Natural Gas Flaring and Venting: Opportunities to Improve Data and Reduce Emissions
Published: 2004-07-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since 1995, the average price of natural gas in the United States has almost tripled as demand has grown faster than supply. Despite this increase, natural gas is regularly lost as it is burned (flared) and released into the atmosphere (vented) during the production of oil and gas. GAO was asked to (1) describe flaring and venting data and what the federal government could do to improve them; (2) report, on the basis of available information, on the extent of flaring and venting and their contributions to greenhouse gases; and (3) identify opportunities for the federal government to reduce flaring and venting.
section_title: What GAO Found
paragraphs: U.S. and global data on natural gas flaring and venting are limited. First, the Department of Energy's Energy Information Administration (EIA) collects and reports data voluntarily provided by oil- and gas-producing states. Because EIA has no authority to require states to report, some do not, leading to incomplete data. Second, EIA has provided limited guidance to states to promote consistent reporting. As a result, only about one-fourth of the states reporting provide data that EIA considers consistent. Third, the data EIA collects do not distinguish between flared gas and vented gas--an important distinction since they have dramatically different environmental impacts. Data on flaring and venting outside the United States are also limited, since many countries report unreliable data or none at all. To improve data on flaring and venting, EIA could use its authority to collect data directly from oil and gas producers; to obtain more consistent data, EIA could improve its guidelines for reporting. From an environmental perspective, EIA, the Minerals Management Service, and the Bureau of Land Management could require flaring and venting data to be reported separately from each other. Globally, the federal government could set an example by continuing to improve U.S. data, continuing to support global efforts, and using U.S. satellite data to detect unreported flaring. On the basis of the limited data available, the amount of gas emitted through flaring and venting worldwide is small compared with global natural gas production and represents a small portion of greenhouse gas emissions. Nevertheless, flaring and venting have adverse environmental impacts and result in the loss of a significant amount of energy. Annually, over 100 billion cubic meters of gas are flared or vented worldwide--enough to meet the natural gas needs of France and Germany for a year. While flaring and venting do occur in the United States, less than 1 percent of global production is flared and vented. Opportunities exist in several areas to help reduce flaring and venting, both in the United States and globally. For example, exploring ways to address market barriers affecting associated gas could help identify approaches to reduce global flaring and venting.

section_title: Letter
paragraphs: Since 1995, the average price of natural gas in the United States has almost  tripled as demand has grown faster than supply. Natural gas prices  increased from $1.93 per million British thermal units (mmBtu) in 1995 to  $5.15 per mmBtu in 2003—an average annual rate of increase of over 13  percent (see fig. 1).
Despite this increase in its price, natural gas is regularly burned and  released into the atmosphere during the production of oil and gas. While  the exact amount of gas lost in this way is uncertain, given the vast extent  of oil and gas production throughout the world, it could be significant. In  addition to resulting in the loss of a potentially valuable resource, the  burning and release of natural gas into the atmosphere contribute to  greenhouse gas emissions, which are generally considered to be warming  the earth’s atmosphere.
Although most natural gas production involves extracting gas from wells  drilled into underground gas reservoirs, some natural gas is generated as a  by-product of oil production. Gas produced during oil production is called  associated gas. During oil and gas production, it may be necessary to burn  or release natural gas for a number of operational reasons, including  lowering the pressure to ensure safety. Burning natural gas is known as  flaring, while releasing natural gas directly into the atmosphere is called  venting. In addition to the operational reasons for flaring and venting, in  areas where the primary purpose of drilling is to produce oil, producers  flare or vent associated natural gas because no local market exists for the  gas and transporting it to a market may not be economically feasible.  Natural gas prices are a major determinant of whether associated gas is  flared and vented or sold. Associated natural gas would be sold if prices  were high enough over a long enough period to justify building the  infrastructure—pipelines and ports—to transport the gas to a market. In  the United States, there are well-developed natural gas markets and  infrastructure to reduce the flaring and venting of associated natural gas.  However, in parts of the world like Africa and the Middle East, where the  natural gas market and infrastructure for transporting gas are not as well- developed, flaring and venting are generally more prevalent. With increases  in natural gas prices, some countries have recognized the potential of  increasing exports to high-demand countries like the United States using  liquefied natural gas (LNG) technology. These countries liquefy the natural  gas and transport it in specially designed tanker ships to the United States  and other countries. When the liquefied gas arrives at an import facility, the  liquid is returned to a gaseous state and transported to a market.
