Atmospheric Emission - Flaring

• Petroleum Act 1998
• Petroleum Licensing (Exploration and Production) (Seaward and Landward Areas) Regulations 2004
• Petroleum Licensing (Production) (Seaward Areas) Regulations 2008

These Regulations consolidate with amendments the provisions of the Petroleum (Production) Regulations 1982 (as amended) in relation to (a) applications to the Secretary of State for petroleum production licences in respect of seaward areas and (b) applications to the Secretary of State for petroleum exploration licences in respect of seaward areas and landward areas below the low water line.

• The Petroleum (Current Model Clauses) Order 1999

An objective of the Petroleum Act 1998 is to conserve gas, a finite energy resource, by avoiding unnecessary wastage during the production of hydrocarbons from the UKCS. The actual Model Clause may vary depending on when the Block Licence was granted, but in recent licences flaring is covered by Paragraph 3 of Model Clause 21, and this states that the Licensee that not flare any gas from the licensed area or use gas for gas lift except with written consent.

• EU Emissions Trading Scheme (EU Directive 2003/87/EC and the Greenhouse Gas Emissions Trading Scheme Regulations 2005)
• The Greenhouse Gas Emissions Trading Scheme Regulations 2005

• The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2007
• The Greenhouse Gas Emissions Trading Scheme (Amendment No. 2) Regulations 2007
• The Greenhouse Gas Emissions Trading Scheme (Miscellaneous Provisions) Regulations 2007
• UK Phase 2 National Allocation Plan 2008-2012

The Greenhouse Gas Emissions Trading Scheme 2005 (the 2005 Regulations) as amended provide a framework for a greenhouse gas emissions trading scheme and implement Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading. Flaring is included in this scheme from 2008 onwards.

• Waste and Emissions Trading Act 2003

This Act provides for the enforceability of penalties, including fixed financial penalties, in the current voluntary UK Emissions Trading Scheme 2002. Part 2 of the Waste and Emissions Trading Act 2003 amends Schedule 1 to the Pollution Prevention and Control Act 1999. The amendment provides for penalties in any future emissions trading schemes.

• DECC Flare Trading Scheme

A joint DECC/Industry initiative under the PILOT scheme introduced a voluntary flare trading scheme from 1 January 2001. This allows companies to trade with others on the UKCS who are members of the scheme, therefore avoiding a return to DECC for increased consent. DECC administers the trades and the membership has available a set of rules (Flare Trading Rulebook - available from DECC). Currently the flare volume trade does not involve any exchange of money.

• Energy Act 1976

Some flaring which has not been permitted under the licence model clauses is covered by this legislation, although it is mostly used for issue of vent consents.

• EC Directive 2001/81 on National Emission Ceilings for Certain Atmospheric Pollutants
• National Emission Ceilings Regulations 2002

These Regulations set national ceilings and a requirement for the development of a reduction programme for sulphur dioxide, nitrogen oxides and volatile organic compounds in the UK. These Regulations apply to emissions from land, territorial sea and the UKCS. 

At present, the UK government believes that it can meet targets through existing targets onshore. However, this does not preclude future targets for offshore operations. The UK Government is in the process of preparing a national programme for reduction of these emissions.

DECC Guidance Notes for the Completion of Flare and Vent Applications

Guidance on the EU Emissions Trading Scheme for offshore installations are available on the DEFRA website and the DECC website

Consent to Flare

Note that at the field start-up a series of consents may be issued for short periods (usually for 28 days or a calendar month) to allow DECC closer control over the operation. As the commissioning programme progresses, DECC may issue consents for longer periods as greater plant stability is achieved.

Once production has stabilised the consent will normally be re-issued for a longer duration and thereafter renewed annually (see Renewal).

EU Emissions Trading Scheme

There are two parts to the EU ETS (see Pending Legislation)

a) the requirement to be registered under the scheme, and the receipt of a permit under the EU ETS; and

b) application for an allowance from the National Allocation Plan (NAP)

Consent to Flare

For a new flare consent, contact should be made in the first instance with the appropriate Consents Unit within DECC (see below) approximately 3-4 months before start-up. This will kick off a series of meetings and request for background information (see below). Formal written application for the first flare consent should be made approximately 2 weeks prior to first oil. The consent will not be issued until the first oil date is confirmed.

The DECC Guidance Notes for the Completion of Flare and Vent Applications provide further information.

