Methane from oil and gas operations – a source of free fuel for on-site generation?

Methane is a powerful greenhouse gas, but also a potential source of ‘free’ fuel. Previous articles in this series have looked at methane emanating from landfill sites and coal mines. Here, Mark Schlagenhauf, Suzie Waltzer, Rhonda Lindsey Jacobs and Christopher J. Freitas survey the scope for making on-site use of methane from oil and gas operations.

Oil and natural gas are found stored in porous and highly permeable reservoir rock, trapped under low permeability cap rock. Within the reservoir, oil and gas are arrayed vertically according to their densities, oil at the greatest depths and natural gas above. Natural gas is also usually found dissolved in the oil. The natural gas held in rock reservoirs typically contains between 70% and 100% methane. Methane in both oil and gas is produced during the thermal degradation of organic matter in sedimentary rocks. Natural gas may escape from the oil and gas system at several points, including oil wells, oil refineries, natural gas wellheads, gas processing plants, gas transmission and distribution pipelines, and gas storage facilities.

Proven, cost-effective technologies and practices exist for recovering methane that have broad applicability globally and across the industry. Oil and gas companies, both in the US and internationally, have successfully implemented projects to reduce methane losses cost-effectively from the production, processing, transmission, and distribution of oil and natural gas. However, even with the industry’s application of these technologies and practices, global emissions estimates show that there are still significant profitable opportunities for the oil and gas industry throughout the world. This article focuses on cost-effective opportunities to reduce methane emissions that would otherwise be vented or flared, and to use recovered methane for on-site fuel and power generation.

Global methane emissions and flaring

Oil and natural gas operations are a significant source of global methane emissions, constituting approximately 17% of total man-made sources. In 2005, global oil and gas methane emissions totalled approximately 82 billion cubic metres (Bcm), equivalent to about 1165 million tonnes carbon dioxide equivalent (MtCO2e). Based on an average natural gas price of US $7 per thousand cubic feet (Mcf), this equates to a loss of about $20 billion in revenue. In addition, these emissions have an equivalent annual greenhouse gas effect of adding more than 200 million vehicles to the roads.

These results indicate a significant economic and environmental opportunity for oil and natural gas companies to recover and use methane as clean energy source. Furthermore, the US Environmental Protection Agency forecasts that methane emissions will grow globally by more than 33% during 2005-15.

Figure 1 shows global oil and gas methane emissions estimates for the top 20 emitting countries. As shown in Figure 1, the leading emitters of methane from oil and gas operations include Russia, US, Ukraine and Mexico, all of which are M2M partner countries (see box, page 93).

Figure 1 Global methane emissions from oil and natural gas operations; top 20 emitting countries (MtCO2e)
Click here to enlarge image

In addition to the methane losses from venting or leakage, the results of a recent global survey by the US National Oceanic and Atmospheric Administration using satellite data à‚— funded by the World Bank’s Global Gas Flaring Reduction partnership à‚— showed that oil-producing companies and countries burned close to 170 Bcm of natural gas in 2006. According to this study, 170 Bcm of natural gas equates to 27% of total US natural gas consumption and 5.5% of total global production of natural gas for the year. In addition, the study found that if the gas had been sold in the United States instead of being flared, the total US market value would have been about $40 billion. To access the report, visit

Major methane sources from oil and natural gas

Methane emissions occur in all sectors of the natural gas industry, from drilling and production, through processing and transmission, to distribution as well as end-use as fuel. Methane emissions from the natural gas sector primarily result from normal operations, routine maintenance and system upsets. As gas moves through the system, emissions occur through intentional vents and unintentional leaks. Venting can occur from typical equipment design or operational practices, such as the continuous bleed of gas from pneumatic devices (that control gas flows, levels, temperatures and pressures in the equipment), as well as venting from well completions during natural gas production.

Another example is methane emissions that result from the ‘blowdown’ or venting of high-pressure gas left within a compressor when taken offline to control demand or for maintenance. Methane losses can also occur from leaks (or fugitive emissions) in all parts of the infrastructure, from connections between pipes and vessels as well as valves and equipment. Leaks can also occur from the seals in pumps, compressors, valves and instruments.

