July 30, 2007

EUB reports solution gas flaring down 71.5% since 1996, venting down 56.4% since 2000

Upstream oil and gas companies in Alberta have reduced solution gas flaring by 71.5% since 1996 and solution gas venting by 56.4% since 2000. Together, these reductions have prevented the release of approximately eight million tonnes of greenhouse gas emissions (CO2 equivalent) into the atmosphere since 1996, says Alberta's Energy and Utilities Board (EUB). Climate Change Central equates this achievement to taking about 1.7 million cars off Alberta's roads for one year, adds the Board.

In its just-released 2006 Upstream Petroleum Industry Flaring and Venting Report, the EUB presents figures showing that in 2006, the upstream oil and gas industry conserved 96% of all solution gas produced in the province for use or sale, rather than flaring and venting it. This maintains Alberta's record as one of the global leaders in conservation and reduced flaring, even as last year's oilpatch activity reached unprecedented levels.

There were 299 more crude bitumen batteries reporting production in 2006 than in 2005, a 28.5% increase. In some areas of Alberta where there is increased crude bitumen production, additional gas conservation infrastructure is required, notes the report. Solution gas is natural gas produced in association with crude oil and bitumen production.

The EUB attributes Alberta's success in reducing flaring and venting to the co-operative efforts of the Clean Air Strategic Alliance (CASA) flaring/venting project team, the petroleum industry, environmentalists, the Board itself and various government departments such as Alberta Energy and Alberta Environment.

Of the 17,245 million cubic metres of solution gas produced in 2006, 689 million cubic metres (m3) were flared and vented, up from 667 units in 2005. Quantities of solution gas flared rose slightly from 376 million m3 in 2005 to 382 million m3 in 2006 (up 1.6%), while quantities vented also showed a 5.5% increase from 291 to 307 million m3. In both cases, the increase is attributed to rising production at crude bitumen operations.

Crude bitumen batteries accounted for 34.8% of the solution gas flared and vented in 2006, with 83.9% of this volume being vented, says the report. Venting from these operations rose by 13.6% between 2005 and 2005, from 177 to 201 million m3, while conservation at crude bitumen batteries decreased from 85.4% in 2005 to 83.6% in 2006. In addition to the increase in number of operations, this trend was also attributed to economic factors relating to conservation, flaring and venting from these sources. For example, in areas of Alberta where crude bitumen production has increased, there is often insufficient gas conservation infrastructure to make gas conservation viable, notes the report.

Nevertheless, the Board is concerned about the 2006 increases, coming in the wake of a steady downward trend. As a result of the continuing work of CASA, the EUB revised its Directive 060 governing upstream petroleum industry flaring, incinerating and venting. These revisions are designed to ensure that solution gas flaring and venting continues to be reduced in 2007.

The new regulations, which came into effect on January 31, 2007, require oil and gas companies to allocate revenues from all oil production (not just gas production) for solution gas conservation. The regulations state that if the cost of conserving the gas is greater than minus $50,000 (this figure was previously $0), the gas must be conserved. This means that industry must use part of a project's revenues to conserve solution gas.

Companies are also required to conduct yearly evaluations of the potential for conserving solution gas at each facility, including evaluating gas prices, service costs, and access to conservation facilities like pipelines and gas plants.

Other upstream venting sources include crude oil batteries, gas batteries, well testing and transmission lines.

The EUB notes that it will continue working with stakeholders to continue developing venting reduction strategies, and will take advantage of opportunities and implement measures to achieve further reductions. It anticipates that future reports will show positive results due to the new regulations.

The World Bank calculates that flaring of solution gas from oil and gas operations around the world adds about 350 million tons of CO2 emissions to the global atmosphere annually. The World Bank's Global Gas Flaring Reduction Partnership supports governments and companies in their efforts to reduce the flaring and venting of gas associated with the extraction of crude oil.

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