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Global Gas Flaring Reduction Global Gas Flaring Reduction
Partnership (GGFR)Partnership (GGFR)A Sector Specific CDM Capacity A Sector Specific CDM Capacity
Building EffortBuilding Effort
Host Country CommitteeAnnual Meeting, Cologne
April 30th, 2007
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GGFR and CDM/JI GGFR and CDM/JI
Gas flaring and venting, what is the issue?Gas flaring and venting, what is the issue? Why GGFR and carbon finance?Why GGFR and carbon finance? Capacity building effortsCapacity building efforts Overall flaring reduction demonstration projectsOverall flaring reduction demonstration projects Flaring activity to expect in the futureFlaring activity to expect in the future
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Where gas is flared?Where gas is flared?
Europe: 3 bcm
Central andSouth America:10 bcm
North America:5-7 bcm
Middle East: 30 bcm
CIS: 15-60 bcm
Asia: 7-20 bcmAfrica: > 45 bcm
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““Hard” causes:Hard” causes:
Risks of gas re-injection in oil reservoirRisks of gas re-injection in oil reservoir
Distance from significant gas markets Distance from significant gas markets
(“stranded gas”)(“stranded gas”)
Reliability of supply from associated gasReliability of supply from associated gas
Gas Infrastructure constraints Gas Infrastructure constraints
Lack of Lack of
or access to itor access to it
Why is gas flared ?Why is gas flared ?Some typical barriersSome typical barriers
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““Soft” causes:Soft” causes: Limited institutional, legal and regulatory framework for Limited institutional, legal and regulatory framework for
gas, including associated gas: gas terms (or absence of) gas, including associated gas: gas terms (or absence of)
in existing oil development agreementsin existing oil development agreements
Supporting fiscal terms (gas price, equity share, tax Supporting fiscal terms (gas price, equity share, tax
structure, etc)structure, etc)
Underdeveloped domestic market for gas and gas Underdeveloped domestic market for gas and gas
products (LPG, CNG, fuel methanol, power, etc.) and gas products (LPG, CNG, fuel methanol, power, etc.) and gas
product pricingproduct pricing
Funding constraints and need for coordinated actions by Funding constraints and need for coordinated actions by
multiple stakeholdersmultiple stakeholders
Why is gas flared?Why is gas flared?Some typical barriersSome typical barriers
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Each mEach m33 of gas flared is a waste of resources, and of gas flared is a waste of resources, and generates nearly 2 kg of COgenerates nearly 2 kg of CO22 in atmosphere in atmosphere
If vented, a mIf vented, a m33 of methane is 5 times more damaging of methane is 5 times more damaging than when it is flaredthan when it is flared
In many countries, but not all, venting is prohibited In many countries, but not all, venting is prohibited mainly for safety reasonsmainly for safety reasons
Gas Flaring and Venting have to be reduced: It wastes resources, prevent
gas development, and harms the atmosphere
Why is gas flared?Why is gas flared?
…impact on the environment…impact on the environment
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How much gas is flared ?How much gas is flared ? • GGFR estimates that global flaring GGFR estimates that global flaring
is around is around 150 to 200 bcm 150 to 200 bcm or or >>400 MtCO2e400 MtCO2e per yearper year
• In perspective, all annual ER from In perspective, all annual ER from CDM/JI projects equal 348 MtCO2 CDM/JI projects equal 348 MtCO2
• Major areas are: Russia, Africa Major areas are: Russia, Africa and Middle Eastand Middle East
• Flaring in Africa alone could be Flaring in Africa alone could be used to produce 50% of current used to produce 50% of current power consumption of the power consumption of the continentcontinent
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Reported flaring levels : 2004 & 2005Reported flaring levels : 2004 & 2005
0
5
10
15
20
25
30
Niger
ia
Russia
(tota
l)Ira
nIra
q
Angola
Venez
uela
Qatar
Alger
iaUSA
Kuwait
Indones
ia
Kazak
hstan
Equatoria
l Guin
ea
Libya
Brazil
CongoUK
Mex
ico
Gabon
Camer
oon
bc
m
2004 2005
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GGFR Public and Private Partners GGFR Public and Private Partners
Countries/NOCsCountries/NOCs IOCsIOCsAlgeria (Sonatrach)Algeria (Sonatrach) BP BPAngolaAngola ChevronTexaco ChevronTexacoCameroon (SNH)Cameroon (SNH) ENI ENIChadChad ExxonMobil ExxonMobilEcuadorEcuador Marathon Oil Marathon OilEquatorial GuineaEquatorial Guinea Norsk Hydro Norsk HydroIndonesiaIndonesia Shell ShellKazakhstan Kazakhstan Statoil StatoilKhanty Mansiysk (Russia) Khanty Mansiysk (Russia) Total TotalNigeria Nigeria QatarQatar (as of 2007) (as of 2007)
DonorsDonors Multilateral OrganizationsMultilateral OrganizationsCanadaCanada The World Bank The World BankEuropean UnionEuropean Union (as of 2007) (as of 2007) OPEC SecretariatOPEC SecretariatFranceFrance (as of 2007) (as of 2007) NorwayNorwayUSAUSA
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Why?Why?