Although gas is sometimes flared or vented because it has too little  economic value to justify its capture, flaring or venting this gas into the  atmosphere has an environmental cost. In general, flaring emits carbon  dioxide, while venting releases methane. These and other chemical  compounds found in the earth’s atmosphere create a greenhouse effect.  Under normal conditions, when sunlight strikes the earth’s surface, some of  it is reflected back towards space as infrared radiation or heat. Greenhouse  gases such as carbon dioxide and methane impede this reflection by  trapping heat in the atmosphere. Methane is 23 times more potent than  carbon dioxide in its ability to warm the atmosphere. While these gases  occur naturally on earth and are emitted into the atmosphere, the  expanded industrialization of the world over the last 150 years has  increased the amount of emissions from human activity (known as  anthropogenic emissions) beyond the level that the earth’s natural  processes can handle. Scientists generally agree that these increased  greenhouse gases are contributing to global warming, which can have  detrimental effects on the climate. In general, the environmental costs of  flaring and venting are not borne by the responsible parties because there  are no restrictions on greenhouse gas emissions. However, nations have  proposed international agreements to limit greenhouse gas emissions,  including those released during flaring and venting.
Numerous federal agencies have a role in oil and gas production and its  emissions’ impact on the environment. The Department of Energy’s (DOE)  Energy Information Administration (EIA) is the federal agency responsible  for providing energy information to meet the needs of the public, the  federal government, industry, and the Congress for making policy, fostering  efficient markets, and improving public understanding. DOE has also  provided funding support to a World Bank public-private partnership to  reduce global gas flaring. The Environmental Protection Agency (EPA) has  responsibility for monitoring and reporting on a wide range of  environmental issues, including greenhouse gases such as carbon dioxide  and methane. The Department of the Interior’s Minerals Management  Service (MMS) and Bureau of Land Management (BLM) have responsibility  for regulation and oversight of oil and gas leases for offshore federal  properties and onshore federal lands, respectively. In general, flaring and  venting are not authorized on these properties except for standard  operational reasons. In addition, both agencies require producers to report  combined flaring and venting data for federal leases. The Federal Energy  Regulatory Commission (FERC) has responsibility for determining public  convenience and necessity for interstate transmission of natural gas  through pipelines as well as for permitting onshore liquefied natural gas  facilities. In addition, the U.S. Coast Guard plays a role in the LNG offshore  permitting process. The U.S. Agency for International Development  (USAID) supports various projects around the world, including energy  projects, in partnership with other countries. The National Oceanic and  Atmospheric Administration (NOAA), under the Department of Commerce,  uses U.S. satellite technology to, among other things, monitor gas flaring  activity around the world.
Regarding natural gas flaring and venting from oil and gas production, in  both the United States and the rest of the world, you asked us to (1)  describe the data collected and reported on natural gas flaring and venting  and what the federal government could do to improve it; (2) report, on the  basis of available information, on the extent of flaring and venting and its  contribution to greenhouse gases; and (3) identify opportunities for the  federal government to reduce such flaring and venting.
To do this work, we obtained currently available data on natural gas  production and estimates of flaring and venting in the United States from  EIA, MMS, and BLM. We obtained international data from Cedigaz, a  French oil and gas industry association that gathers worldwide information  on natural gas; the World Bank; the International Energy Agency, an  intergovernmental energy policy body; and the United Nations. We  determined that all the data we reviewed were sufficiently reliable for  inclusion in this report after acknowledging the limitations of these data.  We also interviewed officials from EIA, EPA, MMS, BLM, NOAA, USAID,  the World Bank, the United Nations, various private corporations and  organizations, and state governments regarding data collection and  methodologies, quality of the data collected, and reporting practices. In  addition, we contacted natural gas-producing states to determine their  assessment of the reliability of data they collect and report. We also  attended the World Bank Global Gas Flaring Reduction Partnership’s  Second International Gas Flaring Reduction Conference in May 2004 in  Algeria with delegates from numerous other countries concerned about gas  flaring and venting. We conducted our work from October 2003 through  June 2004 in accordance with generally accepted government auditing  standards. A detailed description of our objectives, scope, and  methodology is contained in appendix I.