Information that will be required during initial discussions with DECC for a first flare consent application will include the following:

• A description of gas plant and flare equipment to be commissioned. · A description of how the wells will be brought on stream. · A detailed description of the plant start-up procedures and philosophy; the procedure for filling the gas export line should also be described.
• The commissioning schedule.
• Flaring calculations – to include flaring on a daily basis and total quantities. This should also show the target design flare levels for stable conditions once commissioning is complete.
• Sketches and figures should also be supplied for:
  • Overall commissioning programme;
  • Fuel gas system
  • Gas dehydration system;
• Gas compression system;
• Gas export system and pipeline; and
• Onshore facilities.

Initial consent application in the form of a letter, should include the following as a minimum:

• Flare level for consent being applied for (usually for a 28 day period);
• Justification of how this figure has been arrived at, including GOR rates etc.
• Description of the work being carried out during the 28 day period.

For an annual flare consent application (see Renewal for more information), information required includes

• A summary of the main points of the application.
• A summary of the main flaring assumptions, including any projects planned through the year.
• Flaring calculations – to include flaring on a monthly basis and total quantities

EU Emissions Trading Scheme – Existing EU ETS Permit Holders

Where an EU ETS permit is already held (for power generation) a new permit need not be applied for.   However this permit will need to be amended to include flaring and additional information is required to be submitted to DECC.  The following additional information is required:

• Description of flare equipment on installation; and
• Amendment of M&R Plan to include flaring.

EU Emissions Trading Scheme – New Applicants (also see Pending Legislation)

Application for a permit under the EU ETS should be through DECC application form available on DECC website. 

In addition an application for an allocation from the New Entrants Reserve (NER) will also be required to the Phase II NER by those installations starting new entrant activities after 31 December 2007 and before 01 January 2013. Application is through DECC NER Application Form available on the DECC website. Guidance on completion of the NER and calculation of allowances is also available on DECC website.

Applications for Phase I NER allowances for activities starting after 30 June 2006 are classified as "Later Phase I New Entrants". All such applicants will also need to make a separate application to the Phase II NER using the Phase II Application Form (ETS 3.2), the Phase II VO template and the Phase II Spreadsheet in order to obtain allowances for Phase II of the scheme.

Installations that entered under Phase I will already have new allocations issued under Phase II.

Data submitted as part of the application for allocation under the NER must be externally verified as part of the application process.  This will require production of a Design Report. 

The Design Report will need to be verified by a UKAS accredited verifier, who will produce a Verification Report for submission to DECC.  Guidance on production of the Design Report and verification is available on the DECC website and further guidance is also available on the DEFRA website.  Once the Design Report and Verification Report are received by DECC, the application will be recognised as “duly made”, however final allocations under the NAP will not be issued until DECC have checked and finally approved the Design Report and Verification Report.

The EU ETS permit also requires submission of a Monitoring and Reporting (M&R) Plan (see Monitoring). 

Flare Consent

DECC Oil and Gas Office contacts for Consent to Flare applications are as follows:

Northern and Central North Sea
Louise Novell
Tel: 01224 254052
Email: carol.campbelll@berr.gsi.gov.uk

Southern North Sea and Onshore
Ivor Newman
Tel: 020 7215 5163
Email: ivor.newman@berr.gsi.gov.uk

EU Emissions Trading Scheme – Existing EU ETS Permit Holders

Additional information required to modify an existing EU ETS permit to include flaring should be submitted to DECC EDU-LED.

EU Emissions Trading Scheme – New Applicants

Completed EU ETS and NER applications will be submitted electronically to both DECC Environmental Management Team and Environment Agency by email.  Under exceptional circumstances, it may be necessary to separately forward hard copies of any supporting documents.  Two copies of each document should be submitted.  Applications should be emailed to the following email addresses:

DECC: emt@berr.gsi.gov.uk

DEFRA: etapps@environment-agency.gov.uk

Note - Department of Energy and Climate Change (DECC) has been formed through the merger of BERR energy divisions (including Oil and Gas) with divisions of DEFRA involved with climate change (including EU ETS activities). It is not yet clear how new contact arrangements will be organised under the new government department.

Flare Consent

First discussions with DECC should be held at least 3-4 months before “first oil”.  However, it is advised by DECC that the operator is in contact at all stages, from design through construction to commissioning planning and demonstrate that all reasonable steps have been taken to keep flaring to a minimum.

Application for a first consent should be made at least 2 weeks before “first oil”.  Consent will not be issued until the “first oil” date is confirmed.

See Renewal for more information on ongoing annual applications.

EU Emissions Trading Scheme – Existing EU ETS Permit Holders

• Description of Flare equipment to be provided by 30 September 2007;
• Amended M&R Plan to be provided by 31 October 2007.

Revised M&R Guidance and Form will be available from 15 September 2007.

A revocation notice will be issued with your new permit cancelling your existing permit at midnight on 31 December 2007.

EU Emissions Trading Scheme – New Applicants

EU ETS permit must be in place before operations commence.

Verification opinions on applications for allowances under the NER must be submitted within 30 working days of receipt of the GHG permit in order to be eligible for any set aside allowance.

The UK has now submitted its final National Allocation Plan for Phase II of the EU ETS to the Commission and had the plan accepted.  A final list of installation level allocations is available on the Defra website.

Later Phase I New Entrants have been granted priority access to the Phase II NER and are invited to make applications from 01 May 2007.   For all other Phase II applicants, the earliest application date is 01 August 2007.

Consent will specify the flare volume that must not be exceeded over a specified time. If there is any possibility that the consented rate for the period may be exceeded, the operator must contact DECC immediately to discuss the difficulties encountered and if appropriate arrange for a revision of the consent.

DECC has an objective to reduce non-safety related flaring by 5% per year (see Snippets). Reductions in flaring are achieved through close cooperation between DECC and the operators, rather than prescriptive limits.

EU ETS – Permit Conditions

The EU ETS Permit includes conditions specifying the activities it covers, the emissions of GHG it covers and the permitted emission points.  The conditions will also place an obligation on the operator to submit a detailed monitoring and reporting plan confirming the monitoring and reporting arrangements that will be implemented (see Monitoring).

Permit conditions also include details of reporting requirements.  See EU ETS Standard Permit and Conditions (pdf file).

Oil & Gas UK has detailed additional voluntary standards in the ‘Guidelines on Reducing Atmospheric Emissions from Oil and Gas Facilities’. Under Publications on the Oil & Gas UK website.

• Daily flare and cumulative flare volumes.
• Downtime/uptime of gas plant.

Note: Cold flaring is considered a venting activity and should not be included in flaring reports or against a flaring consent.

EU Emissions Trading Scheme (for 2008 onwards)

A condition of the EU ETS permit is for the operator to submit a Monitoring and Reporting Plan to DECC for approval.  Monitoring and Reporting Guidance for the Offshore Sector (Word document) is available on DECC website.

The following need to be monitored/measured under the EU ETS:

• Flare volumes;
• Emissions to be reported either on the basis of calculations or direct measurement.  Measurement of emissions shall use standardised or accepted methods.

DECC Guidance on Offshore Sector Monitoring and Reporting is available on the DECC website.  A number of guidance documents are also available on the DEFRA website including factors for CO2 emissions and useful conversion factors.

The M&R Guidance sets tiers for monitoring requirements based on accuracy of the monitoring method.  The Guidelines require that the highest tier approach shall be used by operators to determine parameters for monitoring and reporting purposes.  Only if it is shown to the satisfaction of DECC that the highest tier approach is not technically feasible or will lead to unreasonably high costs, may a next lower tier be used.  BP has undertaken a review of fuel gas and flare gas monitoring for each asset that can be used to determine the monitoring and reporting tier. 

There are no set requirements for Improvement Plans, as each installation is likely to pose different challenges.

Step 1 - quantify current measurement uncertainty.

Step 2 - identify necessary improvements.

Step 3 - undertake necessary cost and engineering studies.

Step 4 - schedule and implement necessary improvements (including allocation of necessary time and resources).

If there are problems with meeting the Improvement Plan, DECC should be contacted as soon as possible to advise the delay and amended timetable. Also see Snippets.

There are two types of reporting required for flaring. The first is statutory reporting to DECC the second is voluntary reporting of environmental emissions due to flaring which is used by Oil & Gas UK to report industry performance.

Statutory information: the following shall be sent to DECC for the previous reporting period (as specified in the Flare Consent).

• Short technical summary of performance of gas handling plant, highlighting any features which have affected or could affect the operation of the plant.
• Rates in respect to oil production, gas production, gas export, gas used for fuel and of gas flare.
• Cumulative average production for production and flare.
• Calculations of gas compression plant efficiency.

Some consents may include the provision that specific monthly flare reporting is not needed and that flare volumes are reported in the routine field reporting into DECC Petroleum Production Reporting System (PPRS). In this case, specific flare reporting would be by exception only if flaring is out of consent.

Voluntary information: Complete relevant parts of applicable atmospheric emissions inventory EEMS pro forma that can be downloaded from the EEMS Website. Guidance notes are also available from the EEMS site.