To help initiation of DNAs in GGFR partner countries (Angola, To help initiation of DNAs in GGFR partner countries (Angola,
Nigeria, Indonesia, Algeria, and Russia)Nigeria, Indonesia, Algeria, and Russia)
To better understand how flaring/venting reduction projects To better understand how flaring/venting reduction projects
could earn carbon credits and achieve resultscould earn carbon credits and achieve results
Chance to make a difference: projects offer large, real, Chance to make a difference: projects offer large, real,
measurable ERsmeasurable ERs
Industry engaged but not strongly linked with emerging Industry engaged but not strongly linked with emerging
processesprocesses
Few projects back then (and still now, 17/1700)Few projects back then (and still now, 17/1700)
Few AG utilization methodologies approved (2/80)Few AG utilization methodologies approved (2/80)
SD benefits: from small to large scale projectsSD benefits: from small to large scale projects
Carbon FinanceCarbon FinanceCapacity Building – Reason for actionCapacity Building – Reason for action
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Carbon FinanceCarbon FinanceCapacity Building - BeginningsCapacity Building - Beginnings
Started in 2003 by request from Partners to:Started in 2003 by request from Partners to: Build understandingBuild understanding within National Oil Companies (NOC) and within National Oil Companies (NOC) and
International Oil Companies (IOC), and other relevant stakeholdersInternational Oil Companies (IOC), and other relevant stakeholders
Examine prospectsExamine prospects and issues surrounding carbon credits from flare and issues surrounding carbon credits from flare
reduction activitiesreduction activities
Collect expert input for elaborating carbon credits Collect expert input for elaborating carbon credits flare reduction flare reduction
guidebooksguidebooks and for selection of demonstration projects (Reports 2 & 6) and for selection of demonstration projects (Reports 2 & 6)
Begin capacity building of GGFR members on CF and their Begin capacity building of GGFR members on CF and their potential potential
value in promotingvalue in promoting flare reduction flare reduction
www.worldbank.org/ggfr
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Where GGFR intervened and how?Where GGFR intervened and how?
Validation
Project Identification (PIN)
Executive Board (EB)
Host country approval
Designated National Authority (DNA)
Operational entities (OE)
Issue CERs
Monitoring
Verification & certification
Registration
Project screening
Project Design Document (PDD)
GGFR intervention
Validation
Project Identification (PIN)
Executive Board (EB)
Host country approval
Designated National Authority (DNA)
Operational entities (OE)
Issue CERs
Monitoring
Verification & certification
Registration
Project screening
Project Design Document (PDD)
GGFR intervention
• Early stages of Early stages of project cycleproject cycle
• Supports project Supports project
proponents & proponents &
host countryhost country
• Not a project Not a project
participantparticipant
• Leveraged Leveraged
expertise from expertise from
World Bank CFUWorld Bank CFU
• Has offered links Has offered links
to WB lending to WB lending
programsprograms
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Carbon FinanceCarbon Finance Capacity Building - ApproachCapacity Building - Approach
Establish a Establish a forum for exchange of viewsforum for exchange of views, ideas and experiences , ideas and experiences
on gas flaring reduction CDM/JI projects;on gas flaring reduction CDM/JI projects;
Screen potential flare reduction projectsScreen potential flare reduction projects by country to select a by country to select a
pilot (demonstration) project; pilot (demonstration) project;
Foster and Foster and establish links and cooperationestablish links and cooperation between oil & gas between oil & gas
stakeholders and DNAs;stakeholders and DNAs;
Support development flaring reduction methodologies (3 NMs Support development flaring reduction methodologies (3 NMs
drafted)drafted)
Test new issues such as: ownership and policy development to Test new issues such as: ownership and policy development to
remove barriers, national circumstances, transaction costs, and remove barriers, national circumstances, transaction costs, and
additionality.additionality.
