Significant economic and environmental gains can be achieved by applying Best Available Technology in the oil sector in the Arctic

25 June 2020
The Arctic Council’s Arctic Contaminant Action Program (ACAP) has completed a study on flaring of associated petroleum gas in the Russian Arctic. The report shows that significant economic and environmental gains can be achieved if Best Available Technology (BAT) and Best Environmental Practices (BEP) are applied. Application of BAT and BEP may decrease the volume of short-lived climate pollutant (SLCP) emissions from the current 25 to 7 million tons of carbon dioxide-equivalents by 2025 in the Russian Arctic region.

Industrial processes such as oil production generate gas as a byproduct (also called Associated Petroleum Gas; APG), with the potent climate gas methane as a major component. A common way of eliminating this is by flaring, where the unwanted gas is burned off, even if solutions exist to avoid this. This practice, however, is controversial as it has shown to be a major environmental concern causing emissions of, for example, black carbon.

The Arctic Council’s Arctic Monitoring and Assessment Program (AMAP) Working Group has indicated that flaring is one of the most important sources of black carbon emissions from Arctic States and that emissions that are released close to the Arctic have the strongest effect on sea ice melting. A significant share of emissions stem from oil and gas operations in the Arctic.

The knowledge and awareness about the climate risks and abatement opportunities for black carbon emissions are still developing. At the same time, it is recognized that flaring of APG represents a resource waste which often can be rectified without causing net costs.

Closing the knowledge gap and spurring action requires dialogue and cooperation with oil companies. Without this, access to information will be difficult and policies and regulations will typically lack effectiveness.

Project’s history

In response to AMAP’s findings that flaring is a major emission source in the Arctic, the Arctic Contaminants Action Program (ACAP) developed the “Mitigation of Short-Lived Climate Pollutants (SLCP) from Associated Petroleum Gas flaring” project, which received financial support from the Arctic Council Project Support Instrument (PSI). The project aims to address SLCP emissions from APG flaring that impact the Arctic environment, primarily those of black carbon, methane and non-methane volatile organic compounds.

An analysis was carried out by independent consultants VYGON Consulting (Russia) and Carbon Limits (Norway) in close cooperation with the Russian Ministry of Natural Resources and Environment and Ministry of Energy. The Russian oil companies Gazprom Neft and BerezkaGas also contributed significantly through their extensive experience to the implementation of APG utilization technologies in the Russian Arctic.

The Project has been implemented in two phases so far. As of June 2020, a comprehensive assessment of the environmental impact of APG flaring has been carried out; global BAT and BEP were considered, their applicability and potential effect for the Russian Arctic were evaluated; and a draft report on the use of new method to reduce APG flaring at remote fields was developed.

APG Utilization in the Russian Arctic

The Russian Arctic is a dynamically developing oil producing area with production and emissions growing significantly. Between 2010 and 2019, its oil output increased from 45.4 to 87.7 million tons, while the volume of extracted APG grew from 9.1 to 27.4 billion cubic meters, leading to increased flaring volumes in the same period.

Most of APG production comes from mature oil and gas fields that achieve a production plateau, where the utilization rate of the gas currently stands at about 92 percent. As for new oil and gas field developments, this indicator is traditionally low due to the timing of field development, amounting to 67 percent. APG that is not utilized is flared, which causes significant emissions of black carbon.

The ACAP project assessed potential environmental gains from implementing BAT and BEP for APG utilization, and the estimates show that if the oil and gas industry proceeds with business as usual scenario (see description in Figure 1 below), by 2025 the projected utilization rate will amount to 73.6 percent, while implementation of BAT and BEP will increase the APG utilization rate to 91.6 percent.

APG utilization in the Russian Arctic in 2025 in different utilization scenarios

More importantly, the application of BAT and BEP will significantly decrease the volume of SLCP emissions from the current 25 to 7 million tons of carbon dioxide-equivalents by 2025.

Potential for application of BAT and BEP in the Russian Arctic

Unfortunately, certain limitations exist. Key challenges and barriers to their implementation include regulatory aspects, technical or geological features, remoteness of fields, infrastructural, scale-related (applicability for certain APG volume), structural (ownership of assets, contracts, etc.) or financial issues.

