Global Gas Flaring Reduction PublicPrivate Partnership

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Global Gas Flaring Reduction Public-Private
Partnership

• Presentation to
• API Benchmarking Group
• 20th May 2004

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Current Public and Private GGFR Partners

• Countries/NOCs Oil and gas industry
• Algeria (Sonatrach) BP
• Angola ChevronTexaco
• Cameroon (SNH) ENI
• Canada ExxonMobil
• Chad Norsk Hydro
• Ecuador Shell
• Equatorial Guinea Statoil
• Indonesia TOTAL
• Nigeria
  Halliburton/Granherne
• Norway
• USA
• Multilateral Organizations NGOs
• The World Bank Group Enda-TM

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GGFR aspiration
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Global Venting and Flaring Reduction Voluntary
Standard

• Developed in close consultation with GGFR
  Partnership
• Provides guidance on how to achieve reductions in
  the venting and flaring of associated gas
  worldwide
• Has the intent to go beyond prevailing venting
  and flaring practices that would otherwise occur
  in many countries
• Encourages integrated approach including
  commercialization, regulations, standard, carbon
  credits
• Designed to achieve significant reductions in the
  medium term

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Key Concepts and Spirit of the Standard

• The standard is framed as
• Voluntary
• Performance based rather than prescriptive
• Guidance on mechanisms to reduce gas flaring and
  venting
• Initially targets the most significant sources
• Relies on Partner integration into existing
  policies, processes and systems
• Aims to achieve global applicability and impact
• Balances ambitious reductions with realistic
  constraints

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Key Elements of the Standard

• Initial Goal with focus on large sources that can
  make a significant difference early
• Ultimate Goal for longer term continuous
  improvement
• Implementation planning through development of
• Generally applicable flaring reduction process
  and tool box
• Associated Gas Recovery Plan
• Country Implementation Plan
• Recommended Timeline
• Recommendations for measurement, public reporting
  and verification
• Implementation and administration roles

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Initial Goal for Venting

• No continuous venting of associated gas, unless
  there are no feasible alternatives
• Consider best practice and new technologies
• Initially excludes smaller venting sources
  (covered by Ultimate Goal), e.g.
• Gas-operated pneumatics
• Gas blanketing for storage tanks
• Technical, environmental and safety safeguards

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Initial Goal for Flaring

• No continuous production flaring of associated
  gas, unless there are no feasible alternatives
• Implementation is based on stakeholder engagement
  process and tool box
• Initially excludes small flaring sources (covered
  by Ultimate Goal)

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Process to Determine Feasibility of Flaring
Alternatives

• Cooperative approach involving stakeholder
  engagement
• Potential expansion of the project boundaries
  to include other fields / operations /
  infrastructure / customers in region
• Consideration of range of options to enhance the
  feasibility of associated gas utilization (tool
  box)

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Ultimate Goal

• Minimize continuous and non-continuous venting
  and flaring of associated gas through a periodic
  prioritization of the remaining venting and
  flaring sources to be addressed next
• Associated gas flaring activities not initially
  prioritized
• Alternative gas management practices initially
  deemed not feasible
• Sources of small continuous flaring and venting
  (Appendix A).

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Public Reporting

• Public Reporting by Companies
• Report to Country Governments
• Flaring and venting volumes, and associated GHG
  emissions
• On both an operational control and equity share
  basis
• Preferably via common reporting tool
• Report via annual disclosure
• Public Reporting by Governments
• Facilitate reporting and gather on country basis
• Recommend common reporting tool
• Data should be made publicly available

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Next Steps Oil Companies

• Communicate the Standard throughout their
  organization
• Encourage business units and joint ventures to
  participate in cooperative Stakeholder engagement
  process
• Align existing business systems with the Standard
• Prioritize venting and flaring sources and
  develop Associated Gas Recovery Plans in
  consultation with key Stakeholders
• Periodically prioritize the remaining venting and
  flaring sources to be addressed next

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Background Slides

• Flaring Venting Standard details

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GGFR Global Deliverables
Consultations
Data

• Commercialization

Regulations
Reduce flaring and venting of associated gas
Standards
Carbon Credits
Best practice
Dissemination
Identified actions for implementation
Workshops Reports
Strong high level support
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Key GGFR Success Factors