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GGFR ProgramGGFR Program
Flaring and Venting ReductionActivities
Commercialization
Regulations
Carbon Credits
Standard
Country Deliverables andDemo projects
Sustainable Gas Flaring Reduction
Phase I
Phase II
2006
2007Focus on major flaring countries and in-country deliverables
2003
2010
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Global Deliverables In-country Deliverables Guidebook Kyoto Mechanisms for
Flaring Reduction (Report # 2) Gas Flaring Reduction Project
Framework for CDM (Report # 6) CDM Project Risk Analysis Tool Workbook for Small-Scale Utilization of
Associated Gas
Algeria Carbon Strategy for Sonotrach (Algeria) DNA Report on large-scale criteria and institutional
issues: Selection of priorities and criteria for CDM in Algeria
Angola Guidebook and Operations Manual for Angola’s
Designated National Authority for the CDMIndonesia CDM Guidebook for the Oil & Gas Sector in Indonesia Indonesia Associated Gas Survey – Screening &
Economic Analysis Report Nigeria CDM Project Document Electronic Library for PIC-CDM
Nigeria Guide: Carbon Credit Development for Flare
Reduction Projects
ALL (Angola, Algeria, Indonesia, Ecuador, Nigeria, Russia)
Training Workshops (16 combined) in specialized CDM-JI topics
Carbon FinanceCarbon Finance Capacity Building - OutputsCapacity Building - Outputs
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ResourcesResources www.worldbank.org/ggfr
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Carbon FinanceCarbon FinanceCapacity Building – Demonstration ProjectsCapacity Building – Demonstration Projects
Country Company Project Project TypeCER/
EUR/y (k)CER/EUR <
2012 (k) Status Method
Angola Chevron Angola LNG Gas to LNG
14,300 42,900 Dropped AM0009+
Argelia Sonatrach TFT Gas to pipeline
200
1,000 In progress AM0009
Indonesia Mepco Kaji Gas to LPG (power)
123
1,034 In validation AM0009
Nigeria Eni Kwale Gas to power 1,513
10,540 Registered AM0009
Nigeria Shell Afam Gas to power
740
3,700 Meth submitted NM
Nigeria Eni ObOb Gas to reinjection 2,000
10,000 On hold NM
RussiaRegionenergogas (JI) N. Danilovsk Gas to power
162
813 In determination JI
19,038
69,987
Seven demo projects initiated (1 registered, 1 in validation) One recently submitted new methodology to UNFCCC MP (Afam) One challenging new methodologies in progress (gas to reinjection) One JI project in Russia
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Expectations & ChallengesExpectations & Challenges
Midterm Maintaining momentum, as window of opportunity (1st Maintaining momentum, as window of opportunity (1st
commitment period) is closingcommitment period) is closing Sustaining capacity generated in DNAs (linking these with Sustaining capacity generated in DNAs (linking these with
WB Carbon Assist program)WB Carbon Assist program) Host countries have capacity and political motivation to Host countries have capacity and political motivation to
approve CDM/JI flaring reduction projectsapprove CDM/JI flaring reduction projects Effective sharing of learning and best practices inside and Effective sharing of learning and best practices inside and
out of GGFR partnershipout of GGFR partnership
Long term Delivering real sustainable development effects through Delivering real sustainable development effects through
downstream provision of clean, cheap and reliable energy downstream provision of clean, cheap and reliable energy supply (in addition to health, local environment and supply (in addition to health, local environment and economic development benefits)economic development benefits)
Mobilizing substantial technological, financial and political Mobilizing substantial technological, financial and political resources from the IOCs.resources from the IOCs.