See Above

Statutory information: DECC’s Petroleum Production Reporting according to terms of consent.

Voluntary information: Completed reports should be submitted electronically to the EEMS website.

Statutory information: Frequency of reporting will be established through consent (e.g. weekly or monthly). It varies widely according to stage of field production and between fields and operators.

Voluntary information: Annually by 7th February.

A permit is no longer required for potential flare drop-out. However, if flare drop out does occur, a PON1 report must be submitted.

If there is a possibility of exceeding the flare consent value, contact should be made with DECC to discuss the problems, and if appropriate to arrange for a revised consent.

It is unlawful to flare gas without a current consent and in extreme cases this could lead to withdrawal of the licence.

Non-compliances should be reported through the routine flare consent reporting or, if there is no specific routine flare reporting, then breach of exemption conditions should be reported at month end as they occur. Early phone contact with DECC is recommended before consent limits are exceeded.

Commissioning phases - re-application should be made approximately 2 weeks before the next consent period.

Annual ongoing flare consents. DECC will invite applications for renewal in September each year, with annual consents being issued in December for the following year. DECC Guidance on the Completion of Flare and Vent Applications is available on DECC website.

Two new proposed EU instruments are out for consultation by the European Commission:

• Proposal 2008/16/EC for a Directive amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading system of the Community

• Proposal 2008/17/EC for a Decision on the effort of Member States to reduce their greenhouse gas emissions to meet the Community's greenhouse gas emission reduction commitments up to 2020

On 23 January 2008 the European Commission published a package of proposals for tackling climate change and delivering a low carbon economy in Europe. These proposals together aim to implement the decisions agreed by EU Heads of State and Government at the March 2007 Spring European Council, including a 20 per cent reduction in EU GHG emissions by 2020 from 1990 levels, increasing to 30 per cent when there is an international climate agreement; 20 per cent of total EU energy consumption to come from renewable energy sources by 2020 and measures to support carbon capture and storage (CCS). 

The proposed amendments to the EU ETS Directive discussed in this consultation document sit alongside proposals for a new Directive on renewable energy, a draft Decision allocating among Member States the responsibility for achieving emissions reductions outside the EU ETS sectors and a new Directive and Communication relating to CCS. The amended EU ETS Directive is an integral part of this package, and is therefore central to meeting the EU’s GHG reduction targets.

DEFRA has launched a consultation on the new proposals. The consultation document can be accessed on the DEFRA website. This consultation closed on 30 July 2008, however information is still available on the website.

Phase III will run 2013-2020 and will include year on year reductions in allowances with a driver of reducing EU emissions by 21% between 2005 and 2020. There will be no National Allocation Plans (NAPs) with allocations being managed centrally by the EU.

Initial Phase III reduction of 5% reduction in the EU cap compared with the average for Phase II. Another 5% will go to Phase III New Entrants Reserve. Allocation method is not yet clear. 80% of allowances will be allocated for free in 2013 declining each year to zero in 2020, except in the power sector where there are no free allowances. Where no free allowances available allocations will be made by auction. Corporate penalties will also be included. Not clear where oil and gas industry fits into the scheme (i.e. whether classed as power sector).

Carbon Capture and Storage - a separate Directive has been published. Credit will be given under EU ETS for CO2 captured and stored.

A Climate Change Bill was introduced before the UK Parliament on 14 November 2007 The Bill is intended to introduce powers in order to combat climate change by setting annual targets for the reduction of CO2 emissions until 2050. The Bill sets sectoral reduction targets and targets for energy efficiency. The Bill introduces a new cap and trade scheme for large business not already covered elsewhere, so this is unlikely to impact the offshore oil and gas industry. The Bill puts into law targets to reduce carbon dioxide emissions by at least 60% by 2050 and 26-32% by 2020, against a 1990 baseline. Consideration will also be given to including other greenhouse gases and emissions from shipping. The Bill when enacted will apply to England and Wales.

A draft Scottish Climate Change Bill is due to go to the Scottish Parliament by the end of 2008.

For Phase II, DECC will not allow operators to submit improvement plans that do not demonstrate progress towards meeting the required measurement or reporting tiers under EU ETS. DECC will use enforcement notices and impose deadlines on operators as necessary to ensure compliance. Where operators cannot meet imposed tiers, verifiers will be forced to confirm "non verified" annual reports. Where operators submit "non verified" annual reports, emissions levels will be set based on historical data or maximum levels of uncertainty.

This is considered to be a venting activity, and controlled under the venting consent. It should not be reported as flaring, or counted against the flaring consent.