World – countries seek to crack down on gas ‘flaring‘ waste

Dow Jones reports that the world‘‘s energy industry has never been keener to tap the commercial potential of natural gas. But some nations are wasting more gas than ever before as producers burn it off straight into the atmosphere.



A World Bank-financed study released this month found the industry burned off, or "flared," about $40 billion worth of gas globally in 2006, up 14% from 2004, in part due to higher oil and gas prices. The study also found that 22 countries, including Russia and China, flare much more gas today than a decade ago as companies pump more oil from new and more remote areas of the world.



Flaring is a decades-old industry practice used to dispose of natural gas that is often found with deposits of crude oil but can‘‘t easily be used for economic activities because of a lack of pipelines and other infrastructure. The process is similar to the flame flowing from a cigarette lighter magnified a thousand times.



The World Bank says flaring accounts for just 2% of the total carbon emissions believed to help cause global warming. But that number masks the damage flaring does to local environments and the irritation it causes people with asthma and other respiratory ailments. This is now causing serious concern in the world‘‘s top flaring countries, Nigeria and Russia, which together flared at least $16 billion worth of gas in 2006, according to industry data. Both countries say they‘‘ll soon force all energy firms to stop flaring. "Such squandering cannot be tolerated," Russian President Vladimir Putin was quoted on the Kremlin‘‘s Web site as telling Russian state energy firms last month.



President Putin has said bigger ecological penalties and tougher demands on producers in oil development licenses could end flaring. Analysts say they have little reason to doubt Russia‘‘s resolve to sharply cut flaring in light of the firm manner in which the Kremlin has dealt with foreign oil companies in recent years.



Indeed, flaring has dropped sharply in recent years in countries like Norway and Canada. A stiff carbon tax, for example, implemented in the 1990s in Norway has been enough of a penalty to substantially cut the amount of gas burned off there. Even in Nigeria, long the worst flaring country in the world, big reductions have been achieved with the rise of gas exporting projects, though it is still the largest flarer in the world alongside Russia. Attracted by the profit-potential in rising gas prices, the energy industry globally spent $56 billion from 2001 to 2005 globally on projects aimed at producing gas-derived consumer goods like plastics and exporting gas, according to the International Energy Agency. Gas is also used more today for producing electricity because it burns more efficiently and pollutes less than other fossil fuels.



Russia, for example, has seen the biggest increase in flaring of any country the past decade as its energy industry recovers from its dilapidated post-Cold War state and company‘‘s invest billions of dollars in new oil and gas production.



"It‘‘s been difficult to reduce the overall quantity of gas flared because oil production worldwide has increased the past 20 years," says Bent Svensson, who leads the World Bank‘‘s Global Gas Flaring Reduction program. Global oil production last year was about 85 million barrels a day, up around 25% from 1992.



A big reason for this is that private and state firms are drilling for oil in more distant and remote places in the world, like at sea, where no infrastructure exists to deliver the accompanying natural gas economically to markets.



Energy companies say building pipelines and other facilities to commercialize all the gas produced alongside oil can be too costly, so they burn off a lot of it from the drilling site. They also re