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Thank you!Thank you!Further information: Further information:
fsucre@worldbank.orgfsucre@worldbank.org
www.worldbank.org/ggfrwww.worldbank.org/ggfr
GGFR’s Vision is… GGFR’s Vision is…
2020
Back UpBack Up
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Other Gas Flaring CDM/JI Projects in UNFCCC Other Gas Flaring CDM/JI Projects in UNFCCC RegistryRegistry
Country Company Project Project TypeCER/
EUR/y (k)CER/EUR < 2012 (k) Status Method
India ONGC Ahmedabad Asset Gas to reinjection+power 13
156
In validation AM0009
India ONGC Hazira Gas Processing Complex
Gas to multiple solutions 74
466
In validation AM0009
India ONGC Cauvery Asset Gas to pipeline 33
211
In validation AM0009
India ONGC Mumbai High Gas to LPG and Nafta 201
1,274
In validation AM0009
India ONGC Ankleshwar Asset Gas to LPG 137
865
In validation AM0009
India ONGC Assam Asset Gas to pipeline 21
134
In validation AM0009
India ONGC Rajamundry Asset Gas to pipeline 27
170
In validation AM0009
India ONGC Neelam and Heera (NH) Asset Gas to LPG and Nafta 109
693
In validation AM0009
India ONGC Uran Plant Gas to LPG and Nafta 96
610
In validation AM0009
India ONGC Mehsana Asset Gas to reinjection 17
106
In validation AM0009
Lithuania Minijos Nafta UAB (Minoil)
Minoil Gas to LPG (vehicle + power) 30
148
Predetermination AM0009
Nigeria Pan Ocean Ovade Ogharefe Gas Gas to pipeline 2,532
14,505
Validated AM0009
Qatar Qatar Petroleum Al-Shaheed Oil Field Gas Recovery
Gas to power+LPG 1,457
10,199
Validated AM0009
Vietnam Petrovietnam Rang Dong Gas to power+LPG 677
6,910
Registered AM0009
Russia Yukon Gas Flare Reduction in Kondisky District
Gas to LPG+LNG+power 85
428
Determination AM0009
5,509 36,875
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Back UpBack Up CDM JI CDM/JI
Type of Project # 2012 kCERs # 2012 kERUs #< 2012
kCERs$EURs%
Projects% ER <
2012
Annual ER/#
Project
Afforestation 0 - 1 82 1 82 0.06% 0.00% 82
Others 0 - 0 0 0 - 0.00% 0.00%
EE households 4 510 1 70 5 580 0.29% 0.03% 116
PFCs 1 542 0 0 1 542 0.06% 0.03% 542
EE service 11 572 0 0 11 572 0.64% 0.03% 52
Energy distribution 2 684 17 10,177 19 10,861 1.10% 0.60% 572
Tidal 1 1,104 0 - 1 1,104 0.06% 0.06% 1,104
Solar 7 1,151 0 - 7 1,151 0.41% 0.06% 164
Transport 2 1,785 0 - 2 1,785 0.12% 0.10% 892
Reforestation 5 3,882 0 - 5 3,882 0.29% 0.22% 776
EE supply side 15 7,401 9 1,531 24 8,932 1.39% 0.50% 372
Geothermal 9 11,277 4 328 13 11,605 0.75% 0.65% 893
Cement 29 27,548 0 - 29 27,548 1.68% 1.53% 950
Biogas 89 27,964 4 433 93 28,397 5.39% 1.58% 305
Agriculture 159 37,952 0 - 159 37,952 9.22% 2.11% 239
Fugitive (flaring reduction) 17 77,213 3 153 20 77,366 1.16% 4.30% 3,868
Coal bed/mine methane 26 93,927 8 1,458 34 95,385 1.97% 5.31% 2,805
EE industry 162 108,403 11 1,474 173 109,878 10.03% 6.11% 635
Wind 196 110,417 22 1,590 218 112,007 12.64% 6.23% 514
Fossil fuel switch 62 117,085 8 2,368 70 119,453 4.06% 6.65% 1,706
Hydro 273 118,184 27 1,378 300 119,562 17.39% 6.65% 399
Biomass energy 347 136,857 17 2,502 364 139,359 21.10% 7.75% 383
Landfill gas 117 162,529 19 1,688 136 164,218 7.88% 9.14% 1,207
N2O 19 215,763 3 1,798 22 217,561 1.28% 12.10% 9,889
HFCs 18 507,714 0 - 18 507,714 1.04% 28.25% 28,206
Total 1571 1770464 154 27031 1725 1,797,495 100% 100% 1,042