Ever since crude oil production started in the 19th century, gas flaring and venting were born with it. Companies and even some governments found associated gas a nuisance that had to be flared and vented if continued and increasing crude oil production was to be achieved. But the value of gas as a source of energy and its environmental benefits were gradually realised and some governments introduced regulations to limit gas flaring to the minimum.
However, the problem is still with us and the World Bank estimates that in 2017 gas flaring was at a level of around 140 billion cubic meters (bcm). The Bank established the Global Gas Flaring Reduction initiative with the aim of reaching “zero routine flaring by 2030”.
The Arab countries, with the exception of Iraq, as major crude oil producers, have made serious efforts to reduce flaring and use the resulting savings for power generation and feedstock for the fertiliser and petrochemical industry. In 2013, their crude oil production was close to 24 mbd and gas flaring at 21.8 bcm. By 2017, crude oil production was over 26 mbd and gas flaring increased to 25.5 bcm.
Almost all the increase in gas flaring came from Iraq where in that period oil production increased from 3.0 to 4.5 mbd, while flaring increased from 13.3 to 17.8 bcm. Iraq has to learn from its neighbours to initiate a programme to set flaring on a reduction path if it is to meet its oil minster’s promise to reach zero flaring by 2021, a very optimistic promise not supported by firm action on the ground.
Gas Flaring – A Wasted Resource
Reports suggest that Iraq wastes almost 62 per cent of its gas production which is equivalent to 196,000 barrels a day of crude oil. At US$70 a barrel the wasted resource is worth close to US$45 billion, which would have been sufficient to build a whole new gas industry. Lately gas production and utilisation had gone up appreciably to 29.4 and 13.8 bcm a year respectively, which means that flaring has also risen to 15.9 bcm. This which is equivalent to about 260,000 thousand barrels a day or a loss of about US$20 million a day.
To rectify the need for gas in power stations, Iraq resorted to imports from Iran rather than increase processing capacity and augment its transmission and distribution network. The potential of two agreements with Iran may eventually reach over 18 bcm a year at an estimated cost of US$10.56 per million BTU, a price much higher than its equivalent in international markets.
As Iraq’s crude oil production is expected to increases, gas production will follow proportionately and if processing and utilisation is not increased, flaring will increase. The South Gas Company and also The Basra Gas Company have lately implemented some measures for the recovery of flare gas in the southern oil fields in Iraq. Judging by the size and outputs of these projects it becomes apparent of the scale of this issue. This means that unless further projects are signed and expedited, Iraq will continue flaring gas.
It needs at least an additional processing capacity of some 10 bcm a year considering its expected oil production then. The effective use of gas in Iraq will create jobs, increased revenues, develop other industries and most importantly reduce harmful emissions and finally help the environment.