Iraq’s Ali al-Saady postpones flaring rule
Economic recovery has been predicated in part on the growth of gas-fired power generation, but the lack of infrastructure in Iraq means flaring is inevitable
The Iraqi government has put back the deadline for the elimination of natural gas flaring from this year to the end of 2022, the Basra Oil, Gas and Infrastructure conference in Istanbul heard in early November.
The delay itself will present technical and financial challenges. At present Iraq, with the 12th largest natural gas reserves in the world, is fourth in terms of the amount of associated gas that it flares. This is not only wasting a precious asset – Iraq will soon be importing gas from Iran for power generation –it is also polluting the environment.
Under the Iraqi government’s 2013 Integrated National Energy Strategy (INES), gas flaring has risen to the point that of the 1.726bn cf/d produced this year, 1.233bn cf/d are being flared.
This is because oil production capacity in southern Iraq has been rising steadily since the first licensing round of 2008, with around 1.7m b/d added. This in turn has meant more associated gas coming out of the ground. In the absence of sufficient gathering, processing and delivery infrastructure, most has had to be flared.
Compounding the infrastructure deficiencies that accompanied the years of sanctions is the fact that the operating companies have not re-injected associated gas into oil wells. This has led to a decrease in gas pressure underground.
The director general of the state South Gas Company (SGC) Ali al-Saady said: “ordering, renting and installing a compressor can take up to two years. Then frequent power cuts interrupt the operation of compressors, which need about two hours to restart.”
These problems affect mostly the three major fields awarded in the first licencing round in 2008: Rumaila, West Qurna 1 and Zubair fields that were already in production. The greenfield projects under the second licencing round in 2009 – West Qurna 2, Majnoon and Badra – are being developed with integrated gas processing equipment.
The Basra Gas Company has been set up to coordinate the upgrading of existing gathering and processing facilities and to establish new ones along with gas transmission infrastructure. BGC, set up in 2013, comprises the SGC, Anglo-Dutch major Shell and Japanese Mitsubishi. BGC has drawn up a plan to develop the southern gas infrastructure so that flaring will largely be eliminated by 2022 (see Table 2).
The plan takes into account agreements with the IOCs to lower the production plateau targets at five oil fields: Rumaila, West Qurna 1 and 2, Zubair and Majnoon. What cannot be calculated in advance is the ability of the federal government to fund the southern gas project at a time of low oil prices; the collapse of northern exports; and high expenditure in the campaign against Islamic State. No overall figure for gas sector investment has been given. But with cost cutting ordered across all sectors, absent a sudden upsurge in global oil prices it will be surprising if BGC is able to complete its program to eliminate flaring by 2022.
Another element in the gas strategy in the longer term is the development of dry gas reserves. In the fourth licencing round three fields were awarded. But work on two of them – Akkas which is close to the Syrian border and was awarded to Kogas; and Mansuriya, which is north-east of Baghdad and awarded to Turkish TPAO – has had to stop because of the IS insurgency. Kuwait Energy is developing the Siba gas field southeast of Basra city, but no date has been given for the start of production. In the meantime, work is underway on a pipeline to import gas from Iran, with one spur to a power station in Basra and another to a power plant in Baghdad.
A side-effect of the flaring of associated gas is pollution. Zaher al-Abadi, a member of the federal parliament representing Basra, told the Istanbul conference how people cough and choke in the streets as rainfall turns into acid rain. Flecks of oil are often seen on car windscreens.
“I am very disappointed to learn,” Abadi said, “that we will now have to wait until 2022 for the flaring to stop. We are burning billions of dollars worth of gas and harming the health of our people.” The Basra authorities are critical of the federal government for not insisting that the IOCs operating the southern oil fields re-inject the associated gas until a full gathering and processing system is in place.