Associated natural gas flare in the integrated market of the southern cone

Abstract

Reducing greenhouse gas is a major challenge. The oil and gas industry must contribute to this goal, primarily by controlling natural gas flaring and venting, which is a multibillion revenue loss. More than 4000 billion cubic feet of gas is flared every year in the world, leading to almost 400 million tonnes of greenhouse gases. In Latin America, 7.4% of the total gas produced in the region is flared or vented. This article evaluates the status of the flaring and venting of gas in Latin America, focusing on the southern cone countries (Argentina, Bolivia, Brazil and Chile). It also develops a long-term perspective analysis for the region, using an integrated optimization model. Findings indicate that, when transport infrastructure is limited or there is no domestic demand to absorb the associated gas, flaring becomes the least-cost solution in the optimization model. This can be critical in the next decade, due to the excess gas supply or the lack of gas demand to absorb it. Particularly, the natural gas demand associated with the electricity generation in Brazil is reduced by the hydroelectric expansion and a sluggish economy. Therefore, policies must promote options to monetize the stranded gas.