• A significant representation of world gas flaring
  in the Partnership
• Target 70-80 coverage of global flaring
• A global standard for flaring and venting
• Target Standard endorsed and implemented
  throughout the Partnership and beyond
• Producer driven associated gas recovery
• Target Completed prioritization of venting and
  flaring sources by Producers, and Associated Gas
  Recovery Plans for those including reduction
  forecast
• Country support to improve framework for
  associated gas utilization
• Target Completed Country Implementation Plans by
  GGFR client Countries
• Demonstration projects facilitated by GGFR
• Target demonstration projects in all GGFR client
  countries

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Objectives of the Global Venting and Flaring
Reduction Voluntary Standard

• Provide industry and governments with common
  framework for venting and flaring reduction
  activities
• Encourage consultation and cooperation between
  industry and governments
• On global and local scale, significantly reduce
  venting and flaring

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Program timeline and consultations
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Process to Determine Feasibility of Flaring
Alternatives
Investigate alternatives for utilization of
associated gas from the production facility.
Modify the economic approach or improve the
incentives to enhance the viability of
alternatives to utilize associated gas.
Broaden the project boundary by engaging in
discussions with other producers, consumers,
and/or infrastructure owners.
Is the most attractive alternative to eliminate
gas flaring feasible?
Agreement on feasibility of project to utilize
associated gas and development of plan for its
utilization.
Yes
No
Agreement that project is not feasible.
Government flaring approvals, consistent with
existing regulations and agreements
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Toolbox for stakeholder discussions

• Gas Producers
• Integrate economic, environmental, social
  benefits and/or costs into incremental econs
• Integrated economics
• Expand project boundaries
• Trade gas between fields and producers
• Source gas deficient fields
• Transfer best practices and technology
• Carbon credits

• Governments
• Contractual rights to associated gas
• Third party access to infrastructure
• Infrastructure cost recovery
• Profit sharing mechanisms
• Provision for gas market development
• Tax and royalty incentives
• Gas pricing to reflect value to economy
• National gas market strategy

• Consumers
• Flexible long-term contracts
• Associated gas pricing based on competitive fuels
• Take or pay contracts
• Payment guarantee for associated gas delivery

• Gas Infrastructure Owners
• Capital investment and operating cost
  requirements
• Use associated gas supply to fulfill existing
  contract commitments
• Third party ownership of infrastructure
• Infrastructure expansion projects
• Tariffs to recover costs and fee for 3rd party
  gas transport

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Implementation Planning

• Producer - leading the Associated Gas Recovery
  Plan (AGRP) and consultation
• AGRP addresses the approach and activities to
  reduce venting and flaring
• Government leading the Country Implementation
  Plan (CIP) and consultation
• CIP addresses the barriers to associated gas
  utilization
• Plans are inter-linked through the consultation
  process

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Integrated Approach to Flare Reduction
Global Venting and Flaring Reduction Voluntary
Standard
Country Implementation Plan
Standards
Regulations
Flaring and Venting Reduction Activities
Commercialization
Carbon Credits
Associated Gas Recovery Plan
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Recommended Timing

• Intent of the recommended timing
• Effect change consistent with GGFR Goals
• New projects implement at conceptual design
  stage
• Existing Projects
• Initial focus on most significant venting and
  flaring volumes
• Partners make a good faith effort towards meeting
  timing targets
• Future Partners can utilize timeframe with
  adjusted starting date

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(No Transcript)
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Partnership Endorsement

• Endorsement of the Global Gas Venting and
  Flaring Reduction Voluntary Standard (the
  Standard) at the GGFR Steering Committee
  meeting of 23 March 2004 means that the GGFR
  Partnership and its individual Partners
• endorse the principles set forth in the Standard,
  as presented at the GGFR Steering Committee
  meeting,
• with the intent to work toward the utilization of
  associated gas and the reduction of venting and
  flaring in cooperation with the Partners of GGFR.

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Public Announcement

• Press release, fact sheet, talking points and
  communication program sent out for comments and
  will be final by May 4, 2004
• Public announcement at the 2nd International
  Conference on Gas Flaring Reduction in Algiers,
  May 10-11, 2004
• Communication program includes global, regional
  and national organizations, conferences and
  publications
• Partner input and active involvement in roll-out
  essential for global implementation

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Next Steps Country Governments

• Communicate the Standard to key stakeholders in
  the country
• Promote and participate in cooperative
  Stakeholder engagement process
• Align existing policies and guidelines with the
  voluntary Standard
• Develop Country Implementation Plan in
  consultation with key stakeholders
• Periodically evaluate the effectiveness of the
  voluntary standard and the need for additional
  steps