Thus, since fields differ significantly in terms of their location, geology, economic and other features, the restrictions that impede the implementation of a certain utilization technology are always site-specific. More than 20 international BAT and BEP in the field of APG production, utilization and flaring were considered within the project. The analysis of the applicability and efficiency of BAT and BEP conducted within the project focused on two assets – the Salym-Shapsha group of fields and the Novoportovskoye field, both of which faced the challenge of increasing APG production volume and the consequent necessity to ramp up the utilization capacity.

The Salym-Shapsha group of fields consists of three Salym and three Shapsha oil fields, which are located in the Khanty-Mansi Autonomous Okrug. At the time of evaluation, the group of fields produced more than seven million tons of oil annually. The Novoportovskoye field is the larger of the two assets. It is located on the Yamal Peninsula and is one of the major fields of the Russian Arctic with the peak oil output of about eight million tons annually.

Based on the analysis of BAT and BEP applicability, as well as their environmental impact and economic efficiency, it was concluded that the compression of dry gas and monetization of light hydrocarbons would be the most efficient solution for the Salym-Shapsha group of fields.

Similar analysis was carried out for the Novoportovskoye field, which is a largely different asset in terms of scale, properties of gas, geological features and other factors. Out of 10 APG utilization BAT and BEP, gas supply via pipeline and the reinjection of APG proved to be the most efficient options.

Scaling up the experience of the Novoportovskoye field

By the end of 2018, Gazprom Neft completed its APG utilization project at the Novoportovskoye field by creating APG reinjection facilities. This not only allowed to ensure higher volume of APG utilization, but also proved to be economically effective due to the generated incremental crude oil production.

Since the analysis indicated that the reinjection technology is not only beneficial from the environmental standpoint, but also proves to be economically effective, it is advisable to scale up the experience of the Novoportovskoye field and implement it at other assets.

Several criteria for the applicability of the APG reinjection (injection of gas into the oil reservoir) technology were considered. For example, it is impractical to consider the application of APG reinjection technology at the fields where gas production is predominant, as well as at assets with a developed gas utilization infrastructure, where additional investments in APG utilization are not required.

Thus, the list of target assets for scaling up the experience of the Novoportovskoye project includes five fields in the Russian Arctic. In addition, there are six more fields with high potential for application of the said experience for fields that will be commissioned after 2025. The analysis revealed that scaling up the technology to target assets will reduce emissions by up to 10 percent.

Potential further steps

Following the detailed analysis of gas reinjection, the applicability and the potential for scaling up other BAT and BEP for reduction of APG flaring should also be explored in order to further improve the environmental situation in the Russian Arctic. Cooperation with the industry remains key to finding practical and attractive solutions to APG flaring.

Another important step to promote emission reductions of SLCPs from the oil and gas sector in the Arctic is revising and aligning methods for quantification of emissions to reduce uncertainty in the SLCP inventories. This will provide a more reliable baseline for documenting national (and company-level) efforts in mitigating these emissions.

The project report also includes analysis of policy measures to cut emissions. It underlines that the Arctic states can learn from each other with regard to policy measures and see what has worked in other countries.

Another important issue related to the oil and gas industry is methane emissions from the gas infrastructure. It is widely discussed in the context of the role of natural gas as a transition fuel and is not limited to the Arctic environment. However, Arctic’s fragile ecosystem and its rapid warming make it especially vulnerable to adverse effects of this potent greenhouse gas. Analysis of the scope, key sources and mitigation opportunities of methane emissions from natural gas infrastructure in the Arctic (in Russia and beyond) could provide important insights into opportunities for effective and efficient climate mitigation.

This article was developed in cooperation with:

Dmitriy Akishin, Director, Gas and Chemicals, Vygon Consulting

Ivan Timonin, Analyst, Vygon Consulting

Torleif Haugland, Senior partner, Carbon Limits

Irina Isakova, Senior consultant, Carbon Limits