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GAS FLARING REGULATION IN

THE OIL AND GAS INDUSTRY: A


Comparative Analysis of
Nigeria and Texas Regulations.
By
Dennis Otiotio

U n i v e r s i t y o f Tu l s a C o l l e g e o f
Law

May 2013

GAS FLARING REGULATION IN THE OIL AND GAS


INDUSTRY: A
Comparative Analysis of Nigeria and
Texas Regulations.
TABLE OF CONTENT
1. INRODUCTION
page 2
1.1 Background
1.2 Study Area
1.3 Research Objective
1.4 Research Question
1.5 Methodology
2. UNDERSTANDING THE BASICS OF GAS FLARING
page 10
2.1 What is gas flaring?
2.2 What are the reasons for flaring gas?
2.3 What are the environmental impacts of gas flaring?
3. International framework for gas flaring reduction
page 13
3.1 International convention on the environment
3.2 The United Nations Framework Convention on
Climate Change (UNFCCC)
3.3 The Kyoto Protocol
3.4 Global Gas Flaring Reduction Initiative (GGFR)
4. The Nigerian Institutional and Regulatory Framework
page 22
4.1 Background history on the regulation of gas flaring
in Nigeria
4.2 The legislative and regulatory framework in Nigeria
4.3 The institutional framework for regulating gas
flaring in Nigeria
4.4 The challenges, successes and failures at reducing
gas flaring in Nigeria
5. The Texas Institutional and Regulatory Framework
page 34
5.1 Background history on the regulation of gas flaring
in Texas
5.2 The legislative and regulatory framework in Texas
5.3 The Institutional framework for regulating gas
flaring in Texas
5.4 The challenges, successes and failures at reducing
gas flaring in Texas
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6. ANALYSIS AND CONCLUSION


page 48

1. INTRODUCTION
1.1. Background of the Study.
The production of oil and gas generate waste gases that need to be
controlled in a manner that protects the environment. But a major
problem with oil and gas exploration activities is the inability of
governments and their regulatory agencies to control and prevent
environmental pollution and other associated problems. Oil spillage,
gas flaring and venting have caused loss of lives, and have adversely
affected human health and the environment. These adverse effects
have led to the clamor for strict environmental regulation of oil and gas
operations, in order to control, reduce or prevent pollutions arising
from exploration and exploitation activities.
Gas flaring is one of the most contentious energy and environmental
issues facing the world that has persisted for decades. The World Bank
estimated that the annual volume of natural gas being flared and
vented globally in 2011 is about 140 billion cubic meters (bcm).1 This is
enough to provide for the annual gas consumption of Central and
1 World Bank Press Release dated July 3, 2012, available at www.worldbank.org.
2

South America. The World Bank had warned that efforts to reduce gas
flaring needs to be sustained because there has been a slight increase
in global gas flaring from 138 bcm in 2010 to 140 bcm in 2011. The
World Bank figures shows that Russia tops the worlds flaring countries
with 37.4 bcm, followed by Nigeria with 14.6 bcm, while the United
States is fifth flaring country in the world with 7.1 bcm.
Gas flaring is a waste of valuable non- renewable source of clean
energy and causes the wasteful emission of greenhouse gases (GHG),
which is directly linked to global warming.
The international community has realized the potential impact of gas
flaring on the environment and seriously seeks to address it through
the United Nations Framework Convention on Climate Change
(UNFCCC)2 and other conventions, including the Kyoto Protocol,3 made
pursuant to the UNFCCC. In 2002, the World Bank, in furtherance of its
poverty reduction policy started a public- private partnership initiative
called Global Gas Flaring Reduction (GGFR). This initiative was
launched formally at the World Summit on Sustainable Development
(WSSD), in Johannesburg, South Africa, with the aim of reducing gas
flaring and venting worldwide by supporting national governments,
development agencies, and oil producing companies in their efforts to
reduce environmentally damaging flaring and venting of associated
gas. A World Bank GGFR study identifies the lack of an effective
2 Printed in 31 ILM (1992)
3 Printed in 37ILM (1997)
3

regulatory framework, non-availability of local and international gas


market, and financial constraints for the execution of gas reduction
projects as the three main barriers to natural gas conservation4.
It is generally believed that the enactment of environmental and
conservation laws, coupled with the establishment of independent
regulatory and enforcement framework will change the general
behavior and attitude towards environmental protection and invariably
reduce gas flaring. However some economists have argued that
regulation is not the best approach to encourage the oil and gas
industry to reduce gas flaring but rather market incentives aimed at
reducing cost and stimulating innovations.5

1.2.

