Associated Gas Utilization in Russia: Issues and Prospects

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Associated Gas Utilization in Russia: Issues and Prospects Associated Gas Utilization in Russia: Issues and Prospects Annual Report, Issue 4 Moscow, 2012 E. Kutepova, A. Knizhnikov & K. Kochi: Associated Gas Utilization in Russia: Issues and Prospects: Annual Report, Issue, 4, Moscow: WWF Russia, KPMG, 2012, 35 pp This report addresses the problem of associated gas fl aring. It contains annually updated data and is aimed at government bodies, hydrocarbon producers, refi ners and users, research institutes and fi nancial and public organizations, plus anyone else interested in the issue. If you have any comments and observations on this report, please send them to WWF Russia World Wide Fund for Nature, PO Box 3, Moscow, 109240 / [email protected] Issue 1 is available at http://www.wwf.ru/resources/publ/book/eng/337. Issue 2 is available (in Russian) at http://www.wwf.ru/data/pub/energy/gases-full-inet.pdf. Issue 3 is available at http://www.wwf.ru/resources/publ/book/eng/545. or KPMG Block C, 10 Presnenskaya Naberezhnaya, Moscow, Russia, 123317 / [email protected] This report may not be quoted, cited or reproduced without reference to WWF Russia and KPMG Photo: Offshore oil platform. Photographer: Kim Steele (source: www.thinkstockphotos.com) CONTENTS Glossary 4 Foreword 5 1. Associated gas production and fl aring in 2011 6 1.1. Global gas fl aring 6 1.2. Associated gas fl aring in Russia 8 1.2.1 Change in the associated gas utilization rate in 2011 compared to 2010 9 1.3. A regional overview: associated gas trends in various Russian regions 16 1.3.1 Associated gas fl aring in Nenets Autonomous Okrug (NAO) 16 1.3.2 Associated gas fl aring in Krasnoyarsk Krai 19 1.3.3 Associated gas fl aring in Khanty-Mansi Autonomous Okrug 19 2. The Kyoto Protocol and Joint Implementation Projects 22 3. Measures to overcome the problem 27 4. Actual examples of successful associated gas utilization measures 29 4.1. The Russian context: associated gas-fi red power plants 29 4.2. The international context: Norway 31 Conclusion 35 4 | Associated Gas Utilization in Russia: Issues and Prospects GLOSSARY APG: associated petroleum gas GTU: gas turbine unit BCS: booster compressor station IEA: International Energy Agency COTF: Central Oil Treatment Facility JI: joint implementation CPF: Central Processing Facility JV: joint venture CS: compressor station NGL: natural gas liquid(s) DPP: diesel power plant NOAA: National Oceanic and Atmospheric Administration ERS: Earth remote sensing OGCF: oil and gas condensate fi eld ESPO pipeline: Eastern Siberia-Pacifi c Ocean pipeline PSA: Production Sharing Agreement GGFR: Global Gas Flaring Reduction SFD: Siberian Federal District GPP: gas processing plant SRPS: state-owned regional power station GPPP: gas piston power plant TGP: Target Gas Programme GTPP: gas turbine power plant Annual Report | Issue 4 | 5 FOREWORD “DDesspitee the meassuures thaat arree alrreaaddyy beeiinngg This issue of “Associated Gas Utilization in Russia: Issues taakeen,, signnifi caant vooluummees of tthiiss ressoourrcce arre and Prospects”, prepared jointly by the World Wide Fund for wassteed, I meean asssocciatteed gaas.Abbooutt a quuaartterr Nature (WWF Russia) and KPMG, is signifi cant as it shows of the volumme prrodduceedd is siimmpplyy waassteed the results of efforts to reduce associated gas fl aring in 2011 and the state of the issue on the eve of 2012, when Russian thhroouggh fl aaring. 24.6 ppeerccennt, or 16.22 billliioonn Government Resolution 7, On measures to encourage the cuubic mmeterrs. Thhis diffi ccultt to addmmitt, butt thhiis reduction of air pollution with associated gas fl aring products is moore tthan the annnuual coonssuummpttion of (8 January 2009), which establishes a target fl aring rate limit soome Euurroppeaan coounntrriees””. of 5%, took effect. Vladimir Putin, The data in this report on fl aring reduction by oil and gas Meeting of the Commission for Strategic companies show that achieving the target will remain a Development of the Fuel and Energy challenge in the coming years. Sector and Environmental Security, According to the Russian Energy Ministry, recent years have 1 October 23, 2012 seen an increase in associated gas production in Russian and a stable associated gas utilization rate (75.4% in 2011)2. However, recording and reporting still need improving, and data from different sources may differ signifi cantly. The World Bank reports that global gas fl aring increased by 2 billion cubic metres in 2011 to 140 billion cubic metres, equal to 360 million tons of greenhouse gases 3. Satellite data show that the increase in gas fl aring in 2011 is due to