COP21 a Turning Point for the Oil and Gas Industry
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WHITE PAPER INDUSTRY: OIL & GAS PUBLISHING DATE: MARCH 2016 COP21 – A turning point for the Oil & Gas Industry A concerted global effort to reduce greenhouse gas emissions and the associated temperature rise is underway and gaining momentum. As a large scale emitter, the Oil & Gas industry needs to move quickly from estimating towards accurately measuring, monitoring, reporting, and ultimately reducing gas emissions. 1. Introduction While this may be safer in the short Gas is flared at oil extraction term, the rising level of CO2in sites all over the world. the earth’s atmosphere is Flaring is used for safety causing global tempera- reasons and as the main tures to rise. method of disposal for Oil & Gas facilities A concerted global that lack the required effort to reduce infrastructure to GHG emissions capture, store, and and the associated sell natural gas. temperature rise Methane, the primary is underway and component of natural gaining momentum. gas, is 40 times more The Oil & Gas industry potent as a greenhouse needs to move quickly gas (GHG) than carbon from estimating large- dioxide (CO2). Flaring the scale emissions towards gas converts the methane accurately measuring, moni- and associated noxious gasses toring, reporting, and ultimately into safer substances like CO2. reducing gas emissions. 2. Flaring – worldwide issue gas through flaring operations. From this How much gas is flared? perspective, the USA and Russia are the two A 2015 study1 on global flaring by researchers main gas flaring nations. The USA has by at the National Oceanic and Atmospheric far the highest number of flare sites at 2399, Administration (NOAA) used data collected by while Russia leads in terms of the volume of the National Aeronautics and Space Adminis- gas flared. Russia also has the second largest tration (NASA)/NOAA Visible Infrared Imaging number of flare sites at 1053. Moving down the Radiometer Suite (VIIRS) to build an accurate scale, individual countries’ flare site numbers estimate of global gas flaring. reduce significantly: Canada has 332 flare sites, Nigeria 325, and China 309. VIIRS is well suited for detecting and measuring emissions from gas flares. It collects shortwave Although the USA has the most flare sites, the and near-infrared data at night, recording the country is not a leader in terms of volume of peak radiant emissions from flares, and builds gas flared. Russia flares the most at around 35 a complete BCM, followed picture with by Nigeria at an estimate around 15 accuracy rating BCM, and Iraq of ±9.5%. and Iran both While the study flaring around was released ten BCM. in 2015, the The highest results of the flare gas study reflect volumes are global flaring concentrated in 2012. 7467 in a small individual flare percentage sites were iden- of flare sites, tified, with a and there are total flared gas a significant volume esti- Active flare stacks in the Gulf of Mexico number of flare mate of 143 (±13.6) billion cubic meters (BCM), sites with small flare gas volumes. Half of the corresponding to 3.5% of global production. total flared gas volume is released from less than 400 flares, and 90% occurs at 30% of the The vast majority, 90%, of gas flared occurred sites. in upstream production areas, with a further 8% at refineries and 2% at liquefied natural gas The largest flare site is in Venezuela, which (LNG) terminals. Of the flare sites identified in flared 1.13 BCM of gas. The smallest flare site the study, 6802 were upstream flares, 628 were is in Oman, which flares 28,431 cubic meters. downstream sites and 37 flares were found at LNG terminals. Are flaring volumes consistent? The top ten flaring nations account for more Who is flaring the most? than 70% of all GHG emissions on the planet, The predominance of gas flaring in a specific and while flaring makes up 1% of total GHG region can be looked at in two ways. Regions emissions, it is an entirely wasteful practice. that have the highest number of individual This has remained consistent despite varia- flare sites, and regions that release the most tions of flare volumes within individual nations. Flaring in the USA increased nearly 50% Governments and oil companies that endorse between 2010 and 2011, and between 2007 the Zero Flaring initiative will publicly report and 2012 flaring tripled. This was largely due their flaring volumes and progress towards the to the dramatic increase in national shale oil Initiative on an annual basis. They also agree production, where the hydraulic fracturing to the World Bank aggregating and reporting in technique used to produce the oil necessitates parallel. multiple, small production centres. In 2011, Russia emitted 1.8 BCM more gas than the In 2015, the World Bank’s initiative aimed at previous year. eliminating gas flaring by 2030 reached 45 endorsements from oil companies, governments Global oil production has steadily increased and others related over the past 17 years, from around 65 million parties, repre- The top ten flaring nations barrels per day in 1996, to around 86 million senting potential account for more than barrels per day in 2012. Despite this increase, CO2savings in the 70% of all GHG emissions gas flaring volumes are falling. In 1996, around hundreds of millions on the planet. 