Russia Flares Equivalent of 1.2% of Global Natural Gas Demand
Posted on August 1, 2008 – 3:14 pm | by oilandgaspress.com
In a study sponsored and co-authored by the Global Gas Flaring Partnership (GGFR) and the World Bank, PFC Energy estimates that Russian oil producers annually flare an estimated 1.3 trillion cubic feet (tcf) of gas, a figure more than double the official estimates. PFC Energy estimates that it would be viable to utilize 30-80% of this flared gas, capturing an estimated $2-7 billion in annual revenues.
“The potential for improvement in the country’s gas flaring is enormous, and would be important on a carbon, gas value, and country revenue basis,” commented Lew Watts, CEO of PFC Energy. “The quantity of gas flared is comparable to South Korea’s entire demand for 2007.”
The Russian government has made several moves to reduce its level of gas flaring but legislation alone will not allow substantial reductions. The economic incentive to use associated gas will increase as domestic gas prices rise to international levels, net of transportation costs, but it is also important, however, to create a system under which all producers have open and transparent access to gas processing plants and pipelines, and enforcing that system with proper independent regulatory measures. Earlier this month Prime Minister Vladimir Putin took one such step by ordering gas producer OAO Gazprom to grant broader access to its pipelines, a move that will help oil companies to reduce their flaring by accessing the pipeline infrastructure with the otherwise flared gas.
Options for flaring are dependent on the size of the field, with five providing economic solutions for the associated gas in most cases:
Power generation for oil field operations
Power generation for regional markets
Gas processing to produce LPG (propane, butane), petrochemicals and dry gas
Gas to liquids
Re-injection for Enhanced Oil Recovery
GGFR estimates that annual global gas flaring is approximately 5.3 tcf, with the bulk coming from the Russian and Caspian region.
PFC Energy was pleased to work with the World Bank and its partners on this important study. In addition to independently quantifying the magnitude of gas flaring levels in Russia, we believe our proposed solutions provide a path forward to reduce the amount of flared gas, which in turn will reduce emissions, unlock value, and allow more gas to be used more economically.
A copy of the full report can be downloaded from the GGFR website: www.worldbank.org/ggfr
PFC Energy, headquartered in Washington, DC, is a leading strategic advisory firm in global energy with main offices in Houston, Kuala Lumpur, Paris, Bahrain, and Lausanne. PFC Energy’s clients include all major international oil and gas companies, many national oil companies, oilfield service companies, financial institutions and government agencies and ministries involved in energy policy and energy-driven economic development. PFC Energy’s coverage includes competitor analysis, energy sector strategies, commercial opportunities, and geopolitical forces affecting energy policy and energy economics.
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