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François Régis MOUTON World Bank GGFR Adviser

Rhonda ZYGOCKI Chairperson, International Association of Oil and Gas Producers (OGP)

Global Gas Flaring Reduction: a Time for Action! Rashad KALDANY World Bank Group, Director Oil, Gas, Mining and Chemical Department

Flaring and Gas Utilization in Kazakhstan: problems and solutions Nasipolla SULEIMENOV Head of the Committee on Environmental Monitoring of the Ministry of Environmental Protection, Republic of Kazakhstan

Utilization of Associated Gas in Russia Alexandr SAVINOV Head of division on natural resources policy of the department of fuel and energy complex in the Ministry of Industry and Energy of the Russian Federation

Crude oil and associated gas production (2001-2005)(mln tonnes and bcm) 459 470 500 421,3 379,6 450 348,1 400 350 300 mln tonnes/bcm 250 200 150 100 56,3 54,9 48,5 42,6 35,9 50 0 2001 2002 2003 2004 2005 1 2 3 4 5

Breakdown of associated gas usage in Russia for 2005 6,9% 1,6% 9,8% 55,2% 26,5% Processed Flared Used for own needs Sold to consumers Losses

Associated gas utilization in Russian Federation (2001-2005)

Associated gas production and flaring by companies in 2005

Needed measures to improve associated gas utilization rate in Russia • Improvement of legislative and regulatory framework aimed at creation and implementation of conditions and mechanisms for complex utilization of associated gas, including at the stages of project design decisions concerning exploration and development of hydrocarbon reserves • Improvement of fiscal legislation aimed at attraction of investments into associated gas utilization projects • Improvement of system of payments for environmental pollution resulting from flaring, as well as for burning of valuable components with the objective to compensate for consequent damage/losses incurred by the state

Thank you for your attention!

Gas flaring: The countries' experience and best practices James A. Slutz Deputy Assistant Secretary for Oil and Natural Gas, U.S. Department of Energy Office of Fossil Energy ● Office of Oil and Natural Gas

U.S. Natural Gas History Overview • The U.S. has a long history of best practices involving natural gas production. • Today 99.5 % of gas withdrawn in the U.S. is utilized. • Projected global demand growth will encourage countries with stranded gas to develop LNG export capacity to supply our needs.

U.S. Natural Gas History Overview (continued) • The U.S. continues to develop implement technology that reduces carbon intensity. • The United States supports the following international programs to reduce global natural gas venting and flaring and to develop commercially viable projects: • World Bank Gas Flaring Reduction Initiative • Methane to Markets • Gas Star • The Asia Pacific Partnership

History of U.S. Production • Discovery in 1859 • Current Production: • Third Largest Oil Producer • Second Largest Gas Producer • Context for Gas Flaring Estimates in the U.S.

Current Oil and Natural Gas Production in the United States

History of Conservation Regulation • 1893 Supreme Court ruling that States have the right to regulate natural gas • Prevention of Flaring and Waste Gas • 1946 Texas Railroad Commission hearing asking operators of Seeligson field to show cause why gas flaring should not be stopped. A year later, the Texas Railroad Commission ordered Seeligson field shut in, except for “wells that were using casing-head gas for light, fuel or carbon black, or returning it to the production horizon.”

History of Conservation Regulation • 300,000 miles of transmission lines. • Gas Storage • Gas System/Infrastructure • Natural gas is delivered to customers through a safe, sound, 2.2-million mile underground pipeline system that includes: • 1.9 million miles of local utility distribution pipes (1.1 million miles of utility mains, plus 800,000 miles of utility service lines); and

A Vast Network of Pipelines Provides Interstate Transportation

Natural Gas Costs Around the World ($USIMMBTU) Updated mid-September 2005 Source: American Chemistry Council

Global LNG Facilities Source: ChevronTexaco (April, 2005)

President Bush’s National Climate Change Technology Initiative • The NCCTI recognizes the central role technology needs to play in responding to global climate issues. • Areas of focus include: • Carbon Capture • Carbon Storage / Sequestration • Hydrogen Systems • Methane Recovery and Methane Utilization • Energy Storage Systems