subsections: section_title: Flaring and Venting Data Are Limited, but the Federal Government Has Opportunities to Improve Them
paragraphs: In the United States, DOE’s EIA collects and reports data provided  voluntarily by the states on the amount of natural gas flared and vented, but  the data are incomplete, inconsistent, and not as useful as they could be  from an environmental perspective. Information on gas flared and vented  outside the United States is also limited, since international reporting  generally is voluntary and there is no single organization that is responsible  for collecting and reporting this data. EIA could improve flaring and  venting data by enhancing its guidance to states and collecting data directly  from oil and gas producers; EIA, MMS, and BLM could also improve data by  collecting and reporting data on venting separately from data on flaring. By  taking these actions, the federal government could serve as a model for  global data collection and reporting. EIA could also investigate  improvements in global data collection and reporting by using satellite  images and data to better estimate the volume of natural gas flared in other  countries and by continuing to support international efforts to improve  data.
subsections: section_title: Data Collected and Reported on Flaring and Venting Are Limited
paragraphs: In the United States, data collected and reported on the flaring and venting  of natural gas associated with oil and gas production are incomplete,  inconsistent, and not as useful as they could be from an environmental  perspective. Regarding the completeness of the data, although MMS and  BLM require companies that lease federal lands and offshore areas for oil  and gas production to report flaring and venting statistics, EIA does not use  its authority to require information on flaring and venting from all other  U.S. oil- and gas-producing companies. According to EIA officials, the data  on flaring and venting that EIA collects as part of overall oil and gas  production data represent a relatively small portion of EIA’s energy data  reporting program. Since the agency has limited resources, these data are a  relatively low priority. As a result, rather than requiring that the estimated  20,000 domestic oil- and gas-producing companies provide flaring and  venting data—which would consume considerable resources—EIA collects  this information from the oil- and gas-producing states on a voluntary basis.  Many states do not provide this information, however, and EIA has no  authority to require them to do so. Consequently, EIA’s flaring and venting  information is incomplete.
In addition to being incomplete, the data the states provide to EIA are also  inconsistent. Since flaring and venting data are not a high priority for EIA,  the agency has provided only limited guidelines to states to promote  consistency in the information that they voluntarily submit. As a result,  only 8 of the 32 oil- and gas-producing states provide data that EIA  considers consistent, leaving EIA to estimate the amount of flaring and  venting in the other 24 states. When we asked state officials about EIA  guidelines for reporting, officials from 15 states said they were unsure what  information EIA wanted and how EIA wanted it presented. Most officials  from the states answering our questions about the guidelines thought they  needed improvement, and some officials said they would like to participate  in developing improved guidelines to ensure that the states would be able  to meet EIA’s requests.
The data that EIA, MMS, and BLM collect are further limited because they  do not distinguish between gas that is flared and gas that is vented. As a  result, from an environmental perspective, the information is not as useful  as it could be. EIA, MMS, and BLM do not collect separate flaring and  venting data because their focus is on the amount of gas produced for the  market and not on the gas that is lost through flaring and venting. EPA, on  the other hand, considers flared and vented gas in the context of the  damage it could inflict on the environment: vented gas emissions  (methane), and to a lesser extent flared gas emissions (carbon dioxide),  contribute to total greenhouse gases. According to EPA officials,  differentiating data on flaring and venting could improve EPA estimates of  each gas’s contribution to total greenhouse gases in the atmosphere.  Because EPA does not collect its own flaring and venting data, however, it  must rely on the combined data that these other agencies collect.
EIA believes that the data the states voluntarily provide on production— from which the data on flaring and venting are taken—could be improved  as well. In particular, because some states do not report information at all,  EIA is considering using its authority to collect information on production  directly from natural gas well operators. Toward that end, EIA has  published for comment a proposed sample survey of monthly natural gas  production in the Federal Register. If the survey were implemented, well  operators would be required to provide EIA with production data and the  form would include a category for flaring and venting data. Among other  things, EIA has sought comments from well operators as to whether they  can provide reliable measures of gas flared and vented. However, even if  the proposed sample form is implemented and, as proposed, collects  information on flared and vented data, the focus will be on improving  production data and not on flaring and venting data.
