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Global Economics

Oil Firms Waste $40B per Year in Gas

Up to 170 billion cubic meters of natural gas is burned off by the world's oil producers every year with enormous economic and environmental costs

In spite of all the recent talk about climate change, the Kyoto Protocol and tight energy resources in Europe, the oil industry continues to burn huge volumes of natural gas that rises from oil deposits on land or under the sea. Over 20 countries have increased the practice of "flaring" in the last 12 years, and some burn far more gas on drilling platforms and in oil fields than they've admitted, officially, so far.

America's weather-data department, the National Oceanic & Atmospheric Administration (NOAA), came to this conclusion in a new report based on American satellite data. The study was financed by the World Bank, which five years ago started a global initiative to change the long-established practice of flaring gas and to capture it for energy use instead.

According to the NOAA, oil producers torch from 150 to 170 billion cubic meters (5,200 to 6,000 billion cubic feet) of natural gas per year. This amounts to more than five percent of global natural-gas production. "If the gas were sold in the United States," write the authors, "it would have a market value of around $40 billion." Bent Svensson, head of the Global Gas Flaring Reduction Initiative at the World Bank, emphasizes the sheer volume of waste: "If we just took the 40 billion cubic meters of gas that are burned off in Africa every year, and burned them instead in modern energy plants, we could double the energy supply in sub-Saharan Africa."

Gas flaring also harms the climate. The report says that flaring produces around 400 million tons of carbon dioxide per year -- about half of Germany's CO2 output. "It amounts to 13 percent of all greenhouse gases that industrial countries need to cut by 2012, according to the Kyoto Protocol," says Svensson.

There are also oil fields where gas is simply discharged straight into the atmosphere, which is even worse for the climate, because methane -- the main component in the hydrocarbon mixture known as "natural gas" -- has 20 times the greenhouse-gas or "warming" potential of CO2.

Satellite photos and algorithms

To build a world atlas of oil-industry wasted emissions, the NOAA used American satellite data from the years 1995 to 2006. Cameras shot wide photos of the earth's surface from an altitude of 700 km (435 miles), in the spectrum of both visible and infrared light. Analysts built their numbers by studying only night photographs from a cloudless sky.

Since oil production zones lie mainly outside populated areas, gas flares appear in the high-resolution photos as clear "point sources," or individual points which can help mathematicians estimate volumes and flows. NOAA researchers have developed special algorithms to derive volumes of natural gas from the intensities of the flames.

Russia's oil industry alone burns around 50 billion cubic meters of gas, according to these estimates -- one third of the world's total. That number is several times the 15 billion cubic meters reported by Russia three years ago. Countries like Kazakhstan, Saudi Arabia and China also seem to have underestimated their contributions and appear on the satellite images as serious contaminators of the atmosphere. Russia and Kazakhastan top the study's list, along with Iraq, of oil-producing countries where gas flaring has increased between 1995 and 2006 -- by three to 10 billion cubic meters a year.

Fifteen nations and oil-producing areas have shown the reverse trend, according the study -- including Norway and the North Sea fields. The study also says Nigeria, once among the world's biggest gas-burners with its countless drilling platforms in the Gulf of Guinea, has managed to flare less than it did in the mid-'90s. Unlike Russia, Nigeria is involved in the World Bank's reduction initiative, though it still burns about 20 billion cubic meters per season.

Motivating oil companies to change

"Most crude oil is found in remote regions, often out at sea, far from potential consumers of natural gas," says Bent Svensson. The key to its utilization, he says, is assembling an infrastructure for collecting and transporting the gas which can then be used by all the oil companies working a given region.

But Svensson knows that oil prices are so high at the moment, and profits so easy, that no oil company would see a compelling reason to exploit its own wasted gas. The technology would be attractive in developing nations, though, where the Kyoto Protocol's so-called Clean Development Mechanism (CDM) applies. When a given project fulfills CDM standards and proves it has reduced greenhouse emissions, its leaders collect CO2 certificates, which they can sell on the emissions trading market.

In the oil-rich Gulf of Guinea, Nigeria has set up its first pilot project to be registered under CDM standards. Some of the natural gas is injected back into the oil deposits, some directed by pipeline to a gas-fired power station. These power plants release less CO2 than Nigeria's old-fashioned oil-fired plants.

Svensson says the World Bank is pushing further CDM projects in countries like Indonesia and Qatar. Altogether, the Global Gas Flaring Reduction Initiative is meant to ease the earth's atmosphere of 32 million tons of CO2 by the year 2012.

Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine

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