World Bank Global Gas Flaring Reduction Gas STAR International and GGFR Mutual Goals Roger FERNANDEZ U.S. EPA Natural Gas STAR Team Leader

Presentation Agenda Introduction – Methane to Markets partnership and goals – Interrelationship with Global Gas Flaring Reduction (GGFR) Partnership Natural Gas STAR International program Natural Gas STAR International projects that compliment GGFR goals – Case Study: Colombia – Russian Associated Gas Flaring Summary

Methane to Markets Program Overview The Methane to Markets Partnership is an international initiative that advances cost-effective, near-term methane recovery and use as a clean energy source. Four main sectors: – Coal Mines – Landfills – Oil and Gas Systems – Agriculture (manure waste management) 18 Partner countries Argentina Australia Brazil Canada Colombia China Ecuador Germany India Italy Japan Korea Mexico Nigeria Russia Ukraine United Kingdom United States

Methane to Markets Opportunities Methane to Markets encourages the development and implementation of projects that result in: – Direct methane emissions reductions in member countries, or – Capacity building and technology transfer Partners and Project Network members seeking technical support, financial support, or consultation are invited to submit project ideas and activities

Natural Gas STAR International Program Under the Methane to Markets partnership, Gas STAR International is a U.S. led initiative aimed at voluntarily reducing methane emissions from international oil and natural gas operations Oil and Gas Subcommittee

Natural Gas STAR International Program Natural Gas Star International launched September 26, 2006 – U.S. initiative under the Methane to Markets O&G Subcommittee Benefits Include: – Technical documents on technologies and practices to reduce methane emissions (English, Spanish, Russian languages) – Technology transfer workshops – Project identification and technical assistance – Develop a voluntary record of reductions 7 Founding Partners signed the Memorandum of Understanding

Global Gas Flaring Reduction Program Mission The World Bank GGFR partnership facilitates and supports putting flared gas to beneficial use. – 150 billion cubic meters (350 million tonnes of CO2 Equivalents (TCO2E)) of natural gas are being flared and vented annually – Equivalent to: 25% of U.S. consumption, or 30% of EU consumption, or 75% of Russia exports, or More than Central and South America combined consumption The Methane to Markets Partnership has a common objective with GGFR of putting clean-burning methane fuel to beneficial use rather than being wasted in flares and vents.

GGFR – Methane to Markets Common Goals GGFR and Methane to Markets share common goals – Reduce the waste of associated gas resources – Reduce worldwide Greenhouse Gas (GHG) emissions GGFR – Gas FlaredM2M – Methane Emissions Associated gas wasted in flares CO 2 GHG emissions Methane wasted in vents/leaks x 21 CO 2 E GHG emissions CO 2 CH 4 Production Processing Transmission Distribution Unburned hydrocarbon from flares

GGFR – M2M Common solution Common solution to flaring and venting gas losses – Vapor recovery collects vented gas – Where there are no gas market outlets, opportunities may include: – Natural Gas STAR International supports Methane to Markets by helping companies realize recovery opportunities Install vapor recovery on storage tanks Install Micro Turbines Install Industrial Scale Electrical Generators OR

Natural Gas STAR International Reduction Opportunities There are significant opportunities globally to reduce methane emissions cost-effectively 1 : Particularly in Russia, U.S., India, and more Natural Gas STAR International and Methane to Markets Partner countries are initiating projects – Oxy, Colombia is analyzing an opportunity to recover tank vapors and flared gas to generate electricity potentially saving 159 TCO2E per day – Mexico’s PEMEX has initiated a compressor seal replacement program and is looking at many other methane emission reduction opportunities 1 Oil & Gas Journal July 12, 2004, “Upstream Petroleum HSE” 2010 Marginal Abatement Cost Curves for Methane Emissions

Natural Gas STAR International Technology Alternatives Natural Gas STAR International releases publications detailing Partner Reported Opportunities (PROs), Lessons Learned studies, and Partner Updates – Installing Vapor Recovery Units (VRUs) on Crude Oil Storage Tanks Vapors flashed off of crude in storage tanks are typically vented to the atmosphere VRUs recover such vapors to be used as fuel or sold – Install MicroTurbine Generators Gas that is typically flared or vented to the atmosphere can be directed to Micro Turbine Generators to produce power. Power is backed off the grid, reducing costs Methane emissions to the atmosphere and flared gas wastage can be avoided Indirect emissions from grid power-production are averted

Natural Gas STAR International Case Studies Natural Gas STAR International published technologies are used by its Partners – Oxy requested a solution proposed for a facility in Colombia – Oxy case study demonstrates the use of these technologies

Case Study: Colombia Current Practice Oxy has oil production facilities in Colombia that currently operate with the process diagrammed below – Flashed gas is vented from the water knockout tank – Associated gas from the gas-liquid separator and condenser is flared Oxy sought Methane to Markets and Natural Gas STAR International’s assistance to evaluate options to capture these gases to reduce emissions and generate electricity

Case Study: Colombia Natural Gas STAR International Proposed Project Natural Gas STAR International proposed the process diagrammed below to turn methane emissions and gas waste into electrical energy – Install VRU to capture vented emissions off water knockout tank – Install Reciprocating Engine/Generator to burn previously flared gas for electricity – Compressor is used as part of a gas treatment to increase gas condensate to sales while keeping the fuel gas useable in the engines In this Case Flaring avoided Venting avoided Less power purchased

Natural Gas STAR International Preliminary Economics Flare and Vent Gas Recovery – 20,000 Mm 3 per year flared hydrocarbon – 1,650 Mm 3 per year vented methane Power Generated – 5 Mega Watts (MW) at first site – 10 MW at second site Economics – 12 months simple payback – 100% internal rate of return Carbon emissions reduction – 1,650 Mm 3 per year methane – 50,000 TCO 2 e per year

Case Study Russian Flaring Principles learned in Oxy case study are readily applied elsewhere – Eliminate venting – Eliminate flaring – Produce power Other companies in Latin America and world-wide can apply these concepts

Conclusions Opportunities to reduce flaring and venting methane emissions are available – Methane to Markets compliments GGFR – Natural Gas STAR International is a vehicle for the Methane to Markets to make progress with GGFR Technologies and Practices are available – Technology documents – Project identification and assistance – International workshops Calgary January 16-17, 2007 New DelhiFebruary 22-23, 2007 China Expo November 2007 Natural Gas STAR International can collaborate with GGFR to accomplish complimentary and common goals

Summary Natural Gas STAR International can collaborate with the GGFR Partnership Where GGFR typically addresses large stranded gas flaring solutions – Cross country pipelines to gas markets – LNG terminals – Gas to Liquids processing plants Gas STAR International typically addresses technologies to reduce methane venting and fugitive emissions – Compressor seals – Crude oil tank venting Both programs seek recovery of wasted natural gas – Put wasted, associated gas to beneficial use as a clean burning fuel – Reduce GHG emissions

Methane to Markets and EPA Contacts Roger Fernandez U.S. EPA Natural Gas STAR Team Leader U.S. Representative on Methane to Markets Oil & Gas Subcommittee