals are now in Davos, Switzerland, for The World Economic Forum’s Annual Meeting. With more than 200 working sessions being held over five days under the banner: “Improve the State of the World: Rethink, Redesign, Rebuild,” participants will be zeroing in on topics that range from Haiti to the environment and the economy. One area in which GE Energy will be rolling up its sleeves at the conference is the global issue of flare gas — as reducing it offers an incredible near-term opportunity to create value from a wasted resource while significantly reducing greenhouse gas emissions.
Why flare? When gas is a by-product of oil development but immediate markets are not available, in some countries there are insufficient incentives to capture and use that gas. Instead it is vented or flared. The hurdles to productive gas use grow if domestic gas and electricity prices are controlled at low levels or if high levels of contaminates, such as hydrogen sulfide, increase the cost of gathering, processing and transporting this associated gas.
Approximately 150 billion cubic meters of natural gas are flared into the global atmosphere each year — which is roughly equivalent to the annual gas use of every residence in the U.S. It’s also the same as a 400 million metric ton contribution to global greenhouse gas emissions — which is roughly equivalent to the annual emissions of 77 million cars, or about 34 percent of the US fleet. Flaring also leads to large impacts on local populations in terms of environmental degradation, which can result in loss of livelihood and severe health issues.
Missed opportunity: One key area in the spotlight is what’s called “associated gas flaring,” or the flaring of byproduct gas produced by oil wells. While gas flaring has been part of the oil industry since its inception, some of the largest waste gas streams occur in remote areas where lack of a market, lack of pipeline access, and/or small volumes do not justify the expense of gas gathering.
The technology to address the problem exists today — in fact, much work has been done over the last decade so that large scale flaring is rare at new projects. However the next phase of flare reduction at old and isolated sites is going to be more challenging, which is why industry and governments need to work together to address the issue.
Flare gas reduction is timely for Davos because the role of the international community is seen as critically important if widespread action is to make a difference. International organizations like the World Bank’s Global Gas Flaring Reduction Initiative, the International Energy Agency, and the G8 have all already seized upon the issue.
Davos represents another unique opportunity to make the case that gas flaring is really a global environmental issue — and one that offers long-term financial benefits and associated cost reductions to countries and developers.
Burning issue: Major oil producing countries including Algeria, Saudi Arabia, and Indonesia have made progress in gathering and utilizing their associated gas. In fact, most new oil developments, such as those in Algeria, Angola or Kazakhstan, incorporate associated gas re-injection and gas gathering as part of the overall development plan. But there’s still work to be done in Nigeria, other parts of the Middle East, and Russia — which is the largest flaring nation, but has reduction goals targeted for 2014.
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