Outside the United States, information on gas flared and vented is even  more limited. Generally, international reporting is also voluntary, and no  single organization is responsible for collecting and reporting flaring and  venting data. Although several organizations collect data voluntarily  provided by countries with which they have a working relationship, the  numbers countries report are sometimes questionable. For example, the  United Nations requests data as part of its work on climate change, but few  countries report meaningful data. In addition to U.S. data, EIA also reports  worldwide information largely based on estimates developed by Cedigaz,  an oil and gas industry association that gathers what is generally  recognized as the best flaring and venting information available. A Cedigaz  official told us that they rely on submissions from countries and companies  around the world to make their estimates and that they accept the  information the countries report unless Cedigaz has knowledge of a  country’s operations that could be used to improve the accuracy of the  amounts reported. For example, on the basis of submissions by Russia and  China—two important petroleum-producing countries—Cedigaz has  reported that these countries do not flare or vent. World Bank officials told  us, however, it is generally known that Russia regularly flares and vents  gas. Satellite images created by NOAA have confirmed that Russia does, in  fact, participate in flaring. In addition, as in the United States, the global  data are limited from an environmental perspective because they do not  distinguish between the amounts flared and the amounts vented. More  accurate worldwide data would provide a clearer understanding of both the  extent to which flaring and venting emissions contribute to total  greenhouse gases and the countries that do the most flaring and venting.  This would provide a basis for targeting actions designed to prevent the  waste of a potentially valuable resource while at the same time reducing  harmful emissions into the atmosphere.
section_title: The Federal Government Has Several Opportunities to Improve the Information on Flaring and Venting
paragraphs: Federal agencies have a number of opportunities available to them to  improve the information on flaring and venting. EIA could clarify its  guidelines to states for collecting and reporting flaring and venting data.  Currently, EIA assumes that about 75 percent of the reports it receives from  oil- and gas-producing states contain inconsistent data. State officials  believe that they could better meet EIA’s data needs—that is, provide EIA  with more consistent data—if they had more comprehensive guidance from  EIA on the data it wants and how to report them. Similarly, as the reporting  of greenhouse gas emissions has become more widespread globally, the oil  and gas industry has begun to recognize the need for guidance on how  emissions, such as carbon dioxide and methane, should be collected and  reported. In December 2003, three petroleum industry associations jointly  issued a report, “Petroleum Industry Guidelines for Reporting Greenhouse  Gas Emissions,” to promote consistency in collecting and reporting  petroleum industry greenhouse gas emissions. EIA could consider using  these guidelines while working with industry and state officials to improve  their state guidelines for reporting emissions from flaring and venting of  natural gas.
Another opportunity for improving the data is for EIA to consider using its  general energy information collecting authority to collect data on flaring  and venting directly from the oil and gas producers, rather than relying on  voluntary submissions by states. (Producers with federal leases are already  required to collect and report this information to MMS and BLM.) While  EIA considers these data a relatively low priority, and while collecting data  from all 20,000 domestic producers could involve extensive resources,  there may be efficient and cost-effective methods of collecting sample data.  In addition, from an environmental perspective, the federal government  could broaden the usefulness of flaring and venting information by  distinguishing between the amounts of gas flared and the amounts vented.  Since natural gas that is vented has a more significant effect on the  atmosphere than natural gas that is flared, reporting these emissions  separately could enable EPA to better estimate methane’s and carbon  dioxide’s contributions to greenhouse gases.
Finally, on a worldwide basis, the federal government could improve flaring  and venting data in several ways. First, the U.S. government could continue  to improve its own data, thereby providing an example for other countries.  Second, EIA, working with NOAA, could investigate the feasibility of  supplementing the data already available by using U.S. satellite images. For  example, figure 2 (see p. 14) shows worldwide flaring identified in 2002  using satellite technology. According to a NOAA physical scientist,  analyzing these satellite data could validate the amount of flaring reported  by countries. For example, some countries, like Russia, report no flaring,  while satellite images show substantial flaring is actually occurring. Third,  the federal government could continue to support efforts such as the World  Bank Global Gas Flaring Reduction Partnership (GGFR) that, in part,  seeks to develop guidance for data collection and reporting. According to a  2004 GGFR report, such guidance could improve natural gas flaring and  venting data.
section_title: Although the Amount of Gas Flared and Vented Is Small, It Represents a Significant Amount of Lost Energy and Contributes to Global Greenhouse Gas Emissions
paragraphs: According to the limited data available, the amount of natural gas emitted  through flaring and venting is small compared with overall natural gas  production, but these emissions represent a significant amount of lost  energy. Flaring and venting are concentrated in several parts of the world  and, in the United States, in four states and the Gulf of Mexico. Although  worldwide estimates of flaring and venting constitute a small portion of  total greenhouse gas emissions, many countries have undertaken efforts to  reduce flaring and venting.
subsections: section_title: Three Percent of the World Production of Natural Gas Is Flared or Vented, Which Represents a Significant Amount of Unused Resources
paragraphs: While flaring and venting represent only 3 percent of the total natural gas  production, the natural gas flared and vented—about 100 billion cubic  meters a year—is enough to meet the annual natural gas consumption of  both France and Germany. In general, the amount of flaring and venting  emissions is related to the amount of oil produced: the higher the  production, the more gas flared and vented. Since 1990, the quantity of oil  produced has increased, but because of various global reduction initiatives,  the quantity of natural gas flared and vented has remained constant.  Consequently, natural gas emissions as a percentage of oil production have  decreased.
