The Nickel Report

In September 2018, the US Interior Department issued a final rule rescinding the 2016 Venting and Flaring Rule, which took effect November 2018. The old rule, which never went into effect, would have required oil and gas companies to capture leaked methane gas, repair and prevent leaks, and devise new plans to reduce the flaring and venting of natural gas. Following the effectiveness of the new rule, the applicable policies setting limits on releases of methane gas will mostly be left to individual states.

Many countries are looking for ways to put flare gas to beneficial use. Flare gas occurs when “associated gas” (AG) produced from the reservoir during oil production is flared. Like other natural gas, AG could, in principle, be utilized to fuel power plants, be compressed and used as bottled gas, serve as a feedstock for fertilizer, be exported as LNG, or otherwise be put to productive use. Instead, over 140 billion cubic meters of AG is flared every year, equating to over US $10 billion resource value. Flaring contributes approximately 350 million tons of CO2 emissions annually, and in some cases is cited as negatively impacting the health and livelihood of local populations.

While the scale and complexity of the problem may be daunting, some large oil producing countries and oil producers have taken important steps to reduce flaring, and routine flaring is no longer as widely accepted as a standard business practice. Among others, Saudi Arabia, Norway, Kuwait, UAE, and Canada all have taken steps to harness and put AG to productive use. Other countries also now are requiring that any new field development plans include provisions for sustainably managing AG and putting it to productive use. While much progress has been made in recent years to reduce AG flaring, it continues to be flared at thousands of oil production sites around the world. A further reduction may be achievable through a market-oriented approach to commercialization that can produce a win-win-win: for the oil producer, for the buyer and seller, and for the environment. Click here to view my co-authored article outlining key elements of an AG commercialization program.