165 BCM of gas was flared, and this reduced of tons every year. to slightly more than 150 BCM by 2002, before Signatory governments and legislators around volumes then jumped to around 175 BCM in the world are now proposing new laws aimed at 2004. reducing gas emissions. The flaring outlook COP21 Since 2004, global flare gas volumes have In 2015 the United Nations Climate Change been decreasing, and since 2006 there has Conference, the 21st annual assembly of the been a sharp decrease in flare gas volume, Conference of the Parties (COP21)) to the from around 170 BCM to just under 140 BCM in 1992 United Nations Framework Convention 2010. Momentum to reduce flaring is levelling on Climate Change (UNFCCC), met in Paris to off, with only 10% of reductions achieved by conclude the four year negotiation of the Paris the top 20 GHG emitters since 2007.2 However, Agreement. The Paris Agreement saw a large there is a significant global effort to continue number of Oil & Gas companies, oil-producing reductions, and the World Bank has estimated countries and other associated organisations that global gas flaring volumes will continue to join existing signatories in a pledge to reduce decline, reaching around 80 BCM in 2030. routine gas flaring to zero by the year 2030. The new influx of endorsers is indicative of the 3. A turning point wider successes of the COP21 talks, which saw Zero Flaring by 2030 a landmark new climate deal agreed by 195 The World Bank Zero Routine Flaring by nations. 2030 initiative, launched in April 2015, brings governments, oil companies, and development The goal of the COP21 Paris Agreement is to institutions together to cooperate on the aim of significantly reduce emissions, and endorsing eliminating routine gas flaring by 2030. Govern- nations have committed to the goal of limiting ments that endorse the Initiative will provide global temperature rise to ‘well below’ two a legal, regulatory, investment, and operating degrees. Despite the success of the talks, environment that is conducive to upstream targets for individual nations are not legally investment and to the development of viable binding until at least 55 countries, which markets for utilisation of extracted gas and the together represent 55 percent of global GHG infrastructure necessary to deliver the gas to emissions, officially sign the agreement and market. adopt the framework into their own domestic law. Whilst the aim is for these targets to become oil fields will implement economically viable binding, there is currently little in the way of solutions to eliminate legacy flaring as soon as available enforcement action for non-com- possible, and no later than 2030. pliance. A $100 billion fund has been set-up to help developing nations decarbonise their To implement the agreement, government energy mix as some of the highest producing finance departments around the world will need nations, including China, India and South Africa, to place decarbonisation at the heart of their are concerned the reduction may hamper their fiscal policies. To date, it has been a secondary economic growth and development. consideration and other economic activity has taken precedent. The outlook Reduction targets, known as Intended National The outlook points to a necessary shift in the Determined Contributions (INDCs), have been philosophy of governments, who will need to submitted by 187 countries, but individual drastically change national strategies to deliver nations will need to exceed their own targets the aims of the COP21 agreement. First steps if temperature levels are to will be new legislation on fall below the two degrees COP21 targets for individual nations the measurement and aimed for. Current targets are not legally binding until at least 55 monitoring of gas volumes, will still fall short of this countries, which together represent so that companies have the decrease by 0.7 degrees. 55% of global GHG emissions, ability to practically manage officially adopt the framework into legally binding, large scale Following COP21 and their own domestic law. reductions. the Zero Flaring Initiative, the ultimate aim is for Oil & Gas companies Can the Zero Flaring Initiative work in practice? to eliminate ongoing flaring within existing Satellite data shows that efforts to reduce operations and to ensure that new oilfield devel- flaring have been paying off. Estimated levels opments incorporate gas utilisation solutions have dropped worldwide by around 20% from that will avoid routine gas flaring or venting.