Stakeholders Move To End Gas Flaring

By Phillip Oladunjoye,

Lagos

The recent pronouncement by Shell that it would focus its future investment in the country on gas should be welcome development.

Industry observers are of the opinion that the move would also assist to reduce the volume of gas being flared in the country.

The managing director of Shell’s joint venture in Nigeria, Osagie Okunbor, said recently that the oil major would focus its future investments in the country on natural gas for domestic consumption and export.

“Our strategy is to invest a lot more in gas, for domestic consumption and export. We want to grow our deep water and constrain our onshore oil production,” he said.

Gas flaring has been an issue that has bedeviled the Nigerian oil industry, which successive government could not muster enough political will to stop. Several dates were set in the past to end gas flaring but to no avail.

The recent commitment by senior government officials from several oil-producing countries and chief executives from major oil companies to put an end to gas flaring by 2030 might prove to be the necessary move that would see an end to gas being flared.

Chief executives from major oil companies had joined senior government officials from several oil-producing countries in Washington to commit, for the first time, to ending the practice of routine gas flaring at oil production sites by 2030 at the latest. They made the commitment on the sideline of the IMF/World Group Spring Meetings in Washington.

Though Nigeria was absent on the list of participating countries, but those who endorsed the move are Norway, Cameroon, Russian Federation, Kazakhstan, Gabon, Uzbekistan. Others are Republic of Congo, Angola and France.

Daily Independent gathered that the “Zero Routine Flaring by 2030” initiative – already endorsed by nine countries, 10 oil companies and six development institutions – was launched by United Nations Secretary-General, Ban Ki-moon and World Bank Group President, Jim Yong Kim.

They were joined by Royal Dutch Shell Chairman, Jorma Ollila; Statoil CEO, Eldar Sætre; Norwegian Foreign Minister, Børge Brende; Gabonese Minister of Petroleum, Etienne Dieudonne Ngoubou; and several other senior government and corporate officials and representatives of international development banks.

According to a report on the new development, the endorsers collectively represent more than 40 per cent of global gas flaring, noting that every year, around 140 billion cubic meters of natural gas produced together with oil is wastefully burned or “flared” at thousands of oil fields around the world. This, it said, results in more than 300 million tons of carbondioxide being emitted into the atmosphere – equivalent to emissions from approximately 77 million cars.

It noted that if this amount of associated gas were used for power generation, it could provide more electricity (750bn kWh) than the entire African continent is consuming today, but lamented that currently, the gas is flared for a variety of technical, regulatory and economic reasons, or because its use is not given high priority.

According to World Bank President, Jim Yong Kim, “Gas flaring is a visual reminder that we are wastefully sending carbondioxide into the atmosphere. “We can do something about this. Together, we can take concrete action to end flaring and to use this valuable natural resource to light the darkness for those without electricity.”

The report also noted that by endorsing the initiative, governments, oil companies and developments institutions recognise that routine gas flaring is unsustainable from a resource management and environmental perspective and agree to cooperate to eliminate ongoing routine flaring as soon as possible and not later than 2030.

Part of the commitment, according to the report, include that those concerned will publicly report their flaring and progress towards the target on an annual basis; while routine flaring will not take place in new oil fields developments. Governments, it said, will also provide an operating environment conducive to investments and to the development of functioning energy markets.

UN Secretary-General, Ban Ki-moon, said: “As we head towards the adoption of a meaningful new international climate agreement in Paris in December, these countries and companies are demonstrating real climate action. Reducing gas flaring can make a significant contribution towards mitigating climate change. I appeal to all oil-producing countries and companies to join this important initiative.”

Meanwhile, prior to the latest development, industry analysts had opined that Nigeria flares 17.2 billion m3 of natural gas per year in conjunction with the exploration of crude oil in the Niger Delta, noting that this high level of gas flaring is equal to approximately one quarter of the current power consumption of the African continent.

They lamented that the Nigerian government has not enforced environmental regulations effectively because of the overlapping and conflicting jurisdiction of separate governmental agencies governing petroleum and the environment as well as because of non-transparent governance mechanisms.

They argued that neither the Federal Environmental Protection Agency (FEPA) nor the Department of Petroleum Resources (DPR) has implemented anti-flaring policies for natural gas waste from oil production, nor have they monitored the emissions to ensure compliance. The Federal Environmental Protection Agency (FEPA) has had the authority to issue standards for water, air and land pollution and has had the authority to make regulations for oil industry. However, in some cases their regulations conflict with the Department of Petroleum Resources (DPR)’s regulations started in 1991 for oil exploration.

Analysts believed that the Nigerian government’s main interest in the oil industry is to maximize its monetary profits from oil production, noting that oil companies find it more economically expedient to flare the natural gas and pay the insignificant fine than to re-inject the gas back into the oil wells.

Some of the hazards of gas flaring according to experts include environmental implications such as climate change; acid rain, and contamination of the environment.

Other implications, they argued include haematological effects on the people living in the areas where gas is being flared.

They also argued that aside from the health and environmental consequences of gas flaring, the country also loses billions of dollars worth of gas, which is literally burnt off daily in the atmosphere, adding that much of this can be converted for domestic use and for electricity generation. By so doing, they noted that, the level of electricity generation in the country could be raised to meet national demand. They lamented that Nigeria has recorded a huge revenue loss due to gas flaring and oil spillage, noting that though more than 65 % of governmental revenue is from oil, it is estimated that about $2.5 billion is lost annually through gas flaring in government revenues.

On what should be done to enforce compliance, a Journal on Environment Pollution and Human Health noted that the difficulties faced by local communities from gas flares are a sufficient justification for ending gas flaring practice, recommending that government should as a matter of urgency, make stringent laws and take drastic action against defaulting companies not just by payment of fines. It said fines for defaulting companies should be so exorbitant so as to deter them, adding that the gas being flared could also be processed and produced into cooking/domestic gas.