Oil industry methane emissions result primarily from field production operations, such as venting gas from oil wells, oil storage tanks and production-related equipment. Venting and flaring of methane and heavier gaseous hydrocarbons (also known as ‘associated gas’) often occur during oil production. This gas is often wasted as markets for gas at remote oil production sites might not exist. This is especially common in places such as Russia, and offers a large opportunity for such projects as electric power generation.

Opportunities to recover and use methane

The success of US and international oil and gas companies suggest that there are significant opportunities globally to reduce methane emissions cost-effectively. For example, Figure 2 shows that since 1990, US Natural Gas STAR partner companies have reported 13 Bcm (459 Bcf) in methane emission reductions through the implementation of over 80 cost-effective technologies and practices.1 In 2005 alone, Natural Gas STAR partners reduced methane emissions by approximately 2.1 Bcm (74.2 Bcf), which is equivalent to additional revenue of more than $560 million in natural gas sales (based on a 2005 average gas price of $7.51/Mcf). Moreover, the 2005 emission reductions have a global warming equivalent of the carbon sequestered by approximately 8.2 million acres of forest in one year. In addition, as outlined in Gillis et al (2007), methane emission reduction projects are being implemented successfully at global oil and gas operations to address major emission sources.2

Figure 2: Natural gas STAR emission reductions; annual and cumulative methane emission reductions
Source: U.S. Environmental Protection Agency (EPA) Natural Gas STAR Program
Click here to enlarge image

Methane emission reduction strategies generally fall into one of three categories:

  • reducing venting or fugitive emissions through technologies or equipment upgrades
  • improvements in management practices and operational procedures
  • enhanced management practices that take advantage of improved technology.

Various project options such as compressor upgrades, vapour recovery from oil storage tanks, pneumatic device replacements and leak surveys have broad applicability globally and across the industry.

Companies can recover their investments through a number of economic channels, including gas sales revenue, on-site fuel use, reduced labour costs, reduced capital replacement costs, lower environmental permitting costs and carbon credit revenue. While in the US the gas market is well-developed, internationally, especially in developing countries, this is often not the case. Lack of gas markets represents a problem that often leads to wasting the valuable energy source of the associated gas and vented methane. This represents a unique opportunity for combined heat and power (CHP) developers. While the oil companies may use some of the gas to fuel their own operations, often the oil companies do not have expertise or interest in the power or CHP sector. But often oil companies are willing to work with developers that have an interest in this area.

Edan Prabhu of FlexEnergy, standing by the Flex-Microturbine at the low Btu OFFGASES site, the DCOR Oil Facility near Santa Barbara, California. The Flex-Microturbine runs on 15 Btu/cubic foot waste gas
Click here to enlarge image

Government policies, however, may need to be modified to provide sufficient economic incentives so that the gas canà‚ be successfully captured and utilized for electricity generation orà‚ CHP. And laws may have to be changed to allow independent power producers and distributed generation to enter the market. USAID specializes in supporting development of economic energy markets and has a number of programs. Additional information is available at, and at the websites of development partners, such as,, and

Microturbine technology for electricity generation

As noted above, natural gas is often produced in association with oil production. In the United States, the associated gas is sometimes flared where permitted, but creates air emission challenges in many places and is therefore vented. The inability to flare the amounts of gas produced has caused oil production to be shut-in for lack of compliance with regulations. This means that the valves are closed so there is no oil or gas production from the well. By adding a turbine, emissions are lowered and the valve can be reopened and production is restarted.

A research pilot demonstration project funded by the US Department of Energy’s National Energy Technology Laboratory, is turning methane gas into a valuable energy source through the use of distributed generation power units at marginal well sites in California. Electricity production is one of the largest costs associated with oil production. In California, equipment such as pump jacks are all run by electricity and this power must be purchased from the utility grid. Partners including independent oil producers, the Interstate Oil and Gas Compact Commission, and the California Oil Producers Electric Cooperative (COPE) successfully demonstrated the use of microturbine technology for electricity generation on site.