Technology Support & Development • Improved Oil Recovery • DOE is researching the mobility and the sweep of injected CO2 in order to maximize miscible displacement of residual oil in the reservoir. Efforts focus on the innovative use of foams, chemical jells, and other thickening agents. • Recently initiated CO2 field test in Alabama • Gas to Liquids • DOE has partnered with Air Products and Chemicals to develop an ion transport membrane to reduce the cost of syngas production from natural gas. • DOE also supports small businesses working on new catalysts and reactor designs. • Distributed Generation • Liquefied Natural Gas Source: EOR = Shell

International Programs • World Bank Gas Flaring Reduction Initiative • Methane To Markets Partnership • Gas Star • Asia Pacific Partnership

Gas flaring: in the context of Sustainable Development Joanne DISANO United Nations' Director for Sustainable Development

François Régis MOUTON World Bank GGFR Adviser

Kristalina GEORGIEVA Director for Strategy & Network Operations, World Bank

Gas Flaring: Energy Security and the Environment H.E. François LOOS Minister delegate for Industry, France

Gas Flaring : the view from a Major IOC Christophe de MARGERIE President Exploration-Production, TOTAL

The Global gas picture : Gas resources are abundantNevertheless, energy efficiency & conservation are real issues Tcf p.a. 200 6,340 • Proved conventional reserves equivalent to 65 years of today’s demand • Proved + probable conventional reserves equivalent to 80 years of today’s demand • Potential of non conventional resources difficult to assess 2,000 Tcf is no more than an order of magnitude 180 160 EIA 2006 +2,0% p.a. 140 120 2,000 2,000 ~2,000 100 Demand + 1.8% p.a. 80 60 Demand + 2.3% p.a. Proved reserves 40 Provedreserves Probable reserves Undiscoveredreserves Estimatedresources 20 0 2000 2010 2020 2030 2040 2050 2060 2070 2080 2100 2090 Conventional gas Non Conventional

The Global gas picture : Gas is environment friendly • Global power generation : 17,400 TWh* • CO2 emissions, kg per MWh • Heavy Fuel 844 • Coal (FBC) 815 • Gas oil (diesel) 815 • OCT (open cycle) 582 • CCGT (combined cycle) 354 • CHP (combined Heat & Power) 269 Source: IEA Source : IEA + DIDEME

The Global gas picture : Flaring is the most obvious and urgent issue to tackle Bcm p.a. 2005 figures • Energy efficiency & conservation efforts for the Oil & Gas Industry can be applied to ~500 Bcm p.a. • Flaring reduction : ~150 Bcm (GGFR fig.) • The only "wasted"gas within our industry • Environment & Image issue • Energy efficiency èreduce the 350 Bcm used by the industry • Technology needed : process & equipments • Increased gas prices will help • 400 Bcm are reinjected • Maintain reservoir pressure to improved recovery • Delayed (not lost) gas production 4 000 3570 Bcm 3 500 400 Reinjection 180 Shrinkage : LPG & Condensates Recovery 3 000 2990 Bcm 150 Flaring 190 Upstream cns. 150 Mid-Downstream cons. 2 500 2500 Bcm 165 Fertilizers + Methanol 2 000 1 500 Gas Pipe 2145 1 000 500 190 LNG 0 sources : IEA - Cedigaz - GGFR - Total Flaring : a common issue for the Industry Wasted energy, Environment & Image

The path to gas flaring reduction • E&P installations are large, complex and costly • Re engineering or modifications are difficult • First Priority : Design new development with no flaring • Total company rule since 2000 • Our real issue now is to reduce flaring on existing fields • Existing gas markets / outlets are favorable conditions • Examples : North Sea (no more flare), Nigeria (Ofon ph2) • More difficult and lengthy when new gas outlet has to be created • Examples : Angola (ALNG), Cameroon.. • Enablers : • Gas outlets and valorization • Stakeholders alignment : State, National Company, Partners.. • Adequate contractual –fiscal –legal gas frameworks • Project Financing, Technology

~2/3 is continuous flaring ~1/3 is due to Operational availability (unexpected shut downs…) Safety Start-up operations Split of 2005 flaring Total operated figures Flaring reduction Priority to Continuous Flaring reduction other type of flaring continuous flaring

