Richie D. Baud

Deputy Regional SupervisorProduction and DevelopmentMMS, Gulf of Mexico OCS RegionU.S. Dept. of Interiorrichie.baud@mms.gov

USA OffshoreFlaring and Venting

Outline

• Introduction• History of Regulations• Current Regulations• Compliance• Challenges and Future

• (Definitions and Acronyms)

Gulf of MexicoUS Federal Waters

~6,600 Active Leases ~1.7 million bbls oil/day ~6.5 billion ft3gas/day

Pipeline Infrastructure

Oil-well Gas Production

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• < 1% of OWG flared + vented• < 0.5% of total gas flared + vented

Offshore Oil + GasGreenhouse Gas Emissions

(2005 Survey)

* Estimated using EPA criteria

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Venting Flaring

~ 0.3 % of US greenhousegas emissions are from federaloffshore oil + gas activities

Flare/vent Approvals(Fiscal Year 2009)

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57%43%Non-Hurricane Hurricane

New facilitiesonline

Deepwaterpipeline repaired

Oversight

Executive(Enforce Laws)

Legislative(Write Laws)

Judicial(Interpret Laws)

Oil companies

Branches of USA Government

Office ofInspector

General (OIG)

MineralsManagement

Service (MMS)

GovernmentAccountabilityOffice (GAO)

FederalCourts

Outline

• Introduction• History of Regulations• Current Regulations• Compliance• Challenges and Future

• (Definitions and Acronyms)

USA Flare + Vent Regulations

Executive(Enforce Laws)

Legislative(Write Laws)

Judicial(Interpret Laws)

Congress writesbill (OCSLA)

President signsOCSLA into law

MMS writesregulations

(more detailed)

MMS issuesNTL if needed(very detailed)

Oil companiesfollow regulations

& NTLs

• Law change very rare (Congress)

• Regulation change takes years (MMS)1. Publish proposed regulation2. Receive public comments3. Publish final regulation

• NTL quick, but only guidance (MMS)

Branches of USA Government

MMS & most othergovernment agencies Congress, GAO Court system

Regulatory History

1953 – Outer Continental Shelf Lands Act (OCSLA)• No flare/vent language

Mid 1970’s – OCS Orders (preceded regulations)• Initially vague flaring/venting restrictions• Issued NTL’s

• Focused on OWG • MMS approval beyond 72 hrs• Max 144 cumulative hrs/month• No GWG flaring allowed• MMS may approve flaring <1 yr if…

• Uneconomicor

• Positive plan of action

1947

Regulatory History

1978• OCSLA amended to include flare/vent restrictions

• (No lessee)... shall be permitted to flare natural gas from any well unless the Secretary finds that there is no practicable way to complete production of such gas, or that such flaring is necessary to alleviate a temporary emergency situation or to conduct testing or work-over operations.

• Prohibited continuous flaring + venting

• Issued NTL• As before, MMS may approve flaring <1 yr if…

• Uneconomicor

• Positive plan of action• “Uneconomic” must consider all gas and oil at platform• Companies complained• Took 4-5 yrs for companies to factor into planning

Regulatory History

1981 – No royalties on flared or vented gas

1988 – Flare/vent regulations1 published• Need MMS approval except under certain conditions• Most conditions based on time (not volume)2

• Field records• Did not yet include:

• Burning liquid hydrocarbons• H2S flaring

2007 – Published proposed changes3 to flare/vent regulations• Separate flare from vent reporting• Meters

• Technology now safe (no flow restriction)• Dynamic range/turndown now possible

1. http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=28c064c120daf42f7e000b2a096d5b79&rgn=div6&view=text&node=30:2.0.1.2.26.11&idno=302. Later became issue with large deepwater facilities3. http://frwebgate5.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=704571270642+0+2+0&WAISaction=retrieve

Policy History

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n• Focused on OWG • Increased flare record inspections

• From twice/month to daily• MMS flare approvals

• Limited repair time• Limited GOR• Limited volume

• Limited $ during flaring led to:• Redundant systems• Faster repairs

Outline

• Introduction• History of Regulations• Current Regulations• Compliance• Challenges and Future

• (Definitions and Acronyms)

Current Regulations

• Equipment working• Continuous generally not allowed• Small & uneconomic (50 MCF/day)1

• Lease use allowed

• Equipment failures• OWG – 48 hours continuous• GWG – 2 hours continuous• Total – 144 cumulative hours/month

Sales Pipeline To Shore

LargeCompressor

MediumCompressor VRU

HP Gas IP Gas LP Gas Atmos.-press.Gas

• Unloading / Testing – 48 hrs cumulative

• Everything else – Need MMS approval

• All recorded on daily field records +monthly production reports

1. If >50 MCF/day must show VRU cost > value of gasit would recover over platform life

Record Keeping

• Daily Flare/Vent Field Records• On platform 2 yrs (office 6 yrs)• Volume flared/vented & liquids burned• # Hours• Reasons• Wells contributing + GOR’s

• Monthly Production Reports• Submit to MMS accounting office• Disposition of all oil & gas produced

• Sales, lease use, flared/vented, injected, …

Current Regulations + Policy

• Deepwater facilities• Volume limits• Lower GOR cutoffs• Now have spare VRU on many facilities• Now have extra compressor capacity on many facilities

• Focus on records• Upsets + Routine• Report all gas (sales, lease use, flare/vent, injected …)• Goal = accurate reporting, not punishment

• Hurricanes• Volume limits• Lower GOR cutoffs• No flaring before repair schedule• No flaring until repairs near completion

Outline

• Introduction• History of Regulations• Current Regulations• Compliance• Challenges and Future

• (Definitions and Acronyms)

Compliance• 60 inspectors fly daily / 14 helicopters• ~3,400 GOM facilities - goal to inspect at least once/year• Inspectors check field records

• MMS approvals• Flare/vent records • Raw production data

• Production reports(oil & gas disposition)

• MMS database

Flare/vent approvals

Field Inspections

• Check flare/vent records to determine if they are reasonable

• Compare upsets with approvals (when required)

• If see flare or vent from helicopter, note time & return another day to check records

• Ask about all possible vent locations & make sure all sources being recorded

• Make sure field records include “routine” flaring/venting, not just upsets

• Investigate economics if “routine” averages over 50 MCF/day

How to Minimize ContinuousFlaring & Venting

• Prohibit permanent flaring/venting of associated gas

OR• Include gas and oil in economics

• Economic review of facilities that continuously flare/vent over threshold

• Require capture of gas if equipment is cost neutral over life of facility

Flaring + Venting of All Gas?

Flaring + Venting of Low Pressure Gas?

• Properly maintain equipment• Install spare compressor capacity• Spare VRU on large platforms• Only low GOR wells during incidents• Shut-in facilities when necessary• Monitor compliance

How to Minimize IntermittentFlaring & Venting

Outline

• Introduction• History of Regulations• Current Regulations• Compliance• Challenges and Future

• (Definitions and Acronyms)

• Up to 87% of gas may be vented instead of flared – can’t see it

• Deepwater facilities can flare/vent huge volumes in short time period

• Cannot inspect as many facilities in deepwater due to long flight times

• Hurricanes – damaged platforms + pipelines

Challenges

Challenges - Hurricanes

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Considerations

Short Term• Less oil to market

• Temporary - Still in ground, not lost• Less cash flow to company• $ to install/fix equipment

Long Term• Reduced losses to atmosphere = more oil + gas

to market in long run• Less GHG into atmosphere• Companies prepare better + minimize downtime

• Facility design (spare compressor capacity, multiple compressors, …)

• Repairs (better maintenance, spare equipment + personnel ready)

(Courtesy of Christopher Richter)

Outside Reactions

• 2004 GAO Report• Overall MMS complimented

• Closely regulate flaring/venting• Track volumes at every location• Good database

• Recommendations• Meters• Separate flare vs. vent reporting• Flaring instead of venting

• 2007 Proposed Regulation Change Published• Mostly oil industry comments• Liked clearer language• Did not like meters or separate flare from vent reporting

Infrared Video Camera

Naked Eye

Infrared Video Camera

Satellites

(Image courtesy of Goddard Space Flight Center)

Data from European Space Agency World Fire Atlashttp://earth.esa.int

Future

• MMS Strives to Continuously Improve

• Updated Regulations (2010)• Clearer language• Meters

• Approve each meter• Inspect meters• Set accuracy + calibration requirements

• Separate flare from vent reporting

• Compare Production Reports to Field Records

• Possibly Require Flaring Instead of Venting (workshop)

• Continue Infrared Video Camera + Satellites

(Courtesy of Christopher Richter)

Thank You

Gracias

Richie D. Baud

Deputy Regional SupervisorProduction and DevelopmentMMS, Gulf of Mexico OCS RegionU.S. Dept. of Interiorrichie.baud@mms.gov

Definitions

• Flaring – Controlled combustion of natural gas at the end of a pipe, especially during emergencies, process upsets and equipment failures.

• Venting – Controlled release of natural gas into the atmosphere at the end of a pipe, without combustion.

• Oil-well Gas (OWG) – Natural gas produced as a byproduct of oil production; also called Associated Gas or Casinghead Gas.

• Gas-well Gas (GWG) – Natural gas produced from a gas well.

• Mcf – Thousand cubic feet of gas. 1 Mcf = 28.32 cubic meters.

• Gas-oil Ratio (GOR) – The volume of natural gas (in standard cubic feet) produced divided by the amount of oil (in stock tank barrels) produced.

• Vapor Recovery Unit (VRU) – A system designed to recover atmospheric pressure gas such as vapors from storage tanks. Recovered gas is pressurized so the gas can be sold or used as fuel onsite.

Other Acronyms• EPA – Environmental Protection Agency = USA federal agency responsible for regulating most environmental issues.

• GAO – Government Accountability Office

• GOM – Gulf of Mexico

• HP – High pressure

• IP – Intermediate pressure

• LP – Low pressure

• MMS – Minerals Management Service = USA federal agency responsible for regulating most offshore oil and gas activities.

• NTL – Notice to Lessees and Operators = Brief document that MMS issues to clarify regulations, state policies, ...

• OCSLA – Outer Continental Shelf Lands Act = USA law governing offshore oil and gas activities.