Shell reduces gas flare by 85% in 2015

Flaring volume of gas from Shell Petroleum Development Company’s (SPDC) joint-venture facilities in Nigeria was reduced by 85 percent between 2002 and 2015.

The company is the largest producer of crude oil in Nigeria with it operational tentacles spread across the Niger-Delta region. This action is a significant step towards mitigating environmental effect of crude oil production.

The flaring intensity (the amount of gas flared for every ton of oil and gas produced) was reduced by around 70 percent over the same period.

According to the company in its 2015 annual sustainable report, flaring from SPDC facilities decreased in 2015, due to divestments and improved operations at our assets. Progress was also made on several gas-gathering projects, which are now at advanced stages of completion. For example, it has installed a gas-gathering plant at the Oloma Station that is ready for final commissioning.

Gas flaring contributes to climate change, and acid rains have been linked to the activities of gas flaring. It gives rise to atmospheric contaminants, and the implications on human health are all related to the exposure of those hazardous air pollutants emitted during incomplete combustion of gas flare.

“At Shell, we are working hard to minimise flaring associated with oil and gas production,” the report said.

Precious Okolobo, media relations manager, SPDC, in response to BusinessDay regarding other steps taking so far to reduce gas flare to its present level, apart from the divestment that has taken place, said: “Since 2000, all new SPDC JV facilities have been designed to eliminate continuous flaring of associated gas.

“In parallel, a multi-year programme was implemented to install equipment for capturing associated gas from older facilities. These efforts have enabled SPDC JV to capture the gas that was previously flared and channel it to both the domestic and export (NLNG) gas markets. Key projects have been implemented as part of the drive to reduce gas flares.

“To give you an idea, SPDC JV’s Okoloma Gas Plant in Rivers State supplies feed gas to the Afam VI Power Plant that contributes between 14 percent and 20 percent power to the national grid. Similar facilities in the Obigbo, Imo River and Agbada axis feed the domestic gas network with supplies to nine industries, three in Aba and six in Port Harcourt. We also supply gas for power supply in Bayelsa State. SPDC JV continues to invest in major gas gathering that will drive further reductions in gas flaring.”

However, the planned start-up dates for two other major gas gathering projects have been delayed due to lack of adequate JV fund from the government in 2015, including the continued theft of crude oil, reinforced the need to maintain the highest standards of safety and security in Nigeria.

The report further stated: “In 2015, the SPDC, which is the operator of the SPDC joint venture (SPDC, Shell interest 30%), divested its interest in three onshore leases and a major pipeline. Our performance metrics for Nigeria this year reflect, in part, these divestments.”

In 2015 especially, the gas flared from SPDC JV operations declined by 28 percent and flaring intensity decreased by 15 percent from 2014, partly due to divestments and also to their focus on gas flare reduction. However, a lack of adequate JV funding from its government partner has delayed planned start-up dates for two other major gas-gathering projects.

According to some reports on the industry, gas flaring at oil production sites around the globe has been steadily declining for several years. However, progress has been too slow, particularly when the world is demanding strong climate action and when many oil producing countries have severe energy shortages. If the amount of gas flared globally was instead used for power generation, it could produce more electricity than the whole of Africa currently consumes.

Shell said globally, in 2015, it reduced flaring from facilities it operated from the level reported in 2014 despite an increase in flaring levels in Malaysia in line with increased oil production in 2015. While more than 90 percent of it flare occurs in Iraq, Nigeria, Malaysia and Qatar.

In 2015, the World Bank introduced a new initiative – Zero Routine Flaring by 2030 – to accelerate efforts to reduce global gas flaring. Shell demonstrated leadership by endorsing the initiative before its official launch in Washington, DC. Its endorsement was an impetus for other oil companies to join. We expect Shell to continue its progressive, proactive role to turn the initiative into action.

The bank said the Zero Routine Flaring by 2030 initiative means new oil fields will be developed with solutions that avoid flaring or venting. Existing legacy flaring must end as soon as possible and no later than 2030. In late 2015, Shell received a Global Gas Flaring Reduction Partnership Excellence Award for its achievements in Iraq and Nigeria. We look forward to continuing our partnership towards a more sustainable energy future.

But according to Nigerian National Petroleum Corporation (NNPC) in its Annual Statistical Bulletin, ASB, for 2014, Nigeria lost up to $868.8 million, about N173.76 billion to gas flaring in 2014. The ASB disclosed that oil and gas firms in the country flared 289.6 billion standard cubic feet, SCF, of gas, representing 11.47 per cent of the total gas produced in the country in that year. Using the Nigerian Gas Company, NGC’s price of $3 per 1,000 SCF of gas at the current exchange rate realities, the flaring of 289.6 billion SCF of gas translated to a loss of $868.8 million, an equivalent of N173.76 billion. Specifically, the oil and gas companies produced 2.524 trillion SCF of gas, utilised 2.235 trillion SCF and flared 289.6 billion SCF. According to the ASB, the Joint Venture, JV companies, comprising the multinational oil companies were the worst offenders in terms of quantity, as they flared 211.836 billion SCF of gas, representing 11.2 per cent of their total gas production of 2.11 trillion SCF.

Production Sharing Contract, PSC companies followed as they flared 66.12 billion SCF of gas, representing 19.95 per cent of their total gas production of 397.58 billion SCF.

Sole Risk/Independent oil companies produced 9.71 billion SCF of gas, utilised 1.85 billion SCF and flared 7.86 billion SCF, representing 424.5 per cent of the total gas produced in the subsector.

Similarly, Marginal Fields companies utilised only 6.79 billion SCF of a total of 10.57 billion SCF gas produced in the subsector, and flared 3.78 billion SCF or 55.7 per cent of their total production.