Access to Energy, Gas Flaring Reduction,

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• Access to Energy, Gas Flaring Reduction,
• and Domestic Market Development
• Presentation by Jacob Broekhuijsen, World Bank
• Africa Oil Gas Forum, Houston, November 29-31,
  2004

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Source IEA
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Number of People Without Electricity, 1970-2030
Source IEA
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Access to Electricity

• 1.6 billion people today have no access to
  electricity
• About 80 of these people are located in India
  (580 million) and sub-Saharan Africa (500
  million)
• Four out of five people lacking access to
  electricity live in rural areas
• By 2030, in the absence of radical new policies,
  1.4 billion will still have no electricity (gt600
  million in sub-Saharan Africa)

Source IEA
5
Population Increase in Developing Countries
Source IEA
6
Average per Capita Energy Consumption versus
Share of Population Living under Poverty Line,
2000
Source IEA
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Energy and Poverty - Traditional Biomass Use

• Today, 2.4 billion people in developing countries
  rely heavily on traditional biomass for cooking
  and heating
• The use of biomass in traditional and inefficient
  ways have significant implications
• Productivity
• Health
• Gender
• Environment
• By 2030, in the absence of radical new policies,
  over 2.6 billion people in developing countries
  will continue to rely on biomass (less and less
  available)

Source IEA
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Energy Poverty

• In the absence of radical new policies, energy
  poverty will still be a major issue in the next
  decades
• Creating conditions to attract investment is the
  main challenge. Domestic Market reforms are vital
• Investment requirements for power generation in
  developing countries amount to US 2.1 trillion
  for the next 30 years

Source IEA
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Source NOAA DMSP-OLS Annual Composites of
Nigeria and CameroonRed 2003 only. Yellow
2003 and 2000. Green 2000 only. Cyan 2000
and 1992. Blue 1992 only. White 2003, 2000
1992
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Source NOAA DMSP-OLS Annual Composites of
Angola, Gabon, Congo and DRC Red 2003 only.
Yellow 2003 and 2000. Green 2000 only. Cyan
2000 and 1992. Blue 1992 only. White 2003,
2000 1992
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Background of Global Flaring

• Global venting and flaring level over 100
  bcm/year, similar to
• Total world gas consumption for half a month
• gt10 percent of committed emission reductions by
  developed countries under the Kyoto Protocol for
  the period 2008-2012
• Flaring in Africa alone could produce 200 TWh of
  electricity
• 50 of current power consumption of the African
  continent
• more than twice the level of power consumption in
  Sub-Saharan Africa (excluding South Africa)
• Global level has stayed constant for the last 20
  years
• 80 of global venting and flaring occurs in fewer
  than 15 countries (reliability of available data
  varies widely)

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Why still over 100 BCM / Year ?

• Individual governments and companies have had
  successes in reducing flared gas, and significant
  investments in reduction projects are continuing.
  
• However, two key factors limit the global impact
  of these efforts
• Global oil production increase leads to
  associated gas production increase, offsetting
  efforts to reduce gas flaring
• Development of gas markets, gas infrastructure,
  and flaring reduction projects often requires
  collaborative rather than individual action

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Typical barriers to gas sector development

• Underdeveloped domestic market for gas and gas
  products (LPG, CNG, fuel methanol, power etc)
• Absence of / limited gas policies
• Limited institutional, legal and regulatory
  framework for gas, including associated gas
• Gas terms (or absence thereof) in existing oil
  development agreements
• Fiscal system
• Domestic gas and gas product pricing
• Infrastructure constraints and access
• Funding constraints

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Collaborative Action GGFR

• Started as an Initiative with Norwegian
  Government and World Bank in 2001
• GGFR Public-Private Partnership was formed at the
  World Summit on Sustainable Development in
  Johannesburg in August 2002
• GGFR includes governments from oil-producing
  countries, state-owned and international oil
  companies, OPEC, and the World Bank Group,
  together accounting for over 70 of global
  flaring
• Objective is to support national governments and
  the petroleum industry in their efforts to reduce
  the flaring and venting of gas associated with
  the extraction of crude oil
• Still open for new members governments, national
  oil companies, international oil companies,
  industry organizations, etc.