Flaring and venting of natural gas are concentrated in certain parts of the  world, with Africa, the Middle East, and the former Soviet Union  contributing about two-thirds of the global emissions from flaring and  venting (see fig. 3).
Working with available data, the World Bank has estimated that three  countries—Nigeria (16%), Russia (11%), and Iran (10%)—are responsible  for over one-third of global flaring and venting (see table 1).
According to World Bank estimates, in 2000 eight nations accounted for   60 percent of the natural gas flared and vented: Algeria, Angola, Indonesia,  Iran, Mexico, Nigeria, Russia, and Venezuela. In addition, some countries— for example, Angola and Cameroon—flare and vent most of the natural gas  they produce. In contrast, EIA estimates that the United States flares or  vents about 0.4 percent of its production annually. Within the United States,  most of reported flaring and venting has occurred in the active oil and gas  production states and in the Gulf of Mexico (see table 2).
Four states—Alaska, Louisiana, Texas, and Wyoming—plus the federal  leases in the Gulf of Mexico account for almost 80 percent of all reported  U.S. flaring and venting. None of these states flare and vent more than 0.8  percent of their total natural gas production.
section_title: Natural Gas Flaring and Venting Emissions Contribute a Small Percentage of Global Greenhouse Gas Emissions, and Countries Have Undertaken Initiatives to Reduce These Emissions
paragraphs: Worldwide flaring and venting is estimated to contribute, respectively,  about 4 percent of the total methane and about 1 percent of the total  carbon dioxide emissions caused by human activity. Despite these small  contributions, several countries have undertaken efforts to reduce flaring  and venting emissions that have the potential to reduce greenhouse gases  while saving an energy resource. Specifically, many countries have  imposed requirements on oil and gas producers to eliminate emissions of  gas within the next few years. For example, Norway no longer allows the  burning of petroleum in excess of the quantity needed for normal  operational safety without the approval of the Ministry of Petroleum and  Energy, and in 2003 Canada reported having achieved, through monitoring  and regulation, a 70 percent reduction in flaring and venting emissions. In  addition, corporations in several countries, in order to market their  associated natural gas, either have constructed or are planning LNG plants  to liquefy the gas for export or have developed on-site and local uses for the  gas. For example, corporations operating in Nigeria currently have six LNG  projects in development and have also begun using gas that otherwise  would have been flared or vented to operate the platform equipment as  well as to produce cement and fertilizer and gas that is usable as fuel for  automobiles. Finally, some countries are exploring the potential of  reinjecting carbon dioxide into wells instead of emitting it into the  atmosphere. According to an oil company official, carbon dioxide  reinjection in Algeria has prevented over one million tons of emissions— the equivalent of taking 200,000 cars off the road.
section_title: The Federal Government Could Take a Larger Role in Reducing Flaring and Venting
paragraphs: The federal government has opportunities in several areas to help reduce  flaring and venting both within the United States and globally. First, in the  United States, on federal lands and offshore areas leased to producers, the  federal government could consider regulatory changes to reduce the most  harmful emissions resulting from venting and improve oversight of oil and  gas production. Second, the federal government could promote programs  that identify, and help industry implement, best practices for reducing  natural gas emissions. On a global basis, exploring ways to address market  barriers affecting associated natural gas, and continuing to work with other  countries, could help reduce flaring and venting.
subsections: section_title: Improving Federal Regulation and Oversight Could Reduce Flaring and Venting on Federal Lands
paragraphs: The government has an opportunity to help reduce flaring and venting in  the United States by considering regulatory changes and improving  oversight of oil and gas production on federal lands and offshore areas  leased to producers. If MMS and BLM required producers to flare gas  (rather than allowing them to vent gas) when emitting the gas for  operational purposes, the emissions impact on the atmosphere could be  reduced. Since the impact of methane (venting) on the earth’s atmosphere  is about 23 times greater than that of carbon dioxide (flaring), a small  change in the ratio of flaring to venting could cause a disproportionate  change in the impact of emissions. For example, if 90 percent of the  associated gas volume was flared and 10 percent was vented, the amount  vented would have more than twice the effect on the atmosphere as the  amount flared.
In addition, although MMS and BLM require federal lessees to self-report  estimated flaring and venting volumes, the agencies could require the use  of flare and vent meters at production facilities, which could improve  oversight by detecting how much gas is actually flared and vented.  Currently, such meters are used by some oil- and gas-producing companies.  The meters are placed in or adjacent to the stream of flared or vented gas to  measure the volume emitted. While the identification of unauthorized  flaring or venting is not commonplace on federal lands and offshore leases  in the United States, unauthorized flaring and venting do occur. A major oil  and gas producer recently paid a $49 million settlement in response to  charges of unauthorized flaring and venting in the Gulf of Mexico that went  undetected for several years. The lawsuit alleged that the company both  improperly flared and vented gas under various offshore federal leases and  failed to properly report the flared and vented gas. Improved oversight  could help prevent similar problems in the future. The International Energy  Agency has recommended such meters for accurately monitoring  emissions from production facilities, and some producers that we  interviewed said they already use these meters on many of their offshore  production facilities. According to these producers, flare and vent meters  are fairly inexpensive if installed when the facility is initially built, but retrofitting facilities that are already producing may not be cost effective.  To improve oversight, MMS and BLM, working with producers, could  consider the cost and benefit of requiring the installation of these meters,  particularly at new, major production facilities.
section_title: Promoting Best Practices Could Reduce Emissions Caused by Flaring and Venting
paragraphs: The federal government could also help reduce flaring and venting by  continuing to support programs that identify, and help industry implement,  best practices for reducing natural gas emissions. EPA has sponsored the  Natural Gas STAR program, which identifies and promotes the  implementation of cost-effective technologies and practices that reduce  methane emissions. About 65 percent of the U.S. natural gas industry is  represented in this program. From 1993 through January 2004, according to  EPA officials the STAR program identified over 100 best practices and  technologies that reduce methane emissions from the oil and natural gas  industry. In addition, STAR participants have reported total emissions  reductions of more than 275 billion cubic feet worth over $825 million— which EPA estimates is enough natural gas to heat more than 4 million  homes for 1 year or is comparable to the removal of the emissions of 24  million cars from the nation’s highways for 1 year. The two largest sources  of overall oil and gas emissions identified by the STAR program are  pneumatic devices and compressors. According to EPA officials, the STAR  Program has identified 15 practices and technologies that would reduce  methane emissions from these sources.
section_title: Investigating Market Barriers Affecting Associated Gas and Continuing to Work with Other Countries Could Help Reduce Global Flaring and Venting
paragraphs: The government could also have an effect on flaring and venting worldwide  by (1) addressing market barriers affecting gas produced outside the  United States that would otherwise be flared or vented and (2) continuing  to work with other countries. First, the government could identify  regulatory barriers to economically feasible infrastructure development,  such as building pipelines or LNG facilities for transporting gas that is  usually flared or vented. For example, currently, four LNG import facilities  exist in the United States—three on the East Coast and one on the Gulf of  Mexico coast—but more than 15 federal permit applications are awaiting  approval (from either FERC or the Coast Guard), which can take more than  a year. In addition, the government could investigate the public’s  perceptions of the risk associated with new infrastructure. For example,  some communities have resisted LNG facilities because they are worried  about the safety and security procedures in place to protect them from an  accidental explosion or a terrorist attack. Finally, the federal government  could continue to work with other countries and corporations to reduce  flaring and venting. For example, USAID provided much of the funding for  training regulators in Kazakhstan, where improved regulation has virtually  eliminated the routine flaring of natural gas. In addition, the United States  could continue to support the work of the World Bank’s Global Gas Flaring  Reduction Partnership (GGFR), which recently issued standards on how to  achieve reductions in the flaring and venting of gas worldwide.
section_title: Conclusions
paragraphs: By itself, the reduction of natural gas flaring and venting will not solve the  problem of meeting increasing natural gas demands or eliminate all  greenhouse gas emissions; however, it would be a helpful step in that  direction. Although the emissions from flaring and venting are small in  comparison with those from other sources, such as fossil fuel combustion,  reducing flaring and venting from oil and gas production would help  eliminate harmful emissions and possibly preserve an energy resource that  is currently being lost.
Although the role of the federal government in reducing flaring and venting  of natural gas during oil and gas production may be limited, especially at  the international level, opportunities exist for the government to make  worthwhile contributions in this area. Given the immense challenges the  government faces in the energy and environmental arenas and the limited  resources available, however, any actions to reduce flaring and venting will  have to be based on careful consideration of the potential costs and  benefits of such actions. Moreover, since flaring and venting are not viewed  as major problems in this country, it may be difficult to justify devoting  much attention to them. Nonetheless, the government could consider  several potentially cost-effective actions that would improve data  reporting, help reduce the most harmful effects of flaring and venting, and  improve oversight of federal leases.
Improving flaring and venting data reporting would be an important first  step because it would add information about the scope of the problem and  allow actions to be targeted to those areas where flaring and venting are  most significant. However, our review identified several limitations of the  data currently reported that hinder such targeting. First, reliance on oil-  and gas-producing states to voluntarily provide flaring and venting  information has led to incomplete data, since some states do not submit  reports. Second, because of the limited guidance on what data to report,  EIA considers most of the information it receives from the states to be  inconsistent. Third, the data collected do not distinguish between flared  gas and vented gas—an important distinction, since the methane emitted  during venting is potentially much more harmful to the atmosphere than  the carbon dioxide emitted during flaring. Consequently, these combined  data are less useful than they could be in shedding light on the extent of  methane emitted into the atmosphere during venting. Finally, on a global  basis, some countries that flare and vent considerable amounts of gas  report that they do not, and others underreport their flaring and venting.  For these and other reasons, the worldwide data are considered even less  accurate than U.S. data.
In addition, for federal lands and offshore areas leased for oil or gas  production, opportunities exist to help reduce the most harmful effects of  flaring and venting and improve oversight on these leases. Specifically,  although flaring and venting are authorized only under certain  circumstances, when these circumstances occur, oil and gas producers  may choose to either flare or vent. Since the emissions released during  venting are much more harmful to the atmosphere than those associated  with flaring, this choice is an important one. Moreover, although flaring and  venting are generally not authorized, no oversight mechanism currently  exists for routinely monitoring the amount of flaring and venting that  actually takes place. As a result, MMS and BLM cannot always be assured  that companies are appropriately restricting their flaring and venting.
Overall, however, as is evident in the example of the United States, a robust  natural gas market, along with a supporting infrastructure, would have the  most significant impact on the reduction of flaring and venting. Therefore,  changes to natural gas markets, and to the transportation infrastructure for  moving gas to these markets, will likely be needed to offer producers an  economic incentive to sell the associated gas rather than flare or vent it.
section_title: Recommendations for Executive Action
paragraphs: We are making four recommendations to the Secretary of Energy to  explore opportunities for improving data on flaring and venting and to  weigh the cost and benefit of making such improvements. Such  opportunities could include   considering the use of the department’s authority to collect flaring and  venting information directly from the producing companies;   working with industry and state officials, and using guidance already in  existence, to enhance guidelines for reporting consistent flaring and  venting data;   considering, in consultation with EPA, MMS, and BLM, how to best  collect separate statistics on flaring and venting; and  considering working with the Secretary of Commerce to provide EIA  access to NOAA’s analysis of satellite data to improve the accuracy of  worldwide data on flaring.
We are also making two recommendations to the Secretary of the Interior.  Specifically, for federal oil and gas leases, we are recommending that the  Secretary direct MMS and BLM to consider the cost and benefit of requiring  that companies  flare the natural gas, whenever possible, when flaring or venting is   use flaring and venting meters to improve oversight.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Secretaries of  Energy and the Interior, as well as the Administrator of the Environmental  Protection Agency. The Department of Energy and Department of the  Interior provided written responses, including technical and clarifying  comments, which we included in our report as appropriate.
The Administrator of the Energy Information Administration (EIA), who  responded on behalf of the Department of Energy, concurred with our  findings and recommendations while acknowledging that the  implementation of the recommendations would need to be balanced with  other priorities. EIA stated it has revised the instructions on all natural gas  forms and has committed to continue efforts to improve data quality,  timeliness and coverage of production data that states collect. Further, EIA  agreed to work with agencies with satellite technology to determine the  feasibility of improving data worldwide. EIA’s comments are reprinted in  appendix II.