Study Area

The area of study of this research is the Federal Republic of Nigeria and
the State of Texas in the United States of America. Nigeria and Texas
are both rich in oil and gas resources and have had the problem of gas
flaring in the course of oil and gas production.
In Nigeria, flaring of associated gas continues to generate adverse
environmental and energy consequences against the backdrop of
sustainable development. Presently Nigeria is still the second largest
gas flaring country in the world despite legislation enacted to phase
4 World Bank, Report on Consultation with Stakeholders. Global Gas Flaring
Reduction- GGFR Report No. 1 (Washington: World Bank 2002)
5 Jack I. Knetsch, Environmental Economics, Environmental Law: An Intensive Short
Course for Practitioners. (1992), 32, cited in Roger Cotton & Cara Clairman, The
Effect of Environmental Regulation in Technological Innovation in Canada 21
Canada- U.S. L.J. 239

out gas flaring in 2008. In Nigeria there are several legislation and
regulatory institutions regulating gas flaring in the oil and gas industry
and Nigeria is also signatory to several international conventions and
protocols aimed at reducing gas flaring. But these regulatory efforts
have been unsuccessful as gas flaring continues unabated, and it
remains the accepted industry practice, even though gas flaring has
been illegal since 1984. As at 2012, it is believed that about 25 percent
of gas production in Nigeria was flared, while only 75 percent of gas
production was utilized. Though the MPR states that only 18 percent is
being flared.
In contrast to Nigeria, Texas, the largest oil and gas producing state in
the United States has recorded tremendous success in reducing gas
flaring. Although United States is the fifth largest gas flaring country in
the world, with a total flare of 7.4 bcm, Texas flared gas accounted for
only 4.2 percent of that figure. Since 1866 when the first oil well was
drilled, Texas had enacted legislations and created institutions to
regulate gas flaring in the oil and gas industry. The states efforts are
complimented by national environmental legislations and regulatory
institutions, which have successfully reduced gas flaring to a minimum
level. Texas has long had a history of best practices with regards to gas
flaring regulation. Texas regulators strictly enforce the rules and
operators fully comply with existing regulations. As at 2012, 0.5

percent of the gas production in Texas was flared, while 95.5 percent of
gas produced was utilized.

1.3.

Research Objective.

This research will do a comparative analysis of all existing legislation


regulating gas flaring in the oil and gas industry, the institutions
created to regulate gas flaring and how the institutions regulations
affect the operations of oil and gas companies. This research will
assess the applicable enforcement strategies and its efficacy in the
control of gas flaring in the oil and gas industry in Nigeria and Texas.
The research will also conduct a comparative analysis of the
enforcement provisions of various statutes and regulations so as to
determine the powers conferred on the regulatory agencies in Nigeria
and Texas.
A comparative study of gas flaring regulations in the oil and gas
industry in Nigeria and Texas is imperative to the glaring difference in
the regulatory framework between Nigeria and Texas, despite their
similarity as big producers of oil and gas. The difference in the oil and
gas jurisprudence as it relates to ownership structure of oil and gas is
also instructive. While Nigeria lacks effective and efficient legislation
and regulatory institutions to reduce gas flaring, Texas has an efficient
regulatory regime aimed at reducing gas flaring.

The lesson that Nigeria can learn from Texass success will be explored
to ascertain if similar regulatory framework can be replicated in the
Nigerian oil and gas industry with little modification. The research will
also make recommendations that will be helpful in the establishment of
an effective legal regime and functional regulatory institutions in
Nigeria.
There has been no known comparative study of gas flaring regulation
in Nigeria and Texas and this research will be the first and it will
provide lawyers in both jurisdictions a comparative perspective and
understanding of the law on the issue. In addition the findings in this
paper might create avenue for further research.

1.4.

Research Question.

In order to achieve the aim of this research, the paper will address the
following research question:
1. What are the legal issues regarding gas flaring regulatory
framework in Nigeria and Texas?
2. What are the available legislative and institutional framework
and enforcement strategies in Nigeria and Texas?
3. What are the factors responsible for the success of Texas gas
flaring reduction efforts?
4. What are the factors affecting gas flaring phase-out regulations
in Nigeria?

5. What lessons can Nigeria learn from Texas in order to achieve


complete gas flaring phase-out?

1.5.

Literature Review.

The issue of gas flaring is a global phenomenon with its attendant


environmental consequences. Its importance has propelled lawyers
and non-lawyers alike to write articles on the subject. Garba I.
Malumfashi,6 wrote on the review of the regulatory, environmental and
socio- economic issues relating to gas flaring in Nigeria and concluded
that phase-out of gas flaring in Nigeria in 2008 was feasible, depending
on the commitment of the government in achieving that objective.
Ismail O. Saheed and Umukoro G. Ezaina7 conducted research on the
multi faceted impact of gas flaring on a global scale and the different
approaches employed by researchers to measure gas flared and its
resulting emissions. The outcome of the research shows that there is
no single global methods by which emission factors and estimation
procedures in the oil and gas industry all over the world can be used to
determine the volume of gas flared. Christen Kris,8 focused on the
environmental impact of gas flaring, venting and efforts by the world
bank and governments to commercialize associated gas, including

6Garba I. Malumfashi, Phase Out of Gas Flaring in Nigeria by 2008: The Prospect of
a Multi- Win Project, University of Dundee, Scotland, United Kingdom
7 Ismail O. Sahad and Umukoro G. Ezaina, Global Impact of Gas flaring, Energy &
Power Engineer, 290-302, vol.4 issue 4, (July 2012)
8 Christen Kris, Environmental Impacts of Gas Flaring, Venting Add Up
Environmental Science &Technology, vol. 38, issue 24, 480 (2004)

developing domestic markets and access to international markets, and


creating legal and fiscal regulations for associated gas. Ologunorisa E.
Temi9 wrote on the impact of gas flaring on the Niger Delta region of
Nigeria and concluded that there is urgent need for scientific study and
analysis of the effect of gas flaring on the different environmental
compartments in the Niger Delta, which is a necessary ingredient for
achieving sustainable development. David F. Prindle10 conducted a
study on the efforts of the Texas Railroad Commission in reducing gas
flaring from 1930 to 1949. He stated that the Commission was one of
the most important regulatory bodies in the United States, and that it
successfully prevented the destruction of the states natural gas
reserve through strict regulations. The article enumerated the
challenges faced by the commission and how it overcame those
challenges. Howard R. Williamss article11 focused on various methods
applied by the different states in the United States to conserve oil and
gas, and discussed the steps taken by regulatory agencies to regulate
the flaring of gas in some states including Texas, but concluded that
they are not inclined to enter an order unless convinced that it is
economically feasible to dispose of the residue of the casinghead gas

9 Ologunorisa E. Temi, A Review of Gas Flaring on the Niger Delta Environment


IJSD&WE, Vol. 8, 249 (2001)
10 David F. Prindle, The Railroad Commission and the Elimination of the Flaring of
Natural Gas 1930 - 1949 The Southern Historical Quarterly, vol. 84, 293 - 308
(1981)
11 Howard R. Williams, Conservation of Oil and Gas Harvard Law Review, vol. 65,
no.7, 1155-1183 (1952)

by sale or reinjection. Moses

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discussed extensively on the state of

the law on gas flaring in the United States leading up 1945.


There is no research that has been conducted to do a comparative
analysis of gas flaring regulations in Nigeria and Texas, and this
research will abridge that gap and serve to be immensely beneficial to
the oil and gas jurisprudence of both jurisdictions.

1.6.

Research Methodology.