increased hydrocarbon production in Russia and shale oil and gas operations in the US state of North Dakota. Russia still tops the world’s fl aring countries, followed by Nigeria, Iran, Iraq and the USA. The satellite estimates also show that Nigeria, Algeria, Mexico and Qatar are making some progress in fl aring reduction. The global effort to track progress on fl aring reduction has been complicated by inconsistent data. 1 Offi cial website of the President of Russia http://eng.kremlin.ru/news/4553 2 Offi cial website of the Russian Energy Ministry, http://minenergo.gov.ru/ activity/oilgas/state_oil_industry_in_2009.php 3 The World Bank’s offi cial website, http://www.worldbank.org/en/ news/2012/07/03/world-bank-sees-warning-sign-gas-fl aring-increase 6 | Associated Gas Utilization in Russia: Issues and Prospects 1. 1.1. Global gas fl aring Associated gas Associated gas fl aring is a global problem, so reliable, transparent and regular recording and reporting of associated production and fl aring gas production and fl aring volumes is important at both national in 2011 and global level. However, tracking progress on fl aring reduction is often complicated by inconsistent and unreliable data. The use of satellite data, making it possible to overcome a wide range of problems, has made it easier to estimate global fl aring volumes. To improve the reliability and consistency of global gas fl aring data and perform regular global monitoring of gas fl aring using consistent methods, the World Bank-led Global Gas Flaring Reduction partnership (GGFR) together with the US National Oceanic and Atmospheric Administration (NOAA) use satellite data to estimate fl aring volumes. According to the latest data, global fl aring overall increased from 138 billion cubic metres in 2010 to 140 billion cubic metres in 2011, equal to 360 million tons of greenhouse gases or the emissions from roughly 70 million cars4. This increase of 2 billion cubic metres is due largely to increased hydrocarbon production in Russia and shale oil and gas operations in the US state of North Dakota. In the past fi ve years, global fl aring overall has decreased signifi cantly, from 154 billion cubic metres in 2007 to 140 billion cubic metres in 2011. However, it has increased in some countries (Iran, Iraq, the USA, Angola, Venezuela, Canada and Egypt). 4 The World Bank’s offi cial website, http://www.worldbank.org/en/ news/2012/07/03/world-bank-sees-warning-sign-gas-fl aring-increase 1. Estimated fl ared volumes from satellite data, 2009-2011 (billion cubic metres) 50 45 40 37.4 35 30 25 19 20 14.6 15 11.4 9.4 10 7.1 billion cubic metres 5 4.7 4.1 3.7 3.5 05 2.6 2.4 2.2 2.2 2.1 1.7 1.7 1.6 1.6 1.6 00 * Including North Dakota ** Including share of Neutral Zones 2009 2010 2011 Annual Report | Issue 4 | 7 The satellite estimates for 2011 show that the USA, Russia, The increase in 2011, after years of reduction/stabilization, Kazakhstan, Venezuela and Iraq are the main contributors is a warning sign in terms of both gas fl aring and climate to this increase, while Nigeria, Algeria, Mexico and Qatar are change. The fact that the global fl aring level remains high making continuous progress in fl aring reduction. shows that efforts to reduce fl aring need to be sustained and even scaled up. Russia still tops the world’s fl aring countries, followed by Nigeria, Iran, Iraq and the USA. Its share of the global total in 2011 rose to 26.7%, compared to 26.3% in 2010.5 2. Share of global fl aring level, 2011 (%) 40 30 26.7 35 25 30 20 25 13.6 20 15 % 10.4 15 8.1 billion cubic metres 10 6.7 10 5.1 3.6 3.4 2.9 2.6 2.5 5 05 1.9 1.7 1.6 1.6 1.5 1.2 1.2 1.1 1.1 1.1 00 0 Estimated fl ared volumes from satellite data, 2010 (bcm) Share of global fl aring level, 2011 (%) * Including North Dakota ** Including share of Neutral Zones 5 More details on the Russian fi gures for recent years can be found in Issue 3 of this report, available at http://www.wwf.ru/ resources/publ/book/545. 8 | Associated Gas Utilization in Russia: Issues and Prospects 1.2. Associated gas fl aring in Russia According to the Energy Ministry, oil production in Russia Every year since 2009, as part of a public campaign for fl aring increased by 6.3 million tonnes (1.2%) to 511.4 million tonnes reduction to be accelerated, WWF Russia has asked the in 2011. One reason for this is the continued development of leading oil and gas companies operating in Russia for data on fi elds in Eastern Siberia and the corresponding increase in their associated gas production and fl aring. Notably, more and production. The utilization rate was practically unchanged, more companies are disclosing such data every year, showing at about 75.4% in 20116.
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