Royal Dutch Shell Plc  .com Rotating Header Image

Gulf-Times (QATAR): Higher gas prices, carbon concerns could cut flaring

Published: Sunday, 15 July, 2007, 02:35 AM Doha Time
 
LONDON: For decades, billions of dollars worth of natural gas have gone up in smoke, sending tonnes of carbon dioxide into the atmosphere, but dwindling energy supplies and rising gas prices could start to make a difference.

Historically, producers flared gas found in association with oil if it was too difficult and too costly to bring to market.

Concerns carbon emissions are causing global warming have added urgency to international efforts to end the practice.

But analysts say harsh economic reality is the factor that really concentrates minds.

“Until you start to put real value into gas prices, you might as well flare. That has been the reality until recently. Now gas prices are getting to the point where it’s worth collecting,” said Jonathan Stern of the Oxford Institute for Energy Studies.

In spite of the World Bank-backed Global Gas Flaring Reduction initiative (GGFR), launched in 2002, the amount of gas flared remained around stable over the 12 years from 1995 to 2006, inclusive, researchers found.

According to figures compiled by the US National Oceanic and Atmospheric Administration (NOOA), with the help of GGFR funding, it has stood at between 150bn cu m and 170bn cu m.

The flaring estimate of 168bn cu m for 2006 equates to 27% of the US’ natural gas consumption with a potential market value of $69bn, NOOA said.

Nigeria was long considered the worst culprit, but new research spearheaded by NOOA, which has analysed satellite data, rather than relying on figures reported by governments believes Russia has been flaring by far the greatest amount.

Both nations are in the throes of legislation to end the practice.

President Vladimir Putin asked the government earlier this year to toughen rules on producers that burn gas and withdraw their licences if necessary to protect the environment and save more gas for Russian industries.

Nigeria has a strategy to end gas flaring by 2008 and has been keen to promote projects, such as liquefied natural gas (LNG) plants that can cool gas situated in remote places to liquid form so it can be shipped anywhere in the world.

But many doubt Nigeria will meet its targets. The country’s biggest oil operator Royal Dutch Shell has said it would miss the 2008 deadline because the government had not provided funding for a joint venture project that was installing gas-gathering facilities.

In any case, analysts say there are problems governments cannot sweep aside and a certain amount of gas will always be flared because of the impracticality of getting it to customers or for safety reasons.

But diminishing oil and gas supplies as production in big fields falls and rising prices could cut that to the minimum.

“What is happening with gas prices means that might happen anyway,” Stern said of the Russian legislative push for a reductive in flaring. “What you will see is a massive reduction in flared gas.”

Daniel Simmons, gas specialist at the International Energy Agency (IEA) in Paris, agreed rising prices were very significant, notably in Russia, where the company that can most benefit is Gazprom.

Domestic gas prices of no more than $60 per thousand cubic metres (tcm), according to information from the IEA’s 2007 Natural Gas Market Review, provide little incentive for creating the infrastructure needed to bring often isolated gas to the consumer.
However, export prices, from which only Gazprom can benefit are more than five times that at $320 per tcm.

“Gazprom might now look to reduce flaring as a short-term solution to increase gas supply,” Simmons said. “The all-in economics are looking good for that, but only Gazprom is allowed to see the whole picture.”

Gazprom’s monopoly control over transportation, gas processing and access to the export market, has made any other firm that might consider building infrastructure to capture stranded gas extremely reluctant.

“There is not much confidence in making large investments that would have a long-term payback period,” Simmons said. – Reuters

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=161063&version=1&template_id=48&parent_id=28

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Gulf-Times (QATAR): Higher gas prices, carbon concerns could cut flaring”

Leave a Comment

%d bloggers like this: