Implementation of Kyoto Protocol in the Iranian oil industry
|In an era of decreasing oil availability and unequivocal evidence of climate change that is very likely linked to anthropogenic greenhouse gas (GHG) emissions, this research seeks to evaluate the potential impact of flare gas recovery (FGR) installations on the implementation of Kyoto Protocol targets in the Iranian petroleum industry.
The Islamic Republic of Iran, second largest producer of the Organisation of Petroleum Exporting Countries (OPEC), ranks third among the world’s top flare gas pollutants (Gerner et al. 2004 p.1). It is estimated that their annual flaring operations of 10-20 billion cubic meters (bcm) per barrel represent an opportunity cost of $20bn. This dissertation will set out recommendations on how best to reduce the volume of flared associated gases, a vast byproduct of the national Iranian fossil fuels industry. An assessment of Iran’s national greenhouse gas (GHG) inventory leads to the conclusion that while the nation’s petroleum industry may have accounted for 14% of GDP and 76% of foreign revenues in 1998, it nevertheless led to an 84% share of national carbon dioxide (CO2) and 64% share of methane (CH4) emissions . Throughout the study, the extent of environmental pollution and damage costs caused by Iran’s heavy flaring activity will be addressed. Via the analysis of key economic, environmental, and social parameters the potential of FGR to act as a suitable GHG emissions mitigation strategy will be determined.
The Amak facility, a pilot project of the Iranian petrol industry on the recovery of sour gases, mainly associated with oil and gas drilling, will be used as the primary case study. Within the following chapters the installation’s various affects on the local economy and ecosystem will be described. The project is in accordance with governmental efforts aimed at increasing sustainability and a zero-flaring policy initiative. Amak is expected to prevent the flaring of 241 million standard cubic feet per day (mmcsfd) associated gases that contain 18,400ppm hydrogen sulfide (H2S) and reduce a daily volume of 18,000 tons of air pollutants. Analysts predict the concept to be highly profitable with chemical end products have been priced at $500million during a 30 month rate of return period. The main share of Iranian oilfields are located in the south western province of Khuzestan: a flat grassland area where tropical temperatures facilitate the diffusion of waste gases not only inland but also seaward towards Saudi Arabia, Iraq and Kuwait and the Persian Gulf. The study will propose the large-scale installation of additional Amak-type gas recovery units at all adjacent south western Iranian oilfields in order to reduce the diffusion of emissions towards bordering Persian Gulf countries. Regarding the key obstacle to waste gas recovery projects, i.e. the vast volume of stored elemental sulphur by-products, it is recommended that these waste substances be used in the asphalt industry due to their high level of concentrated H2S and the expected positive impact such a system could have for national road infrastructure. In addition, by implementing reforestation within a previously uncolonized land, the first generation of pioneer plants can lead to significant ecological benefit to the Khuzestan province.
Furthermore, it is discussed whether the Kyoto Protocol’s Clean Development Mechanisms (CDM) can offer Iran, which signed the convention as a Non-Annex 1 Party, the necessary financial incentives and international credibility to reduce national GHG emissions and sponsor mitigation strategies such as large-scale FGR units. A membership agreement to the World Bank’s Global Gas Flaring Reduction Public-Private Partnership (GGFR) will be recommended in order to facilitate the removal of financial constraints for international investments into gas recovery projects.