TOWARD ZERO FLARING IN INDONESIA: DEVELOPING ... - World...
Transcript of TOWARD ZERO FLARING IN INDONESIA: DEVELOPING ... - World...
TOWARD ZERO FLARING IN INDONESIA:
DEVELOPING POLICY ON GAS FLARE REDUCTION
GGFR STEERING COMMITTEE MEETING
World Bank – Washington DC, 30 November 2011
PRESIDENT’S DELIVERY UNIT
FOR DEVELOPMENT MONITORING AND OVERSIGHT (UKP4)
INDONESIA 2020 (1/2)
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OUR ANNUAL TARGET OF
ECONOMIC GROWTH:
7%
BUT IT HAS TO BE A
GREEN 7% GROWTH
WITH SUPPORT
FROM NATURAL
RESOURCES
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INDONESIA 2020 (2/2)
OUR NATIONAL EMISSION
REDUCTION TARGET OF
26% from state funds
FROM 2950 millions ton of CO2e
TO 1761 millions ton of CO2e
41% with international support
4
Synchronisation
Co
ns
iste
nc
y
UKP4,
BAPPENAS &
MoF
Action Plan 369 Action Plans
UKP4 MAINTAINS CONSISTENCY AND SYNCHRONISATION
ONE OF ENERGY ISSUES IN INDONESIA
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PLENTY
OF GAS
LIMITED
SUPPLY TO
GAS MARKET GAS FLARING
GAS FLARING MAP IN INDONESIA
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• Year 2008 estimated
about 270-350
MMCFD was flared,
equivalent to 10% of
annual Indonesian
consumption (36
bcm in 2009.
Indonesia ranked #
7-10
• Year 2009 estimated
357.5 MMSCFD,
equivalent to $500
million in lost
revenues including
lost government
share
Source: National Geophysical Data Center & The World Bank
WHY GAS FLARE MATTERS
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Flared gas will help meet
increasing domestic demand for
gas along with Indonesia’s rapid
economic growth
Black Carbon emitted
during flaring increases the
warming effect of flaring
Indonesia venting and flaring
adds 17 million tons CO2 to
atmosphere every year and
wastes million dollars of energy
resources
Flared gas utilization will also help reach the
emission reduction target of 26% up to 41%
by 2020
OUR POLICY INSTRUMENT
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PLENTY OF
GAS
GAS FLARING
ZERO
FLARE
REDUCTION
POLICY
LIMITED ACCESS
TO GAS MARKET
Policy Snapshots:
• Recovery gas flare target is 30-
60% per year
• Zero flare by 2025 as part of EMR
action plans
GAS FLARING MONETIZATION
Location: Banyu Urip Field, East Java
With assistance from GGFR, the
instrument aims at addressing:
• Disparity of gas flaring financing
across Indonesia so that it will all be
economically viable
• Business perspective profitable
industrial practice as incentives
• Sustainability on both levels:
– Gas flaring
– Environmentally-friendly energy
supply
Case in Point:
PHE Offshore North
West Java (~zero
flare since 2009)
EXSISTING LEGAL AND REGULATORY FRAMEWORK GGFR assesement
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No single
regulatory
agency Un-defined
Technology
selection
Unspecified
Limitations
on gas flaring
No Flaring
permits system
Specific incentives
for project
development not
provided
No measurement,
monitoring and
reporting
Imp
act
Easiness to implement
High
Low
Hig
h
No mandatory requirements
for flared gas reduction
ROAD TO GAS FLARING MONETIZATION
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Action Plans
1. Acceleration and advancement of
ZERO FLARE policy
2. Stocktaking in oil fields across
Indonesia for potential gas
monetization
3. Acceleration of gas flare utilization for
environmental purposes, particularly
socialization of Clean Development
Mechanism (CDM) for CO2 reduction Progress
1. Framework of regulation for gas flaring utilization has been drafted
2. Stocktaking has already been done in 2009: Indonesia’s current volume
total of flaring is 357,5 MMSCFD and the flaring sites are spread in 13 oil
blocks across Indonesia
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UKP4’s ROLE IN DEBOTTLENECKING:
ACCELERATING ZERO GAS FLARE POLICY
1
Nov 2010 Dec 2010
Dec 2010
Feb 2011
Mei 2011 Jun 2011
Sep 2011 Nov 2011
1st Vice Presidential (VP) Meeting on
National Gas Policy, we highlighted Gas
Flare Monetization (GFM)
Minister of Environment (MoE)
responded to our letter, explaining his
positions on GFM and concerns
about CDM
UKP4 intervention
2012
onwards
Minister of Energy & Mineral Resources
responded to our letter, explaining his
progress on GFM and their continuing
cooperation with GGFR
Government workflow
2nd VP Meeting on
National Gas Policy,
we brought up
MoE’s concern and
discussed potential
recommendations
3rd VP Meeting
also discussed
progress on flare
gas utilization
plan and policy
planning
EMR Ministry cooperated with GGFR & successfully
completed 3 stakeholder workshops on flaring &
venting policy in Indonesia. EMR Ministry ready to
pass the drafted regulation soon.
Government workflow
2
3
4
5 6 7 8
National GHG Emission Reduction Action Plan Launched on September 20th 2011
Presidential Regulation 61/2011 –
National Action Plan for GHG Emissions
Reduction (RAN-GRK)
– implements targets of reducing GHG
emissions by 26% by 2020
– Annex II: Supporting Activities requires
“monitoring of the implementation of the policy
on reducing the volume of flare gas burning”
over the period to 2014
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Towards
Zero Gas
Flare
Indonesia
GAS FLARE REDUCTION PROGRAM 2025
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Year
Gradual decrease facilitated by 24 MMSCFD
gas utilization per year, resulting in total gas
flared of 28,33 MMSCFD and remaining gas
flared as minimum as 4,33 MMSCFD
Utilization channels:
LPG, CNG, Gas Lift, and
Reinjection
Source: EMR Ministry
PROJECTED POLICY OUTCOMES
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TOTAL OF POTENTIAL FLARED GAS REDUCTION
Total current flared gas:
357.5
Utilization:
183.6
Remaining flared gas:
173.9
Source: EMR Ministry
Year 2009
2011 MONTHLY FLARED GAS TRACKING BY NATIONAL OIL AND GAS IMPLEMENTING BODY
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240.00
250.00
260.00
270.00
280.00
290.00
300.00
310.00
JAN FEB MAR APR MEI JUN JUL AGT SEP OKT NOV DES
Cu
mu
lati
ve F
lare
d G
as [
MM
SCFD
]
281,5
MMSCFD
ATTRACT THE INDUSTRIES
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Provides
Economical as
well as
Environmental
Incentives
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CASE IN POINT
PERTAMINA HULU
ENERGI OFFSHORE
NORTH WEST JAVA
(PHE ONWJ)
Zero Gas Flare
Best practice in Indonesia, so far
Spans from North of Cirebon to Seribu Islands
11 Oil Platforms & Central Plant 1 Floating Storage Offloading Unit 3 Onshore Receiving Facilities 171 Normally Unmanned Installations
Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) is the operator of this PSC, transferred from BP in 2009
Facilities include 670 wells, 170 piers, 40 refineries & service stations, and 1600 km underwater pipes
Source: PT Pertamina
PHE ONWJ
CENTRAL PLANT Very MINIMUM flare
almost unnoticeable
ZERO FLARE PRACTICE IN INDONESIA
Source: PT Pertamina
PHE ONWJ
FLOATING STORAGE
OFFLOADING UNIT
1 Million Barrel per Day
ZERO FLARE PRACTICE IN INDONESIA
ZERO
FLARE Source: PT Pertamina
ZERO FLARE PRACTICE IN INDONESIA
CILAMAYA ORF (ONSHORE RECEIVING FACILITIES)
Location: 6 14’31.49202 S, 107 35’26.08716 E
Zero Flare as a Necessary Practice
Through Vent Recovery Unit Unplanned Shut-down as a Catalyst Low Shutdown Low Flare Low Flare Better Oil Production
Source: PT Pertamina
Highlights: Zero Flare as an Economic Company Strategy Emission Reduction as one of the Key Performance Indicators, formally in 2011
ZERO FLARE PRACTICE IN INDONESIA
PHE ONWJ
ONSHORE RECEIVING
FACILITY (ORF)
Potential Floating Storage
Receiving Unit (FSRU) Site
Pipes for Gas Power Plant
(flare gas utilization)
Source: PT Pertamina
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UKP4’s NEXT STEPS FOR ACCELERATING ZERO FLARE
1
Nov 2010 Dec 2010
Dec 2010
Feb 2011
Mei 2011 Jun 2011
Sep 2011 Nov 2011
1st Vice Presidential (VP) Meeting on
National Gas Policy, we highlighted Gas
Flare Monetization (GFM)
Minister of Environment (MoE)
responded to our letter, explaining his
