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Report to the Honorable Jeff Bingaman, Ranking Minority Member, 
Committee on Energy and Natural Resources, U.S. Senate: 

July 2004: 

NATURAL GAS FLARING AND VENTING: 

Opportunities to Improve Data and Reduce Emissions: 

GAO-04-809: 

GAO Highlights: 

Highlights of GAO-04-809, a report to the Honorable Jeff Bingaman, 
Ranking Minority Member, Committee on Energy and Natural Resources, 
U.S. Senate 

Why GAO Did This Study: 

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.

What GAO Found: 

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.

Worldwide Flaring Identified Using Satellite Technology: 

[See PDF for image]

[End of figure]

What GAO Recommends: 

GAO recommends that the Secretary of Energy consider opportunities to 
improve data on flaring and venting. In addition, GAO recommends that 
the Secretary of the Interior consider regulatory changes for federal 
leases to reduce the most harmful emissions from flaring and venting 
and to improve oversight.
 
In commenting on the report, the Department of Energy and the 
Department of the Interior generally agreed with our findings and 
recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-809.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Jim Wells at (202) 512-
3841 or wellsj@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Flaring and Venting Data Are Limited, but the Federal Government Has 
Opportunities to Improve Them: 

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: 

The Federal Government Could Take a Larger Role in Reducing Flaring and 
Venting: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Energy: 

Appendix III: Comments from the Department of the Interior: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Acknowledgments: 

Tables: 

Table 1: Estimated Gas Flared and Vented by Selected Countries, 2000: 

Table 2: Estimated U. S. Natural Gas Produced and Flared and Vented, 
2002: 

Figures: 

Figure 1: U. S. Natural Gas Prices, 1995-2003: 

Figure 2: Worldwide Flaring Identified Using Satellite Technology, 
2002: 

Figure 3: Regional Flaring and Venting As a Percentage World Flaring 
and Venting, 2000: 

Abbreviations: 

BLM: Bureau of Land Management: 

DOE: Department of Energy: 

DOI: Department of the Interior: 

EIA: Energy Information Administration: 

EPA: Environmental Protection Agency: 

FERC: Federal Energy Regulatory Commission: 

GGFR: Global Gas Flaring Reduction Partnership: 

IEA: International Energy Agency: 

LNG: Liquid Natural Gas: 

NOAA: National Oceanic and Atmospheric Administration: 

mmBtu: million British thermal units: 

MMS: Mineral Management Service: 

USAID: U.S. Agency for International Development: 

Letter July 14, 2004: 

The Honorable Jeff Bingaman: 
Ranking Minority Member: 
Committee on Energy and Natural Resources: 
United States Senate: 

Dear Senator Bingaman: 

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).[Footnote 1]

Figure 1: U. S. Natural Gas Prices, 1995-2003: 

[See PDF for image] 

Note: Dollars are adjusted for inflation.

[End of figure] 

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.[Footnote 2] 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.[Footnote 3] 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.

Results in Brief: 

Overall, data collected and reported on the flaring and venting of 
natural gas associated with oil and gas production are limited in 
several ways. First, although the Department of Energy's EIA has 
authority to require U.S. oil-and gas-producing companies to report 
flaring and venting data, according to EIA officials, the agency has 
not used this authority because it considers these data a relatively 
low priority. Instead, EIA collects and publishes data provided 
voluntarily by the states on the amount of natural gas flared and 
vented. Because EIA has no authority to require states to report--and 
some do not--EIA data are incomplete and must be estimated by EIA. 
Compounding this problem, EIA has provided only limited guidance 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 that 
EIA reports on provide data that EIA considers consistent, leaving the 
agency to estimate the amount of flaring and venting in the other 24 
states. Finally, the information available to EIA does not distinguish 
between gas that is flared and gas that is vented, an important 
distinction from an environmental perspective because the methane 
emitted during venting is significantly more potent in its ability to 
warm the atmosphere than the carbon dioxide emitted during flaring.

Outside the United States, information on gas flared and vented is even 
more limited. Generally, international reporting is also voluntary. 
Moreover, there is no single organization responsible for collecting 
and reporting data. The United Nations requests data as part of its 
work on climate change, but few countries report meaningful data. EIA 
reports worldwide as well as U.S. data, but it largely relies on 
estimates developed by an oil and gas industry association that gathers 
information self-reported by countries. In some cases, countries do not 
report the information or report suspect numbers. For example, Russia 
reports no flaring, even though satellite data analyzed by the National 
Oceanic and Atmospheric Administration have confirmed significant 
flaring activity. Also, as with the U.S. data, the global data do not 
distinguish between the amounts flared and vented. More accurate data 
would provide a clearer understanding of the extent and location of the 
problem, as well as a basis for targeted actions designed to both 
prevent the loss of a potentially valuable resource and reduce harmful 
emissions into the atmosphere.

The federal government could consider a number of opportunities to 
improve information on flaring and venting activity, if it deems better 
data is a worthwhile priority. EIA could improve its guidelines to 
states for collecting and reporting flaring and venting data, which 
could provide EIA with more consistent data. EIA could also consider 
collecting data on flaring and venting directly from the roughly 20,000 
domestic oil and gas producers. In addition, from an environmental 
perspective, EIA, MMS, and BLM could require oil and gas producers to 
distinguish between the amount of gas flared and the amount vented. On 
a worldwide basis, the government could set an example for the world by 
continuing to improve U.S. data. In addition, EIA could work with NOAA 
to assess the feasibility of using U.S. satellite technology to 
quantify the volumes of gas flaring around the world and identify the 
additional resource commitment necessary to obtain the information each 
year. Finally, the federal government could continue to support global 
efforts such as the World Bank's Global Gas Flaring Reduction 
Partnership (GGFR), which, in part, seeks to develop better standards 
for data.

On the basis of the limited data available, the amount of gas emitted 
through flaring and venting is small compared with overall natural gas 
production and represents a small portion of greenhouse gas emissions. 
Nevertheless, flaring and venting do have adverse environmental impacts 
and result in the loss of a significant amount of energy. The amount of 
gas flared and vented annually is conservatively estimated by the World 
Bank at over 100 billion cubic meters worldwide, or about 3 percent of 
all gas marketed in the world. While this amount is small in comparison 
with worldwide totals, it is enough gas to meet the natural gas needs 
of both France and Germany for a year. Flaring and venting are 
concentrated in certain parts of the world. According to the World 
Bank, eight nations account for 60 percent of the estimated natural gas 
flared and vented: Algeria, Angola, Indonesia, Iran, Mexico, Nigeria, 
Russia, and Venezuela. Some countries flare and vent most of the 
associated natural gas they produce. In contrast, EIA estimates that 
the United States flares or vents about 0.4 percent of its production, 
representing only 3 percent of the world's total amount of natural gas 
flared and vented. Within the United States, most of the reported 
flaring and venting has occurred in the active oil and gas production 
states of Alaska, Louisiana, Texas, and Wyoming and in the Gulf of 
Mexico. Regarding worldwide greenhouse gas emissions, flaring and 
venting is estimated to contribute, respectively, about 4 percent of 
the total methane emissions and about 1 percent of the total carbon 
dioxide emissions caused by human activity. Several countries have 
taken steps to reduce flaring and venting emissions that have the 
potential of saving energy resources while reducing greenhouse gases. 
For example, some countries have imposed requirements on oil and gas 
producers to eliminate emissions of gas within the next few years.

The federal government has opportunities in several areas to help 
reduce natural gas flaring and venting. First, to address flaring and 
venting in the United States, MMS and BLM could consider regulatory 
changes that would reduce the most harmful emissions associated with 
flaring and venting and improve oversight of oil and gas production on 
federal lands and offshore areas leased to producers. Specifically, 
from an environmental perspective, it may be worth exploring the cost 
and benefit of requiring producers to flare rather than vent when they 
must release gas for standard operational purposes--for example, for 
safety reasons--since flaring is less detrimental to the atmosphere. In 
addition, while the identification of unauthorized flaring or venting 
is not commonplace on federal lands and offshore areas leased by oil 
and gas companies, unauthorized flaring and venting do occur. For 
example, a major oil and gas producer recently paid a $49 million 
settlement for unauthorized flaring and venting that went undetected 
for several years. Requiring the use of meters to measure gas flared 
and vented could improve oversight. Second, the federal government 
could promote programs that identify, and help industry implement, best 
practices for reducing natural gas emissions. For example, EPA sponsors 
the Natural Gas STAR program, which, among other things, identifies 
ways to reduce the need to flare and vent during oil and gas production 
operations. On a global basis, the U.S. government could investigate 
market barriers and the public's perceptions of the risks associated 
with new infrastructure, such as those related to building LNG 
facilities, which could affect relevant markets. For example, the 
permit approval process for building an LNG facility in the United 
States can currently take more than a year. Finally, the federal 
government could continue to work with other countries and 
international corporations to reduce flaring and venting.

We are making recommendations to the Secretary of Energy to consider 
the opportunities to improve data on flaring and venting. We are also 
making recommendations to the Secretary of the Interior to consider 
regulatory changes to reduce the most harmful emissions from flaring 
and venting and to improve oversight for federal leases.

Flaring and Venting Data Are Limited, but the Federal Government Has 
Opportunities to Improve Them: 

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.

Data Collected and Reported on Flaring and Venting Are Limited: 

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[Footnote 4] 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.[Footnote 5] 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.

The Federal Government Has Several Opportunities to Improve the 
Information on Flaring and Venting: 

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[Footnote 6] 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)[Footnote 7] 
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.

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: 

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.

Three Percent of the World Production of Natural Gas Is Flared or 
Vented, Which Represents a Significant Amount of Unused Resources: 

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.

Figure 2: Worldwide Flaring Identified Using Satellite Technology, 
2002: 

[See PDF for image] 

[End of figure] 

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).

Figure 3: Regional Flaring and Venting As a Percentage World Flaring 
and Venting, 2000: 

[See PDF for image] 

[End of figure] 

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).

Table 1: Estimated Gas Flared and Vented by Selected Countries, 2000: 

Country: Algeria; 
Flared gas(bcm)[A]: 6.8; 
Percentage of world total (%)[B]: 6.0.

Country: Angola; 
Flared gas(bcm)[A]: 4.3; 
Percentage of world total (%)[B]: 4.0.

Country: China; 
Flared gas(bcm)[A]: 3.2; 
Percentage of world total (%)[B]: 3.0.

Country: Egypt; 
Flared gas(bcm)[A]: 0.9; 
Percentage of world total (%)[B]: 1.0.

Country: Indonesia; 
Flared gas(bcm)[A]: 4.5; 
Percentage of world total (%)[B]: 4.0.

Country: Iran; 
Flared gas(bcm)[A]: 10.5; 
Percentage of world total (%)[B]: 10.0.

Country: Mexico; 
Flared gas(bcm)[A]: 5.6; 
Percentage of world total (%)[B]: 5.0.

Country: Nigeria; 
Flared gas(bcm)[A]: 17.2; 
Percentage of world total (%)[B]: 16.0.

Country: North Sea[C]; 
Flared gas(bcm)[A]: 2.7; 
Percentage of world total (%)[B]: 3.0.

Country: Russia; 
Flared gas(bcm)[A]: 11.5; 
Percentage of world total (%)[B]: 11.0.

Country: United States; 
Flared gas(bcm)[A]: 2.8; 
Percentage of world total (%)[B]: 3.0.

Country: Venezuela; 
Flared gas(bcm)[A]: 4.5; 
Percentage of world total (%)[B]: 4.0.

Other Countries; 
Flared gas(bcm)[A]: 33.0; 
Percentage of world total (%)[B]: 30.0.

Total; 
Flared gas(bcm)[A]: 107.5; 
Percentage of world total (%)[B]: 100.0%.

Source: The World Bank--which included data from Cedigaz, EIA, OPEC, 
IEA, World Bank, and IHS Energy Group.

Note: 

[A] Billion cubic meters.

[B] Percentages are rounded.

[C] North Sea includes only Denmark, Norway, and the United Kingdom, 
since Germany and the Netherlands did not flare in 2000, according to 
Cedigaz.

[End of table]

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).

Table 2: Estimated U. S. Natural Gas Produced and Flared and Vented, 
2002: 

In millions of cubic feet: 

State: Alaska; 
Gas derived from gas wells: 194,198; 
Associated gas from oil production: 3,283,239; 
Total gas produced: 3,477,437; 
Gas flared and vented: 7,312; 
Flared and vented gas as percentage of total gas produced: 0.21%.

State: Louisiana; 
Gas derived from gas wells: 1,282,137; 
Associated gas from oil production: 100,324; 
Total gas produced: 1,382,461; 
Gas flared and vented: 10,957; 
Flared and vented gas as percentage of total gas produced: 0.79%.

State: Texas; 
Gas derived from gas wells: 4,828,188; 
Associated gas from oil production: 832,816; 
Total gas produced: 5,661,004; 
Gas flared and vented: 27,379; 
Flared and vented gas as percentage of total gas produced: 0.48%.

State: Wyoming; 
Gas derived from gas wells: 1,572,728; 
Associated gas from oil production: 174,748; 
Total gas produced: 1,747,476; 
Gas flared and vented: 12,356; 
Flared and vented gas as percentage of total gas produced: 0.71%.

Gulf of Mexico; 
Gas derived from gas wells: 3,850,708; 
Associated gas from oil production: 858,332; 
Total gas produced: 4,709,040; 
Gas flared and vented: 20,092; 
Flared and vented gas as percentage of total gas produced: 0.43%.

All other states; 
Gas derived from gas wells: 5,999,921; 
Associated gas from oil production: 999,945; 
Total gas produced: 6,999,866; 
Gas flared and vented: 21,077; 
Flared and vented gas as percentage of total gas produced: 0.30%.

Total; 
Gas derived from gas wells: 17,727,880; 
Associated gas from oil production: 6,248,404; 
Total gas produced: 23,977,284; 
Gas flared and vented: 99,173; 
Flared and vented gas as percentage of total gas produced: 0.41%. 

Source: EIA.

Note: EIA reported totals may not equal sum of components due to 
independent rounding.

[End of table]

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.

Natural Gas Flaring and Venting Emissions Contribute a Small Percentage 
of Global Greenhouse Gas Emissions, and Countries Have Undertaken 
Initiatives to Reduce These Emissions: 

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.

The Federal Government Could Take a Larger Role in Reducing Flaring and 
Venting: 

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.

Improving Federal Regulation and Oversight Could Reduce Flaring and 
Venting on Federal Lands: 

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.[Footnote 8] 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.

Promoting Best Practices Could Reduce Emissions Caused by Flaring and 
Venting: 

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.

Investigating Market Barriers Affecting Associated Gas and Continuing 
to Work with Other Countries Could Help Reduce Global Flaring and 
Venting: 

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.[Footnote 9] 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.[Footnote 10]

Conclusions: 

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.

Recommendations for Executive Action: 

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 
necessary and: 

* use flaring and venting meters to improve oversight.

Agency Comments and Our Evaluation: 

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 
[Hyperlink, 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.

Sincerely yours,

Signed by: 

Jim Wells: 
Director, Natural Resources and Environment: 

[End of section]

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

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.

[End of section]

Appendix II: Comments from the Department of Energy: 

Department of Energy: 
Washington, DC 20585:

JUL 02 2004:

Mr. Jim Wells:

Director, Natural Resources and Environment: 
United States General Accounting Office: 
441 G Street NW:
Washington, DC 20548:

Dear Mr. Wells:

Thank you for providing the Energy Information Administration (EIA) 
with the opportunity to review and comment on the draft report, Natural 
Gas Venting and Flaring: Opportunities to Improve Data and Reduce 
Emissions. The report addresses both U.S. and international data 
series. The report is correct in its statement that there are 
opportunities to improve natural gas venting and flaring data and to 
reduce emissions but these opportunities must be evaluated in light of 
available resources and other priorities.

U.S. Data: The source of venting and flaring data about the United 
States is information provided voluntarily by State offices rather than 
directly by well operators. Volumes vented and flared are requested 
from the States because they represent a decrease in the flow of gas 
from the wellhead and help to define the concept of marketed 
production. EIA's goal is to provide energy supply and demand 
information for decisionmaking and energy markets and other general and 
analytic purposes. Given limited resources, other larger-volume issues 
related to energy supply and demand data, and the small (0.4 percent) 
role of venting and flaring in natural gas supply, the development of 
better vented and flared data has not been given a high a priority.

The report includes a recommendation that EIA improve its guidelines to 
the States regarding the data it wishes to collect. In its latest forms 
clearance effort, EIA revised its instructions to clarify reporting 
requirements and definitions on all natural gas data forms including 
the one with production and production-related data submitted by 
States. Further, EIA currently is working with the Interstate Oil and 
Gas Compact Commission (an organization of oil and gas producing States 
that are each responsible for the development and regulation of the oil 
and gas resources within that State) to improve data quality, 
timeliness and coverage, of production data collected by the States and 
subsequently submitted to EIA. We will continue these efforts.

As noted in the report, the Energy Information Administration has 
recently proposed a natural gas production survey to be completed by 
well operators for the purpose of improving the timeliness and accuracy 
of natural gas marketed production. Vented and flared volume was 
proposed as a possible component of the accounting for gas production. 
However, several commenters have indicated that they cannot provide 
detailed components of the disposition of gross withdrawals and hence 
it is premature to say whether this series will be part of a future 
data program.

International Data: EIA does not have a program for collection of 
venting and flaring data from international well operators or from 
other countries. EIA relies upon data provided to international 
agencies. Regarding international data on vented and flared gas, I 
suggest that the report note that the general availability of global 
vented and flared data could be enhanced by further efforts by the 
International Energy Agency and the World Bank to obtain separate 
statistics for natural gas venting and flaring in foreign countries. 
EIA does not presently have the expertise or resources to assess 
satellite imagery, but we may be able to investigate whether agencies 
which do assess such expertise and resources can provide information 
about this subject.

EIA will consider the recommendations provided by GAO in light of 
available resources and all other priorities for possibilities to 
improve but cannot commit to any specific action at this time.

Editorial comments have been enclosed.

Sincerely,

Signed for: 

Guy F. Caruso: 
Administrator: 
Energy Information Administration:

Enclosure: 

[End of section]

Appendix III: Comments from the Department of the Interior: 

United States Department of the Interior:
MINERALS MANAGEMENT SERVICE: 
Washington, DC 20240:

JUN 30 2004:

Mr. Jim Wells:
Director, Natural Resources and Environment: 
U.S. General Accounting Office:
441 G Street, N.W.: 
Washington, D.C. 20548:

Dear Mr. Wells:

We appreciate having the opportunity to review the Draft Report 
entitled "Natural Gas Flaring and Venting: Opportunities to Improve 
Data and Reduce Emissions" (GAO-04-809). Our general comments are 
provided below and more specific comments are enclosed.

In general, we concur with the report's recommendation that requiring 
operators to flare instead of vent, whenever possible, would reduce 
greenhouse emissions. We also agree flaring and venting meters should 
be required to improve oversight and that flaring and venting data 
should be reported separately. We will assess the cost effectiveness of 
implementing these changes and will propose new regulations as 
appropriate.

The GAO report mentions specific programs, such as USAID and the Global 
Gas Flaring Reduction Initiative, that address global flaring and 
venting issues. The Department of the Interior will work in partnership 
with state agencies and other nations in order to assist them in 
improving their regulation of flaring and venting activities.

Again, thank you for providing the opportunity to review and comment on 
this report. If you have any questions, please call Ms. Angela Herring, 
Minerals Management Service's Audit Liaison Officer, at (202) 208-6405.

Sincerely,

Signed by: 

Rebecca W. Watson: 
Assistant Secretary Land and Minerals Management:

Enclosure: 

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Jim Wells (202) 512-3841 Mark Gaffigan (202) 512-3168: 

Acknowledgments: 

In addition to the individuals named above, James W. Turkett, James 
Rose, Carol Bray, and Nancy Crothers made key contributions to this 
report.

(360397): 

FOOTNOTES

[1] Henry Hub natural gas prices adjusted for inflation in 2002 
dollars. Henry Hub is one of the largest natural gas market centers in 
the United States. Its price often serves as a benchmark for wholesale 
natural gas prices across the country.

[2] Natural gas may sometimes be reinjected into the ground for 
possible future use as an alternative to flaring or venting. 
Reinjection can be more costly than flaring and venting, but in some 
cases it may enhance oil recovery by increasing pressure in the 
reservoir.

[3] Besides carbon dioxide, flaring natural gas may emit small amounts 
of methane and trace amounts of other gases depending on the flare's 
burn efficiency. Venting methane may also release other hydrocarbons 
depending on the composition of the gas stream. In addition, due to the 
composition of the gas--for example when gas contains hydrogen sulfide-
-flaring may be required to control any associated air quality or human 
health impacts. 

[4] EIA does not report information for a 33RD state, Missouri, which 
produces a small amount of oil and gas.

[5] 69 Fed. Reg. 22109 (Apr. 23, 2004).

[6] 15 U.S.C. § 772(b).

[7] GGFR is a public-private partnership that in May 2004 included BP, 
ChevronTexaco, ENI, ExxonMobil, NorskHydro, Royal Dutch Shell, SNH, 
Statoil, TOTAL, and Sonatrach; and the governments of Angola, Canada, 
Chad, Ecuador, Equatorial Guinea, Indonesia, Nigeria, Norway, and the 
United States.

[8] For example, industry officials told us that some of the older 
platforms have limited space, so to add meters would require additional 
construction, which could be cost prohibitive.

[9] Three additional facilities were recently approved but have not yet 
been built. Eleven other projects are in various planning stages. 
According to DOE officials, streamlined approval procedures require 
offshore deepwater port terminals to be processed in less than a year 
by the U.S. Coast Guard and onshore facility permitting is being 
streamlined by FERC through pre-filing consultations with project 
proponents to minimize approval time.

[10] A Voluntary Standard for Global Gas Flaring and Venting Reduction 
(World Bank: May 2004).

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