Podcast script:
Gas is considered as the ideal fuel in the transition toward clean, sustainable, and affordable energy access. Many countries are increasingly integrating it in their energy mix to generate power as an alternative to the dirty and expensive liquid fuels. Also, a growing number of industries are becoming dependent on natural gas feedstock. Despite all of the given facts, many oil-producing companies dispose of the natural gas associated with the production of crude oil by burning it at the wellhead through a process known as “flaring”, or by directly releasing it into the air at the gathering stations and processing facilities in a process known as “venting”.
Both of these harmful practices cause accumulation of greenhouse gases in the atmosphere, and waste great amounts of valuable natural gas. They have resulted in flaring of 5.1 trillion cubic feet of natural gas globally in 2018 according to the World Bank, and release of more than 310 million tonnes of carbon equivalent. Such behaviors are a consequence of multiple factors, such as infrastructure restrictions and limited capacities, lack of financial incentives to capture and process gas, weak contractual rights, and poor environmental protection regulations.
Saudi Arabia is one of the most prominent examples of combating these harmful practices and turning gas into a valuable commodity. Back in the early twentieth century, gas did not receive much attention from the Standard Oil of California and the Saudi government, and they disposed of it. In 1948, the discovery of the largest oil field in Saudi Arabia, the Ghawar field, led to the flaring of more associated gas. However, the Saudi government demanded that Aramco stop burning associated gas in the 1950s and instructed Aramco to reinject the gas in the oil reservoirs to provide reservoir pressure support.
Later in the 1970s, Aramco attempted to monetize the associated gas by either selling liquefied petroleum gas to the local and international markets or using it to generate electricity. That coincided with gas being increasingly regarded as an important part of a wider attempt to diversify the Saudi economy, whether to support the petrochemical industry or to generate electricity.
Therefore, the government awarded Aramco a 12 billion US dollar contract to establish the Master Gas System (MGS) to capture, process, and use gas. It became operational by 1982, and it expanded over time in conjunction with the high demand for natural gas and prevented the emission of 80 million tonnes of carbon dioxide into the atmosphere annually. The MGS allowed Saudi Arabia to become the world’s ninth-largest producer of gas, with marketable gas production of 11.5 billion cubic feet per day.
Since then, Aramco placed emphasis on two frontiers: aggressively curbing gas flaring, and developing more non-associated gas fields such as the Jafura field. This has been achieved through implementing corporate-wide programs to further mitigate routine gas flaring across its oil and gas value chain, through the use of zero discharge technologies such as ‘smokeless’ flares, and the deployment of flare gas recovery systems.
To understand how much progress Saudi Arabia has made, we can compare it with Iraq as an example, which ranks second in the world in terms of gas flaring after Russia and burns 65% of the gas output associated with oil. The lack of midstream infrastructure and the absence of a large-scale petrochemical industry augmented the issue even further. Moreover,the Iraqi power sector suffers from aging infrastructure, and there are no incentives for international oil companies in Iraq to capture this gas since oil is profitable.
Were it not for the measures taken by Saudi Arabia, it would have had to produce an additional 18 billion cubic feet in 2018 to meet the domestic demand for gas, in addition to burning 65% of the total gas produced. This proves that strategic partnerships between governments and the private sector remain the main catalyst for development and can form part of the circular carbon economy framework.
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