This research will undertake an indebt study and comparative analysis


of all legislations that regulate gas flaring in Nigeria and Texas, their
respective regulatory institutions, their composition, powers and ability
to perform their respective functions. In addition this research is
intended to identify the major environmental regulatory issues as it
relates to gas flaring in the oil and gas industry in Nigeria and the state
of Texas in the United States.
This research will also undertake a comparative analysis of the existing
regal regime and institutions for the regulation of gas flaring in Nigeria
and Texas, and analyze the lapses in existing legislation, the failure of
Nigerian regulatory agencies to administer and enforce gas flaring
regulations, and the role of major regulatory institutions such as the
Ministry of Petroleum Resources, the Department of Petroleum
Resources (DPR), and the Federal Ministry of Environment. The
12 Moses, Statutory Regulations in the Carbon Black Industry 20 TULANE L. Rev.
vol. 83, (1945)

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legislative framework and existing institutional approach by Texas and


the United States Federal Government in controlling gas flaring will be
critically examined, including the role of the main oil and gas
regulatory agency, The Texas Railroad Commission, and its
environmental counterpart, the Texas Commission for Environmental
Quality in reducing gas flaring in the industry.
The research will be largely library based and will rely on both primary
and secondary source materials in statutes, journal, case reports,
historical records, books, legislative code, administrative regulations,
conference papers, newspapers/ magazines and other internet based
sources such as Westlaw, LexisNexis, Cali, Loislaw, Lawriter, Fastcase,
Quardry online , nigerialawonline, Nigeria- Law, Nigeria Washlaw,
Nigerialawreport and etc.

2. UNDERSTANDING THE BASICS OF GAS FLARING


2.1. What is Gas Flaring?
In the early development of oil and gas production, operators did
not consider natural gas as a useful product and therefore
burned it off at the well or vented it into the atmosphere, through
a process called gas flaring. Gas flaring is the controlled burning
of unutilized natural gas that is associated with crude oil when it
is pumped from the ground.13 A flare system which is similar to
the lighting of a burner tip on a gas stove,14 is made up of a flare
13 Justice in Nigeria, Gas Flaring in Nigeria: an Overview Newsletter, 1 (April 2010)
14 Chesapeake Energy, Gas Flaring in the Barnett Shale: A safe and regulated
practice March 2009, p1. Retrieved from www.askchesapeake.com on 1/19/2013.

11

stack and pipes that feed gas back to the stack, and the gas
flows into a vertical pipe and is immediately lit to burn off. In the
night the flame of the flared gas is easily seen in the sky. The
flare size and brightness depends on the amount and type of
liquid in the stack.
Gas flaring takes place at oil drill sites, refineries, natural gas
plants, chemical plants, and landfills. The process emits gas from
pipes in oil or gas wells, or through smoke stacks at industrial
plants and burns it.15 But this paper is concerned primarily with
the flaring of associated or casinghead gas that is produced
along with crude oil.
2.2. What are the reasons for flaring gas?
In most developed countries natural gas is valuable and 95
percent of natural gas is captured and utilized. However there
are several reasons why natural gas is flared in those countries
during drilling or production process. It might be necessary to
flare gas during well production testing after the completion of
drilling, in order to release unsafe pressure levels in wells during
maintenance and emergencies, for managing gas compression,
processing and to recover oil.16 Flaring of casinghead gas might
be necessary in a new area of exploration, while awaiting the
construction of gas gathering pipeline to connect the well to
major pipeline or sales outlet.
15 Definition of gas flaring, retrieved at www.ehow.com on 3/6/2013.
16 Ohio EPA, Understanding the Basics of Gas Flaring. Newsletter (May, 2012).
Retrieved at www.epa.ohio.gov on 1/19/2013.

12

In contrast, gas flaring goes beyond normal industry practices in


Russia and most developing countries in Africa and Middle East.17
Gas is continuously flared in high volumes because it is the
cheapest means of separating the associated gas from the crude
oil. The non-availability of a viable domestic gas market and the
lack of requisite infrastructure such as liquefied natural gas
facilities and pipelines are a major obstacle to many developing
countries effort in reducing gas flaring.18 Therefore, gas flaring is
allowed to burn the associated gas that is produced along with
the crude oil, and thereby guarantees continued production,
which results in increase revenue to the government. The low
domestic gas prices also contribute to gas flaring because it
makes utilization of the gas unattractive.

2.3. Environmental Impact of gas flaring.


Gas flaring is a waste of potentially valuable source energy and a
global source of black carbons, because the process emits a
considerable amount of carbon dioxide into the atmosphere,
which causes global warming.
In most developing countries like Nigeria, gas flaring occurs on a
daily basis on the oil production platforms, thereby adversely
affecting the environment and health of the people living in the

17 Gerner, Franz; Svensson, Bent; Djumena, Sascha, Gas Flaring and Venting: A
Regulatory Framework and Incentive for gas Utilization World Bank, Washington,
DC. 2 (2004). Retrieved at www.openknowledge.worldbank.org on 3/7/2013.
18 Ibid at p3.

