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December 21, 2021updated 27 Dec 2021 4:47am

Gas Flaring: Regulatory Trends

Oil and gas companies often avoid any form of reporting of gas flaring in their sustainability reports.

By GlobalData Thematic Research

With increased pressure from regulatory bodies to curb flaring, the industry has started adopting several alternatives, including using gas for onsite power generation, processing gas into compressed natural gas (CNG) or liquefied natural gas (LNG) for transportation, or converting gas into liquids using the Fischer-Tropsch or similar processes.

Listed below are the key regulatory trends impacting the gas flaring theme, as identified by GlobalData.

Emission goals of countries and companies

The Paris Agreement of 2015 has laid down guidelines to ensure that global warming remains below 2°C by 2100. The agreement has been ratified by over 190 countries. Developed nations have set strict emission targets for themselves to help achieve global objectives. Countries like the UK, France, Germany, and the US have set themselves targets to achieve net zero emissions by 2050. These countries are enacting laws to reduce emissions, including those generated from flaring.

Major oil companies have also set similar emission targets to address climate change issues. For instance, BP and TotalEnergies have pledged to achieve net zero emissions by 2050. This would impact the flaring activity at production sites where the companies are stakeholders.

Ecological setbacks and social outrage

Environmental activists have consistently targeted oil and gas companies due to their massive contribution to global carbon emissions. The activity of gas flaring has also been targeted by these activists through various modes of protest. The shale industry in the US, in particular, has faced severe backlash concerning the gas flaring issue. For instance, recently in 2021, environmental activists got the Texas Railroad Commission (RRC) to tighten its criteria for granting flaring permits in the state, owing to global pressure.

In contrast, companies operating in emerging countries, such as Nigeria, do not face strong opposition to operational emissions. Regardless, activists in these regions have continued to raise the issue of gas flaring and its adverse effect on the environment.

Global cooperation and initiatives

Gas flaring is a global concern and there has been a global concerted effort to incentivise and reduce flaring activity. The International Petroleum Industry Environmental Conservation Association (IPIECA) has several oil and gas producers and service companies as its members, such as BP, Chevron, Baker Hughes, and Halliburton. It encourages reduced flaring among its members for mitigating the negative effects on the environment.

Similarly, the World Bank has also helped create awareness about flaring through its Global Gas Flaring Reduction (GGFR) initiative. GGFR has promoted programmes, such as Zero Routine Flaring by 2030, to bring oil and gas companies, governments, and other key players, to develop a cohesive plan to mitigate global flaring activity.

This is an edited extract from the Gas Flaring – Thematic Research report produced by GlobalData Thematic Research.

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