World Bank urges oil producers to reduce flaring

Mar 30, 2023 News

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…as flaring offshore Guyana peaked at 71.88 Million Standard Cubic Feet (MMSCF) in January  

Kaieteur News – The World Bank said that oil and gas companies need to rapidly accelerate the decline in global flare volumes if the world is to end routine flaring by 2030. The bank’s caution comes amid a report, which disclosed that global gas flaring has fallen to its lowest level since 2010.

However, in Guyana flaring continues to be a problem with environmentalist calling on the government and oil Major, ExxonMobil to do more to cut the pollution. In January this year, it was reported that offshore flaring in Guyana peaked at 71.88 Million Standard Cubic Feet (MMSCF).

The latest Global Gas Flaring Tracker Report (GGFR), a leading global and independent indicator of gas flaring, finds that global gas flaring decreased by three percent to 139 bcm in 2022 from 144 bcm in 2021.  Oil production increased by 5 percent to 80 million barrels per day (bbl/d) from 77 bbl/d in 2021. As a result, the global average flaring intensity—the amount of gas flared per barrel of oil produced—dropped to 4.7 m3/bbl in 2022 from 5.1 m3/bbl in 2021.

The report states that three countries, Nigeria, Mexico, and the United States, accounted for most of the decline in global gas flaring in 2022. Two other countries—Kazakhstan and Colombia— stand out for consistently reducing flaring volumes in the last seven years, the report published by the World Bank noted.  The top nine flaring countries continue to be responsible for the vast majority of flaring. Russia, Iraq, Iran, Algeria, Venezuela, the United States, Mexico, Libya, and Nigeria account for nearly three-quarters of flare volumes and just under half of global oil production. This wasted gas could displace dirtier energy sources, increase energy access in some of the world’s poorest countries, and provide many countries with much-needed energy security. If put to productive purposes, the amount of gas flared in 2022, could generate as much electricity as Sub-Saharan Africa currently produces in a year.

According to the bank, decreased Russian gas exports to the European Union (EU) did not increase gas flaring in Russia. In 2022, the EU significantly increased its liquified natural gas imports from the United States, Angola, Norway, Qatar, and Egypt, and via pipeline from Azerbaijan and Norway. Of these countries supplying gas to the EU, the United States and Angola have made notable progress commercializing associated gas streams and increasing LNG export.

GGFR estimates that in 2022 gas flaring released 357 million tonnes of CO2e, 315 million tonnes in the form of carbon dioxide, and 42 million tonnes CO2e in the form of methane. Methane, the primary component of natural gas, is a potent but short-lived greenhouse gas, with a warming potential much higher than carbon dioxide. The oil and gas industry is a significant source of methane emissions globally. Reducing methane emissions is one of the most crucial climate actions that can be undertaken in the short term. The Tracker Report also highlights the significant uncertainty surrounding the methane emissions from gas flaring. If the average flare is just 5 percentage points less efficient in burning the gas than generally assumed, then globally, the amount of methane released would be three times higher than currently estimated.

Gas flaring, the burning of natural gas associated with oil extraction, takes place due to a range of issues, from market and economic constraints to a lack of appropriate regulation and political will. However, alongside the countries that continued to reduce flaring in 2022, several other countries— including Algeria and Egypt—provide hope that they will follow suit and that their efforts to reduce flaring will accelerate as the key ingredients for success, such as effective regulation and enforcement, political will, and infrastructure are put in place.

Meanwhile, the bank said while global flare volumes fell over the last year, greater efforts are needed to sustain flare reductions and reduce methane emissions. At a global level, the resumption of the longstanding decoupling of gas flaring and oil production is welcome. Still, oil and gas producers need to rapidly accelerate the decline in global flare volumes if we are to end routine flaring by 2030.

Two countries spotlighted in this year’s report – Angola and the United States – provide evidence of the reductions in flaring that can be achieved when operators and governments work together to develop an integrated gas value chain to commercialize associated gas. On energy security, the shift by European countries away from importing Russian oil and gas during 2022 has not resulted in an
increase in Russian flaring.

ExxonMobil last year paid US$9 million to the Environmental Protection Agency (EPA) to flare excess gas at its offshore operations in the Stabroek Block. This information was revealed during the Consideration of the Budgetary Estimates early this year by Minister of Parliamentary Affairs and Governance, Gail Teixeira. The EPA introduced a flaring fine following rampant offshore flaring by Exxon’s operator, Esso Exploration and Production Guyana Limited (EEPGL) in 2019, shortly after the start-up of first oil at Liza One.

The fine was increased from US$45 per every ton of carbon dioxide emitted through flaring to US$50. It can therefore be determined that the oil giant made payments on approximately 180,000 tonnes of Carbon Dioxide equivalent (CO2e) flared last year. Presently, oil is being produced at two fields in Guyana’s rich Stabroek Block, inclusive of Liza One and Liza Two.  The oil company has always been hesitant to release its flaring data. In July last year, Production Manager at ExxonMobil Guyana, Mike Ryan had told members of the media that the company was finally able to bring an end to the gas compressor woes that plagued the Liza Destiny floating, production, storage and operating (FPSO) vessel. The malfunctioning equipment had led to two years of flaring which released over 200 toxic chemicals into the atmosphere.

Ryan said the Exxon team was able to successfully install a new compressor from Germany and was even open to sharing that over US$10M in flaring fees had been paid over to the EPA. But what the Production Manager carefully dodged was questions posed by Kaieteur News on the amount of gas flared to date via the Liza Destiny FPSO for the two-year period. Ryan would only repeat that the company maintained full compliance with the EPA’s permitted parameters for flaring which was between15-7 million cubic feet of gas per day. After public pressure, the company came out saying that “To date, we have made payments on 279,537.33 tonnes of CO2e (Carbon Dioxide equivalent) flared.”

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• ExxonMobil, Guyana, Million Standard Cubic Feet (MMSCF), producers, World Bank

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