Ofon Phase 1 in 1995 A typical offshore development of the 90’s in the Gulf of Guinea New context after Phase1 Gas outlet : NLNG onstream Field redevelopment opportunity Growing concern on GHG emission Nigerian objective to stop flaring by 2008 Ofon Phase 2 Project Expansion of the fields Installation of gas facilities No more flare Laying of gas export pipeline Gas export 100 Mscfd OFON field redevelopmentLaunched thanks to the alignment of all stakeholders 50 Mscfd Oil export

Common Goal :ensure sustainable oil developments & address gas flaring concerns through a gas valorization scheme Strong Commitment & Alignment of all Stakeholders : partnership Sonangol - Oil companies Pooling of gas resources Legal & Commercial Framework suiting the project characteristics Strong partners to overcome commercial and technical challenges Start-up : 2012 phase II 1-4 NAG fields phase III Gas Caps blowdown Phase I : LNG plant AG pipelines Angola LNG mindset from a gas flaring concern to a gas valorization scheme Arranging a stable gas supply of 1Bcfd Bloc 0/14 Soyo 200 m Kizomba C NAG Kizomba A Kizomba B Block 2 GIRASSOL Greater Plutonio DALIA

Difficult to reach a good technical solution because of scattered installations A regional approach with LNG plant in Equatorial Guinea and gas from Cameroon & Nigeria All Cameroonian E&P players involved Positive involvement of GGFR as early as 2003 Cameroonfrom a gas flaring concern to a gas valorization scheme SNH SNH Total Total Perenco Perenco Nigeria Cameroon Pecten Pecten Addax Addax Euroil Euroil Eq. Guinea

Aiming at efficiency improvement on : CO2 emissions Flexibility Safety A simple molecule (CH3-O-CH3) burning without any soot => clean fuel Easy to transport and store (comparable to LPG) Premium fuel for diesel engine Competitive production process New gas conversion technologies being developedmight also be part of the solution DME : another GTL option GTL micro-technologies Direct Synthesis Process developed since 2001 by Total and a Japanese consortium Partnership with Velocys to develop an improved catalyst process New Technologiesmay help create new gas outlets for limited gas flows

Gas flaring reduction is a mustbut still a difficult issue requiring efforts by all Parties • Gas flared : Wasted energy, harm to the environment & image issue • After the first and most obvious steps have been taken, issues are becoming and will be more and more complex, sometimes requiring solutions beyond a single company capabilities • Enablers : • Mainly stakeholders alignment, Common Will Adequate contractual –fiscal –legal gas frameworks, Gas outlet and valorization, Financing, Technology • GGFR / World Bank : • a welcome initiative to rise global awareness foster stakeholders alignment, disseminate good practice and help securing gas outlets

No flaring on new development Flaring Reduction on existing fields Acute Monitoring of flaring Dedicated team Elaboration of Technical & Business solution Issues discussed with Partners and Governments GGFR Standard & Support quite useful Total’s operated fields Efforts are rewarding : Total operated flaring will continue to decrease despite rising operated production +24% +32% -40% -50% 98 2005 2012 ProductionFlaring Total target : -50% 2005-2012 Beyond 2012 : Efforts are to be maintained and amplified if we want to keep reducing flaring

60 40 20 0 40$ 60$ Partnering with Host CountriesBeyond Gas Flaring reduction : Going Beyond Old Petroleum Practices Injury rate, Group and contractor employees West Africa typical deep-offshore rent sharing Local Communities Issues & Acceptance • Safety is key for the valuation of management performance • New targets for 2009 • Safety policy homogenously applied worldwide • Contractors safety managed as for Total’s employees TRIR* per million man hours worked $/boe Target :- 60% over 4 years 60 15 Net margin 40 10 Host country Realization : - 59% 20 5 Opex Capex 2001 2002 2003 2004 2005 • Balanced risks / profitability sharing with host countries • Development of local industry • Strengthening strategic partnerships • Evaluating local impacts embedded in Total’s decision making process • Developing local employment • Creating partnerships with communities * TRIR : Total Recordable Injury Rate

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