Alternative uses to reduce gas flaring - Anders Pederstad (Carbon Limits)

Agenda

December 03, 2008

Carbon Limits AS

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• The use of non-associated gas in open-cycle gas-lift

• Example case from Democratic Republic of Congo

• Conceptual framework for a new CDM baseline methodology

• Key characteristics of the proposed methodology

• Conclusions

The use of non-associated gas for gas-lift leads to flaring and substantial GHG emissions

December 03, 2008

Carbon Limits AS

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• Gas-lift is a commonly used artificial-lift method by which high-pressure gas assists in bringing oil to the surface

• High-pressure gas can be provided from either associated or non-associated sources

• Non-associated gas is often at higher pressure than associated gas and typically require less treatment than associated gas

• Where gas has low value, non-associated gas is often the lowest cost of supply of high-pressure gas for gas-lift

• When non-associated gas is used as gas-lift gas, there is often higher, absolute volumes of gas flared

Offshore oilfield in DRC utilizing non-associated gas for gas-lift as it represents the lowest cost of supply

December 03, 2008

Carbon Limits AS

4All numbers in MSCF/day

Original situation:

Project for optimization of gas utilization on-site developed based on potential CDM benefits: 30,000 tCO2e/month

December 03, 2008

Carbon Limits AS

5All numbers in MSCF/day

Pilot CDM project activity:

The characteristics of the DRC project provides the conceptual framework for a new CDM methodology

December 03, 2008

Carbon Limits AS

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• Non-associated gas can be the lowest cost option to provide high-pressure gas for gas-lift of oil wells (i.e. an open-cycle gas-lift system)

• Gas from oil wells that is currently flared can be recovered and used to substitute for the non-associated gas, thus reducing flaring of gas

• The volume of gas recovered for use for gas-lift serves as a one-to-one proxy for the volume of non-associated gas that would have been used in the baseline to provide the same service

• Projects will take place in complex brownfield developments and could require utilization of both new and existing gas infrastructure

• A change in the supply to the gas-lift system will by itself not end gas flaring at the field

December 03, 2008

Carbon Limits AS

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End-use (i.e. gas-lift system) included within project boundary and in the baseline selection

Highlights

December 03, 2008

Carbon Limits AS

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• Substitution of non-associated gas with recovered gas for gas-lift leads to a measurable reduction in flaring and thus GHG emissions in situations with very limited opportunities to market gas

• CDM can alter the economic balance in favor of gas from oil wells given that the motivation for using non-associated gas is lower cost (example in DRC has an abatement cost of 2.9 USD/tCO2e)

• Procedure for selection of baseline scenario in NM0277 can be further improved to expand the applicability of AM0009/AM0037 to allow for the recovery of gas-lift gas as well as associated gas

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