By harnessing the energy in the waste gasses, the pilot projects brought shut-in fields to full production, eliminated the need to flare the gas, and reduced costs associated with oil production. Details of the project can be viewed at

In conclusion, the oil and gas sector represents an excellent opportunity for both near-term reduction of methane emissions and cogeneration and on-site power applications. US government agencies are actively pursuing methane partnerships with companies interested in commercially viable operations in 20 countries.

Mark Schlagenhauf is the Global Oil and Gas Advisor, USà‚ Agency for International Development, Washington DC, US.

Suzie Waltzer is Program Manager, Natural Gas STAR Program, US Environmental Protection Agency, Washington DC, US.

Rhonda Lindsey Jacobs is Project Manager, National Energy Technology Laboratory, US Department of Energy, Tulsa, Oklahoma, US.

Christopher J. Freitas is R&D Program Manager for Natural Gas Storage, Pipeline Reliability, and LNG Office of Oil and Natural Gas Desk, US Department of Energy, Washington DC, US.


1 Natural Gas STAR Recommended Technologies and practices,

2 Gillis, Brian, Waltzer, Suzie, Heath, Milton, Cormack, Jim, Ravishankar, Krish; Technology drives methane emissions down, profits up (OGJ, August 13, 2007, page 20).

Methane to Markets Partnership

The Methane to Markets Partnership (M2M) is an international initiative comprising 20 countries and the European Commission, focused on advancing the cost-effective, near-term recovery and use of methane as a clean energy source. The role of the Partnership is to bring diverse organizations from the private sector, the research community, development banks, and other organizations together with international governments to stimulate development of methane-saving projects. Under this framework, US EPA launched Natural Gas STAR International, a global partnership with oil and gas companies. Natural Gas STAR International builds on the success of the domestic Gas STAR Program, to promote cost-effective methane emission reduction activities in the international oil and gas sector. To date, there are over 110 US Partners in the Natural Gas STAR Program representing 56% of the natural gas industry in the US, including 19 of the top 20 production companies. As of 2006, eight companies joined Natural Gas STAR International to advance the global recovery and use of methane as a valuable clean energy source.

The Methane to Markets Project Expo held in Beijing, China, 30 Octoberà‚—1 November 2007, brought together oil and gas operators and other stakeholders to combine resources and knowledge for profitably harnessing methane emissions. For further information visit

For further information on Natural Gas STAR or the technologies discussed in this article,

Case study: Santa Barbara oil facility

The DCOR oil facility near Santa Barbara has installed microturbines to deal with its natural gas emissions. The only technology suitable for the 42 Btu gas at the site was FlexEnergy’s Flex-Microturbine. This innovative technology can run on a range of fuels from as low as 15à‚ Btus per cubic foot (1.5% the strength of natural gas) to as high as 3000 Btus per cubic foot (three times as strong as natural gas). Its emissions are well below those from any other power plant, and meet the toughest requirements of even the California Air Resources Board. The Flex-Microturbine’s fuel range and clean emissions could make it the standard solution for a large fraction of stranded gas in the future.

Framed by state-of-the-art micro-turbines, COPE President Bobà‚ Fickes demonstrates the small footprint of such units thatà‚ are in current use in a neighbourhood inside the city of Losà‚ Angeles, California.
Click here to enlarge image

The Flex-Microturbine is the first system to mix fuel and air at atmosphere and use catalytic combustion to oxidize the weak mixture. This is what gives it the fuel flexibility and ultra-low emissions. The Flex is still completing development, but has already proven to be robust, and has logged over 5000 hours of operation, including over 3000 hours on a single prototype. FlexEnergy is in the process of obtaining R&D and commercialization funds to complete the development, but a line of potential clients is already forming.

The Flex-Microturbine was originally developed for biomass applications (landfill gas, digester gas, wood gasifier gas) with grants from the DOE’s renewable energy division; and its extension to help resolve oilfield problems is a fortuitous benefit. The Flex can run off several streams of methane gas from landfills, coal mine vents, shut-in gas wells, and so on, making it highly valuable as a greenhouse gas abatement technology, because methane has a global warming potential 23 times that of carbon dioxide. This waste-to-energy technology cross-over from renewables to fossil and back to renewables is the kind of clean, flexible, greenhouse gas reduction technology DOE hopes to foster in future.

No posts to display