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ENERGY: Billions Up in Flames as Oil Firms Burn Gas

Abid Aslam

WASHINGTON, Aug 31 2007 (IPS) - Energy producers waste about 40 billion dollars every year by burning off gas released at oil fields, says a new study commissioned by the World Bank.

The practice, known as flaring, also hastens climate change by spewing some 400 million tons of carbon dioxide into the atmosphere, says the study, billed as the first global survey supported by photos taken from satellites in space.

Scientists say carbon dioxide and other so-called greenhouse gases are mainly responsible for changes in global climate that are resulting in increasingly frequent and intense natural disasters and the spread to temperate regions of diseases once found only in the tropics.

The report, commissioned by the World Bank and conducted by the U.S. National Oceanic and Atmospheric Administration, estimates that last year, 5.5 percent of global gas production, or 27 percent of U.S. consumption, was lost to flaring.

“If the gas had been sold in the United States instead of being flared, the total U.S. market value would have been about 40 billion dollars,” according to the study.

Bent Svensson, manager of the World Bank’s gas flaring reduction partnership with energy producing countries and companies, decried the waste.

“Gas flaring not only harms the environment by contributing to global warming but is a huge waste of a cleaner source of energy that could be used to generate much needed electricity in poor countries around the world,” said Svensson.

“In Africa alone about 40 billion cubic metres of gas are burned every year, which if put to use could generate half of the electricity needed in that continent,” Svensson added.

His comments echoed statements made in 2002, when the lending agency and the Norwegian government launched the flaring reduction partnership. Since then, flaring has remained prevalent throughout the oil industry. Some 168 billion cubic metres of natural gas were flared off last year, up from about 146 billion cubic metres in 2002.

Producers in Russia and Nigeria appear largely to blame, accounting for roughly one-third and one-sixth, respectively, of worldwide flaring, according to the new report.

Flaring occurs at oil wells that pump up a mixture of oil and gas. The two are then separated and the gas burnt off. The World Bank has said it does not allow the practice at oil and gas projects it finances. It further urges partners to build new installations and retrofit existing ones so flaring is no longer needed.

Rather, the lender says, producers can capture, liquefy and sell the gas, turning a waste product into a source of revenue.

BP, Chevron, ENI, ExxonMobil, Marathon Oil, Hydro, Shell, Statoil, and TOTAL are among firms standing in agreement with that argument.

Many have said the bank-led partnership makes commercial sense. Yet many also have complained that conversion requires considerable investments to retrofit existing wells and to build new storage facilities, pipelines and other infrastructure to bring the captured gas to market, especially where wells stand in remote locations far from power plants or ports.

Governments have been slow to provide tax and other incentives to ease that investment, executives have said. In major flaring hotspots like Nigeria, they have added, corruption and security worries continue to hinder progress.

Nigerian officials have countered that multinational oil companies long have failed to comply with national laws that make it illegal to flare gas. In addition to environmental damage, the practice has been tied to respiratory and other health problems.

According to the latest satellite observations, 22 countries have increased gas flaring over the past 12 years. These include Azerbaijan, Chad, China, Equatorial Guinea, Ghana, Iraq, Kazakhstan, Kyrgyzstan, Mauritania, Myanmar, Oman, Philippines, Papua New Guinea, Qatar, Russia (excluding the Khanty Mansiysk region), Saudi Arabia, South Africa, Sudan, Thailand, Turkmenistan, Uzbekistan, and Yemen.

Others have decreased gas flaring between 1995 and 2006. These include Algeria, Argentina, Bolivia, Cameroon, Chile, Egypt, India, Indonesia, Libya, Nigeria, North Sea, Norway, Peru, Syria, and United Arab Emirates. Flaring also has been reduced in the North Sea and at offshore U.S. wells. Researchers were confined to surveying offshore U.S. facilities and were unable to assess the country’s overall performance.

Flaring has remained largely unchanged in Australia, Ecuador, Gabon, Iran, Kuwait, Malaysia, Russia’s Khanty-Mansiysk region, Romania, and Trinidad.