Regulation of Associated Gas Flaring and Venting
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Regulation of Associated Gas Flaring and Venting A Global Overview and Lessons from International Experience THE WORLD BANK © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail [email protected] All rights reserved. First printing November 2004 The findings, interpretations, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the GGFR Partners, or the Board of Executive Directors of the World Bank and the governments they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. Acknowledgments This report is one of the outputs of the Global Initiative on Gas Flaring Reduction. The Initiative was transformed into the Global Gas Flaring Reduction Public-Private Partnership (GGFR)1 at the World Summit on Sustainable Development (WSSD) held in Johannesburg in August 2002. 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 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, Equatorial Guinea, Indonesia, and the United States, as well as Chevron Texaco, ExxonMobil, Norsk Hydro, Statoil, ENI, and TOTAL, have joined the GGFR. 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 from 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 Joaquim 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. iii Contents Acknowledgments ...................................................................................................... iii List of Abbreviations and Acronyms ....................................................................... ix Units of Measure ........................................................................................................ xi 1 Introduction and Executive Summary...........................................................1 2 Flaring and Venting Policy .............................................................................5 3 Regulation of Gas Flaring and Venting .........................................................7 3.1 Gas Flaring and Venting Legislation .....................................................7 3.2 Who Regulates Gas Flaring and Venting?.............................................7 3.3 How Has Regulation Been Conducted?.................................................9 3.4 Operational Processes..........................................................................10 3.5 Regulatory Procedures.........................................................................12 4 Other Relevant Factors .................................................................................23 4.1 Standards..............................................................................................23 4.2 Financial Incentives.............................................................................24 4.3 Contractual Rights and Structure of Downstream Energy Markets.....26 5 Summary and Recommendations.................................................................29 Appendix A: Country Regulatory Profiles..............................................................31 A.1 Province of Alberta (Canada) ..............................................................32 A.2 Norway.................................................................................................44 A.3 The United Kingdom...........................................................................50 A.4 North Africa.........................................................................................62 Algeria..................................................................................................62 Egypt....................................................................................................63 Libya ....................................................................................................64 Tunisia..................................................................................................64 A.5 Sub-Saharan Africa..............................................................................66 Angola..................................................................................................66 v Cameroon.............................................................................................67 Gabon...................................................................................................68 Namibia................................................................................................68 Nigeria..................................................................................................69 A.6 Middle East..........................................................................................72 Oman....................................................................................................72 Qatar.....................................................................................................73 Syria .....................................................................................................74 A.7 Latin America and the Caribbean ........................................................75 Argentina..............................................................................................75 Bolivia..................................................................................................76 Brazil....................................................................................................77 Colombia..............................................................................................79 Ecuador ................................................................................................79 Mexico .................................................................................................80 Peru ......................................................................................................81 Trinidad and Tobago............................................................................82 Venezuela.............................................................................................83 A.8 Europe and Central Asia ......................................................................85 Azerbaijan............................................................................................85 Denmark...............................................................................................85