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Current GGFR Public and Private Partners

• Countries/NOCs IOCs
• Algeria (Sonatrach) BP
• Angola ChevronTexaco
• Cameroon (SNH) ENI
• Chad ExxonMobil
• Ecuador Norsk Hydro
• Equatorial Guinea Shell
• Indonesia Statoil
• Khanty Mansiisk (Russia) Total
• Nigeria
• Donors Multilateral Organizations
• Canada The World Bank
• Norway OPEC
• UK (Foreign Commonwealth Office)
• USA NGOs
• Sahel

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GGFR Work Program

• Help each other in associated gas utilization
  and further reduction of local and global flaring
  through best practice identification, development
  exchange in
• Commercialization
• Consultations to identify and address associated
  gas utilization barriers
• Remote fields solutions
• Small scale gas use
• Regulations for (associated) gas sector
  development
• Identification and dissemination of regulatory
  best practice
• Contractual issues surrounding associated gas
• Global Gas Flaring Standards
• Common flaring standards and guidelines,
  including measurement and reporting
• Carbon Credits
• Capacity building including methodology for
  flaring projects
• Representative projects assistance with crediting
  process

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Global Gas Flaring and Venting Reduction
Voluntary Standard

• GGFR announced the Global Gas Venting and Flaring
  Reduction Voluntary Standard at the 2nd
  International Gas Flaring Reduction Conference in
  Algeria in May 2004, which
• Provides framework for governments, companies,
  and other key stakeholders to consult each other
  and take complementary and supportive action
• Encourages integrated approach including market
  and infrastructure development,
  commercialization, legal and fiscal regulations,
  carbon credits
• Aims to achieve global applicability and impact
  by allowing for flexibility to local conditions
  and balancing ambitious timescale with realistic
  constraints.
• Collaborative action of stakeholders will help
  reduce barriers to associated gas utilization in
  a country
• Implementation of the Standard aims to reduce
  venting and flaring significantly within 5 to 10
  years

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Key Concepts of the Standard

• Voluntary and performance based rather than
  prescriptive
• Initial Goal with focus on large sources that can
  make a significant difference early
• Collaborative action and implementation planning
  through
• Identification and consultation of key
  stakeholders
• Potential expansion of flare reduction project
  boundaries to include other fields / operations
  / infrastructure / customers in region for
  consultation
• Consideration of range of options to enhance the
  feasibility of associated gas utilization (tool
  box)
• Producer driven Associated Gas Recovery Plans and
  Government driven Country Implementation Plan.
• Ultimate Goal for longer term continuous
  improvement
• Measurement of remaining flaring and venting, and
  public reporting
• Recommended Timeline for consultation, planning
  and implementation

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International Best Practice A collaborative
approach to gas flaring reduction - Alberta

• Clean Air Strategic Alliance (CASA)
• Multi-stakeholder process, including industry,
  environmental organizations and government
• Key is to build consensus on flaring solutions
• Objectives
• Eliminate routine gas flaring
• Reduce volumes of gas flared
• Improve the efficiency of flares

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Alberta - Results

• Evaluation of each flaring site
• Decision tree works well
• Economic flare gas utilization identified
• Industry reduction targets
• 38 reduction - year-end 2000 (Target 15)
• 53 reduction - year-end 2001 (Target 25)
• 62 reduction - year-end 2002 (Target 50)
• 70 reduction - year-end 2003 (No target est.)
• Clear objective for flare reduction actions
• Improved public confidence in process

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Associated gas utilization and domestic market
development Recommendations (1)

• Establish local public-private partnership(s)
  between relevant government parties and other key
  stakeholders including local communities, and
  take the lead in collaborative action (with World
  Bank / GGFR facilitation if and when required),
  on some or all of
• Formulation, implementation and transparency of
  (associated) gas, gas pricing and flaring
  reduction policies, incl. implementation of GGFR
  Standard
• Domestic market development, especially
  Gas-to-Power reform, consistent with gas sector
  reform, including pilot projects
• LPG production, storage, transportation and
  distribution, including pilot projects

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Associated gas utilization and domestic market
development Recommendations (2)

• Establishing project synergies especially between
  those gas utilization projects that are more
  difficult / less attractive on individual basis
• Financing solutions for infrastructure projects
  to expand domestic market (for example, gas
  trunk-lines and main electricity transmission
  infrastructure), including Government
  facilitation of financing (for example, through
  public-private financing initiatives)
• Small scale gas utilization and power supply,
  including regional pilot projects (this would
  require a local collaboration task force), and
  technical assistance/facilitation/capacity
  building
• Carbon credits for emission reduction projects,
  including institutional requirements and pilot
  projects

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Conclusions

• Radical new policies are required to reduce
  energy poverty in sub-Saharan Africa, and
  domestic market reforms to create conditions that
  attract investment is vital
• Flaring in Africa alone could produce more than
  twice the level of current power consumption in
  Sub-Saharan Africa (excluding South Africa)
• Local public-private partnerships that
  collaborate on a combination of policy and
  projects can be very effective in achieving major
  change in the medium term

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• Thank you for your attention