Regulation of Associated Gas Flaring and Venting
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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized A Public-PrivatePartnership Flaring Reduction Global Gas A GlobalOverviewandLessons FLARING ANDVENTING: GAS OFASSOCIATED REGULATION World Bank Group World Regulation of Associated Gas Flaring and Venting A Global Overview and Lessons from International Experience THE WORLD BANK Report Number 3 - World Bank Group Acknowledgments This report is one of the outputs of the Global Initiative on Natural Gas Fla ring Reduction (GGFR). 1 The GGFR aims to support national governments and the petroleum industry in their efforts to reduce flaring and venting of gas associated with the extraction of crude oil. The GGFR was transformed into the Global Gas Flaring Reduction Public-Private Partnership at the World Summit on Sustainable Development (WSSD) held in Johannesburg in August 2002. The existing partners at the time of the WSSD were the Bank, Shell, BP, Sonatrach of Algeria, and the governments of Ecuador, Nigeria, and Norway. Since then, the governments of Angola, Cameroon, Indonesia, and the United States, as well as Chevron Texaco, ExxonMobil, Norsk Hydro, Statoil, ENI, and TOTAL, have joined the GGFR. The first Steering Committee meeting, held in December 2002, approved a three-year work program and budget for the GGFR, which included assisting countries in developing relevant gas flaring and venting regulations. This report provides a global overview of regulatory practices on gas flaring and venting and draws relevant lessons and conclusions from international experience on how best to reduce flare and venting volumes. This report benefited from a capacity building workshop hosted by the Energy and Utilities Board (EUB) of Alberta (Canada) in October 2003 on its experience with regulating gas flaring and venting.2 This report was authored by Franz Gerner, regulatory expert, Oil and Gas Policy Division (COCPO), and Bent Svensson, GGFR program manager, based on a survey from IHS Energy Group and originally financed by the Energy Sector Management Assistance Programme (ESMAP) and later updated by GGFR. William Porter, consultant; Masami Kojima, lead energy specialist; Sascha Djumena, energy specialist; and Jacob Broekhuijsen, GGFR adviser, from the World Bank supplied many helpful comments. Esther Petrilli and Vince Minhas provided editorial support. Valuable input was provided by Arden Berg, Kim Eastlick, and Michael Brown of the Alberta EUB, Arne Nilsen of the Norwegian Petroleum Directorate, Peter Enga Njumgwe fr om the Cameroon Societe Nationale des Hydrocarbures, Abiodun J. Ibikunle and Farouk G. Sa’id from the Office of the Presidential Advisor on Petroleum and Energy (Nigeria), Rachmat Priatna from BP Migas (Indonesia), Vito Caruso from Eni (Italy), Alcides Joa quim dos Santos from the Angolan Ministry of Energy, Rabah Nadir Allouani from Sonatrach (Algeria), Paul Gunning from the U.S. Environmental Protection Agency, Elmer Danenberger from the U.S. Minerals Management Service (MMS), and Louise Novell from the Department of Trade and Industry (DTI) in the United Kingdom. 1 Other reports in this series include the Report on Consultations with Stakeholders and the Kyoto Mechanisms for Flaring Reductions. These reports can be found on the Partnership’s web page at www.worldbank.org/ggfr. 2 International delegates from Algeria, Angola, Cameroon, Indonesia, Italy, Nigeria, and the World Bank attended the workshop, where EUB staff shared Alberta’s experience with reducing gas flaring and venting volumes and the role of regulation. Further details on the workshop are on the GFFR website at www.worldbank.org/ggfr. ii Contents Acknowledgments ..............................................................................................................ii List of Abbreviations and Acronyms .............................................................................. v 1. Introduction and Executive Summary................................................................ 1 2. Flaring and Venting Policy .................................................................................. 4 3. Regulation of Gas Flaring and Venting .............................................................. 6 3.1 Gas Flaring and Venting Legislation ........................................................... 6 3.2 Who Regulates Gas Flaring and Venting? ................................................... 6 3.3 How Has Regulation Been Conducted? ....................................................... 8 Operational Processes .................................................................................. 9 3.4 Regulatory Procedures ...............................................................................11 Application and Approval..........................................................................11 Measuring and Reporting...........................................................................15 Monitoring and Enforcing..........................................................................17 4. Other Relevant Factors ...................................................................................... 20 Standards ....................................................................................................20 Financial Incentives ...................................................................................21 Natural Gas Market Development Based on Nonassociated Gas..............21 Government Fiscal Policies Related to the Oil and Gas Sector .................22 4.1 Contractual Rights and Structure of Downstream Energy Markets...........23 Contractual Rights to Associated Gas........................................................23 Structure of Downstream Energy Markets.................................................24 5. Summary and Recommendations...................................................................... 25 Appendix A: Country Regulatory Profiles ................................................................... 27 A.1 Province of Alberta (Canada) ....................................................................28 Overview of Onshore Gas Flaring and Venting in Alberta .......................28 A.2 Norway.......................................................................................................40 Gas Flaring and Venting Regulation..........................................................40 A.3 The United Kingdom .................................................................................45 A.4 North Africa ...............................................................................................56 A.5 Sub-Saharan Africa ....................................................................................60 A.6 Middle East ................................................................................................65 A.7 Latin America and the Caribbean..............................................................68 A.8 Europe and Central Asia ............................................................................77 A.9 Far East and Australia ................................................................................86 A.10 North America............................................................................................98 iii List of Figures Figure A.1 Solution Gas Conserved and Volume Flared and Vented ....................... 28 Figure A.2 Solution Gas Flaring/Venting Management Framework.......................... 33 Figure A.3 Solution Gas Flaring and Venting Decision Tree .................................... 34 Figure A.4 Flaring and Oil Production Volumes in Norway, 1980 and 2002 ............ 41 Figure A.5 Taxed CO2 Emission from Oil and Gas Production, 2002 ....................... 43 Figure A.6 Flare Transfer by Assets Operating within Flare Consents ...................... 53 Figure A.7 Flare Transfer by Consent Revision ......................................................... 54 List of Tables Table 2.1 Countries Profiled with Emission and-or Flaring and Venting Targets........................................................................................... 4 Table 3.1 Types of Flaring and Venting Authorization ............................................ 15 Table A.1 List of Countries Profiled.......................................................................... 27 Table A.2 Solution Gas Flaring Reduction Schedule ................................................ 30 Table A.3 Breakdown of Gas Flaring and Venting (in mcm) .................................... 31 Table A.4 Enforcement Ladder.................................................................................. 36 Table A.5 Gas Flared Onshore and Offshore 1996–2001.......................................... 45 Table A.6 Gas-Oil Ratios for Flaring ........................................................................ 68 iv List of Abbreviations and Acronyms AFR Annual Field Report ANP National Petroleum Agency of Brazil ANPE National Environmental Protection Agency of Tunisia API Americ an Petroleum Institute (United States) ARPEL Regional Association of Oil and Natural Gas Companies in Latin America and the Caribbean BAT Best available technique BATNEEC Best available technology net entailing excessive costs BECA Bangladesh Environment Conservation Act BEP Best environmental practice BLM Bureau of Land Management (United States) CASA The Clean Air Strategic Alliance (Alberta, Canada) CDM Clean Development Mechanism CH4 Methane CNOOC China National Offshore Oil Corporation CO Carbon