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communities that are situated near the oil wells. The associated
gas flared into the atmosphere contains GHGs, as well as other
poisonous substances such as dioxins, benzene, toluene,
nitrogen, and sulphur dioxide19. These poisonous gases cause
serious health problems such as cancer, asthma, blood disorder,
chronic bronchitis, and respiratory illness to the people living
near the gas flaring points.20
The sulphur and nitrogen emitted from the flared gas causes acid
rain, which adversely impact soil fertility, thereby reducing crop
yield. The roofs of houses in the area are also susceptible to
accelerated rusting because of the acid rain from the flared
gas.21 According to Nwankwo and Ogagarue,22 waters in gas
flaring environment contains higher concentration of harmful
metals such as barium, cyanide, selenium, chromium, iron,
manganese and copper, which have concentration levels above
permissible limits by the World Health Organization.
Gas flaring negatively affects the human development of the
people living near the flare points as a result of disease, low crop
yield, environmental degradation and other socio-economic
impacts.23
19 Intergovernmental Panel on Climate Change, The Report of the Working Group 1
of the IPCC, Survey for Policy Makers. (IPCC. 2001)
20 Environmental Rights Action, Fact Sheet: Harmful Gas Flaring in Nigeria. ( ERA
2008)
21 Amnesty International, Nigeria: Petroleum Pollution and Poverty in the Niger
Delta. 18. (2009)
22 C.N. Nwankwo and D.O. Ogagarue, Effects of Gas Flaring on Surface and Groung
Waters in Delta State Nigeria. Journal of Geology and Mining Research. vol. 3 no.5,
131-136 (May 2011) .
23 Friends of the Earth, Gas Flaring in Nigeria Media Briefing. 4. (October, 2004)

14

According to the United States Environmental Protection Agency


(EPA)24, the effects of gas flaring are complex, not well
summarized by a global warming potential.
3. INTERNATIONAL FRAMEWORK FOR GAS FLARING
REDUCTION
3.1. International Convention on the Environment.
Nations were not seriously concerned about environmental
issues until 1972, when the United Nations Conference on the
Human Environment was held in Stockholm Sweden. At the
conference, nations met for the first time to deliberate on global
environment and development issues. This conference was seen
as a success, because it brought together developed countries
who laid emphasis on environmental protection and developing
countries who laid emphasis on social and economic
development, to the discussion table. The Conference came up
with 26 Principles, calling on states and international
organizations to play a coordinated, efficient and dynamic role
for the protection and improvement of the environment. In
1973, the United Nations, pursuant to the proposal of the
Stockholm Conference, established the United Nations
Environment Programme (UNEP), with a mandate to coordinate
UN environmental activities, and assist developing countries in
implementing environmentally sound policies and practices. In
1988, UNEP and the World Meteorological Organization
24 US EPA Report to US Congress, (March 2012).
15

established the Intergovernmental Panel on Climate Change


(IPCC).
In 1985, the Vienna Convention on the Protection of the Ozone
Layer was agreed upon at the Vienna Conference, and it entered
into force in 1988. The convention enjoins parties to appropriate
measures to protect human health and the environment against
negative effects that will modify the ozone layer due to the
human activities. Article 2.1. Unfortunately the Convention did
not include legally binding goals for the reduction of CFCs.
The Montreal Protocol on Substance that Deplete the Ozone
Layer, which is a protocol to the Vienna Convention is a treaty
established to protect the ozone layer by phasing out the
production of chemicals that deplete ozone layer while searching
for ozone friendly alternatives. The treaty was opened for
signature in September 16, 1987 and entered into force on
January 1, 1989.
197 states and the EU have since ratified the two ozone treaties,
thus they are regarded as the most successful international
agreements in the history of the United Nations.
But significant progress in creating international awareness on
the impact of gas flaring was achieved in 1992, in the United
Nations Conference on Environment and Development (UNCED),
commonly referred to as the Earth Summit. The conference was
held in Rio de Janeiro, Brazil from 3rd June to 14th June 1992. The
conference, which was attended by about 172 governments, and

