The World Bank described recent efforts made by the industry to reduce gas flaring as “a great story of success”, but annual global gas wastage equivalent to $50 billion suggests more could be done.
Companies and governments need to invest heavily in specialist gas infrastructure to help minimise wastage and support development – that was the key message delivered by Rachel Kyte, World Bank vice president for sustainable development, at a meeting of the Global Gas Flaring Reduction (GGFR) partnership on Wednesday.
Kyte said a 30% cut in flaring over the next five years, which would take the global figure below 100 billion cubic metres, represented “a realistic goal”.
“To increase flaring reduction, countries and companies need to work together to nurture viable gas markets and build adequate gas infrastructure,” said Kyte.
Flared volumes have fallen by 18.7% over the past 10 years, but in 2011 they crept higher year-on-year to 140 bcm.
So why is the figure still so high?
Russia and Nigeria have historically been the worst offenders, together accounting for 37% of global gas flaring in 2011.
It is perhaps easier to forgive the lack of progress made by Nigeria – where limited infrastructure and the rush for oil has fostered a flaring culture – than a gas-producing giant such as Russia which, as well as refusing to sign up to the GGFR, has also attempted to downplay the issue by providing unreliable data. Russia’s federal state statistics service reported flared volumes of 15.7 bcm in 2011 – less than half the GGFR’s equivalent figure of 37.4 bcm.
However, it’s the race for shale oil that is particularly worrying from an associated petroleum gas perspective.
Flaring in the US rose by just over 50% from 2010 to 2011, to 7.1 bcm, largely as a result of the inclusion of data from North Dakota, home to the liquids-rich Bakken Basin.
Despite assurances from the state minerals department that North Dakota will not continue to flare at its current level, the number of undeveloped shale plays across North America means it could soon be another state’s turn to take a seat on the naughty step.
Elsewhere, high oil prices may mean other countries decide to favour oil over gas production. China’s supposedly vast shale reserves, for example, could lead to a sizeable uptick in flaring, while Brazilian pre-salt oil could cloud the picture still further.
Such an uncertain future for oil and gas production, therefore, suggests the World Bank’s congratulatory tone is somewhat premature, and that the real challenge remains unmet.