The Assistant Secretary of Land and Minerals Management, who responded  on behalf of the MMS and BLM within the Department of the Interior,  generally agreed with our findings and recommendations. MMS and BLM  agreed that requiring operators to flare instead of vent whenever possible  would reduce greenhouse gases. Further, MMS acknowledged that this  would enhance the agency’s ability to enforce existing regulations because  inspectors could easily view a flare; whereas inspectors cannot be detected  venting visually and thus they must rely on the accuracy of operators’  records. The two agencies also agreed to evaluate the cost effectiveness of  installing and maintaining flare tips. In addition, MMS agreed that requiring  flaring and venting meters would improve its oversight. MMS  acknowledged that recent incidents have shown that reliance on the  accuracy of the operators’ calculations and recordkeeping may not  sufficiently or accurately capture actual flaring and venting volumes. MMS  stated that it is currently revising its Federal Outer Continental Shelf  regulations to require installation of meters. Finally, MMS agreed that  flaring and venting data should be reported separately and has taken initial  steps to update its database and reporting requirements to accommodate  this change. However, MMS stated that such a change would take time to  complete and would only minimally add to the reporting burden of  operators. The Department of the Interior’s comments are reprinted in  appendix III.
EPA provided oral comments and agreed with our findings and  recommendations. In addition, EPA noted that our recommendations, if  implemented, would greatly advance flaring and venting data availability  and quality. EPA also provided technical comments, which we included in  the report, as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  date of this letter. At that time, we will send copies of this report to the  Secretary of Energy, the Secretary of the Interior, the EPA Administrator,  and other interested parties. We also will make copies available to others  upon request. In addition, the report will be available at no charge at GAO’s  Web site at http://www.gao.gov.
Questions about this report should be directed to me at (202) 512-3841. Key  contributors to this report are listed in appendix IV.
section_title: Objectives, Scope, and Methodology
paragraphs: Regarding natural gas flaring and venting from oil and gas production in the  United States and the rest of the world, you asked us to (1) describe the  data collected and reported on natural gas flaring and venting and what the  federal government could do to improve it; (2) report, on the basis of  available information, on the extent of flaring and venting and its  contribution to greenhouse gases; and (3) identify opportunities for the  federal government to reduce such flaring and venting.
To do this work, we obtained currently available data on natural gas  production and estimates of flaring and venting in the United States from  EIA, MMS, and BLM. We determined that all the data we reviewed were  sufficiently reliable for inclusion in this report after acknowledging the  limitations of these data. We also interviewed officials from EIA, EPA,  MMS, BLM, the World Bank, the United Nations, various private  corporations and organizations, and state governments regarding data  collection, quality of the data collected, and reporting practices. In  addition, we contacted natural gas-producing states to determine their  assessment of the reliability of data they collect and report. To determine  what the federal government could do to improve data collecting and  reporting, we interviewed officials from EIA, MMS, BLM, EPA, NOAA, and  state officials. In addition, we obtained international data from Cedigaz, a  French oil and gas industry association that gathers worldwide information  on natural gas; the World Bank; the International Energy Agency (IEA), an  intergovernmental energy policy body; and the United Nations. We  discussed with officials of these organizations the reliability as well as the  methods of collecting and estimating these data.
Finally, to determine what the federal government could do to help reduce  flaring and venting of natural gas, we reviewed the literature and  interviewed officials from private industry, MMS, BLM, state governments,  EPA’s Natural Gas STAR program, USAID, and various world organizations,  including the World Bank, the United Nations, and IEA. In May 2004, we  also attended the World Bank Global Gas Flaring Reduction Partnership’s  Second International Gas Flaring Reduction Conference in Algeria with  delegates from numerous other countries concerned about gas flaring and  venting. This conference featured speakers from countries and  corporations around the world who addressed data collection and  reporting issues, current regulations and oversight issues, and best  practices within their respective countries. We conducted our work from  October 2003 through June 2004 in accordance with generally accepted  government auditing standards.
section_title: Comments from the Department of Energy
section_title: Comments from the Department of the Interior
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to the individuals named above, James W. Turkett, James Rose,  Carol Bray, and Nancy Crothers made key contributions to this report.
section_title: GAO’s Mission
paragraphs: The Government Accountability Office, the audit, evaluation and  investigative arm of Congress, exists to support Congress in meeting its  constitutional responsibilities and to help improve the performance and  accountability of the federal government for the American people. GAO  examines the use of public funds; evaluates federal programs and policies;  and provides analyses, recommendations, and other assistance to help  Congress make informed oversight, policy, and funding decisions. GAO’s  commitment to good government is reflected in its core values of  accountability, integrity, and reliability.
section_title: Obtaining Copies of GAO Reports and Testimony
paragraphs: The fastest and easiest way to obtain copies of GAO documents at no cost  is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts  newly released reports, testimony, and correspondence on its Web site. To  have GAO e-mail you a list of newly posted products every afternoon, go to  www.gao.gov and select “Subscribe to Updates.”
subsections: section_title: Order by Mail or Phone
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
section_title: Congressional Relations
section_title: Public Affairs