positions on GFM and concerns
about CDM
UKP4 intervention
Minister of Energy & Mineral Resources
responded to our letter, explaining his
progress on GFM and their continuing
cooperation with GGFR
Government workflow
2nd VP Meeting on
National Gas Policy,
we brought up
MoE’s concern and
discussed potential
recommendations
3rd VP Meeting
also discussed
progress on flare
gas utilization
plan and policy
planning
EMR Ministry cooperated with GGFR & successfully
completed 3 stakeholder workshops on flaring &
venting policy in Indonesia. EMR Ministry ready to
pass the drafted regulation soon.
Government workflow
2
3
4
5 6 7 8 Next Steps in
2012
Next
Steps
in
2012
Strategically select and integrate
GGFR’s recommendations into the
KPI of all related ministries by early
2012 through the Presidential
Directives, particularly:
• Issue Ministerial Regulation on
Gas Flaring Policy by mid 2012
• Align supporting and relevant
policies from related ministries
by the end of 2012
• Implement few pilot projects
by the end of 2012
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UKP4
Provide Umbrella
Policy 1
Detail Program/
Action Plan 2
Progress Tracking
3
Human Capacity
Development 4
MOVING FORWARD
THANK YOU
PRESIDENT’S DELIVERY UNIT
FOR DEVELOPMENT MONITORING AND OVERSIGHT
(UKP4)
GGFR STEERING COMMITTEE MEETING
World Bank – Washington DC, 30 November 2011
APPENDIX
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Onshore Offshore All
Median block size (mmscfd) 1.8 7.3 3.6
Share of 5-largest flaring blocks in total flaring 66% 76% 46%
Share of 5-largest flaring blocks in oil prodn 13% 73% 22%
Blocks flaring <5mmscfd 21 8 29
MIGAS data (2004) reported in GGFR Associated Gas Survey (2006)
Existing legal and regulatory framework (1)
by GGFR & Team
Regulatory agency No single regulatory agency. MIGAS, BP MIGAS and Ministry of Environment all have limited regulatory responsibilities with regards to gas flaring
Technology selection
General obligation to use environmentally-friendly technologies
Limitations on gas flaring
PSC requires associated gas is utilised if ‘economic’, but no further detail is provided and this does not appear to be applied in practice.
BP MIGAS may take associated gas that is not utilised for free
Environmental regulations specify minimum opacity for flared gas and prohibit venting except for temporary and operational exclusions defined in Regulation 13/2009
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The format for the summary follows the framework laid out by DG MIGAS
Existing legal and regulatory framework (2)
Flaring permits No formal permitting system appears to be in place
Mandatory
requirements for
flared gas
reduction
All routine and continuous flaring to be eliminated by
2025 (in accordance with GOGII)
Incentives for
project
development
No specific fiscal or PSC incentives are provided for
flared gas utilisation projects
There is uncertainty over the allocation of revenues
from sales of CERs through the CDM
Measurement,
monitoring and
reporting
MIGAS collects data on flaring by company, but
volumes are mostly estimated and appear unreliable
Operators are obliged to report emissions from
flaring (and other sources) to Ministry of
Environment
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