11

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

22

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

33

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

44

““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

55

““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

66

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

77

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

88

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

99

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

1010

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

1111

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

1212

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

1313

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.

1414

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

1515

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

1616

ResourcesResources www.worldbank.org/ggfr

1717

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

1818

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.

1919

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

2121

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

2222

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