16

2400 representatives of non- governmental organizations


(NGOs), addressed urgent problems of environmental protection
and socio-economic development. The Earth Summit influenced
subsequent UN conferences, and its major achievements were
the agreement on Climate Change Convention, which
subsequently led to the Kyoto Protocol, and the Convention on
Biological Diversity (CBD). The Summit also endorsed the Rio
Declaration on the Environment and Development which
contained 27 Principles to help guide international action, and
Agenda 21 which is a non binding, voluntary implementation
action plan of the UN, multilateral organizations and national
governments that demands new ways of investing in our future
to be executed at local, national, and international levels.
The Summit balanced the aspirations of both the supporters of
economic development and environmental conservation by
proclaiming the concept of sustainable development as a
workable objective for all concerned.25
Furthermore, success was achieved in the 2002 World Summit on
Sustainable Development or Rio + 10 (Johannesburg Summit)
which is the fourth major environmental conference held under
the auspices of the United Nations since 1972. The summit was
the follow up to the 1992 Earth Summit, was the first
environment and development conference to allow formal input
25 United Nations, Johannesburg Summit 2002 Basic Information. 2. Retrieved from
www.un.org/jsummit/html/basic_info/unced.html on 3/15/13.

17

from non-state parties identified as stakeholder in the Rio


conference. Although the Summit did not produce any new treaty
or financial commitment, it nevertheless provided an opportunity
for concrete steps to be taken towards implementing the
principles agreed at earlier environmental conferences.26 The
Summit encouraged and recognized a total of 266 partnerships
on sustainable development.27 The most significant of which was
the Global Gas Flaring Reduction Initiative (GGFR).
The most recent international attempt at resolving environmental
problem was the 2012 United Nations Conference on Sustainable
Development (UNCSD), also known as Rio + 20 held in Rio de
Janeiro from 13 to 22 June 2012. It was the third international
conference on sustainable development targeted at resolving the
global conflicting issues of economic development and
environmental protection. The main outcome of the Summit was
the adoption by world policy makers of a series of sustainable
development goals (SDGs), the 49 page document contained
many loosely define steps aimed at addressing the challenges of
poverty eradication, environmental protection, and sustainable
consumption and production. The SDGs are to complement the
UNs Millennium Development Goals (MDGs) and aimed at
26 Gill Seyfang and Andrew Jordan, The Johannesburg Summit and Sustainable
Development: How Effective are Environmental Mega-Conferences? Yearbook of
International Co-operation on Environment and Development. 3 (2002/2003).
27 The UN Secretary-General, Report of the Secretary-General on Partnership, P3,
delivered to the Economic & Social Council, UN Doc. E/CN.17/2004/16. (February 10,
2004)

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providing the foundation for a global green economy. However


some environmentalists have lambasted the outcome document
as being inadequate to tackle the challenges posed by a
deteriorating environment. Nonetheless it is a step in the right
direction.

3.2. United Nations Framework Convention on Climate Change


(UNFCCC).
One of the two legally binding agreements adopted at the 1992
United Nations Conference on Environment and Development
(UNCED) was the United Nations Framework Convention on
Climate Change (UNFCCC).28 The UNFCCC was the first
international effort to address the problem of climate change
caused by the emission of greenhouse gases through human
activities.
The ultimate objective of the Convention is to stabilize the
emission of greenhouse gases, at a level that would prevent
dangerous anthropogenic interference with the climate
system.29 It went further to state that, such a level should be
achieved within a time frame to allow ecosystems to adapt
naturally to climate change, to ensure that food production is not

28 (1992) 31 I.L.M. 849.the Convention was adopted on May 1992, opened for
signature in June 1992 and came into force in March 21, 1994, after deposit of the
50th instrument of ratification.
29 UNFCCC, Art. 2.

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threatened, and to enable economic development to proceed in a


sustainable manner.30 It is important to note that the UNFCCC
specifies that the human interference must be dangerous not
simply interference that will impact the environment.
There are a number of requirements built into the Conventions.
First, industrialized countries are required to reduce their overall
emissions of greenhouse gases to 1990 levels by the year
2000.31 Secondly, industrialized countries have a general
commitment to make financial and technological transfers to
developing countries.32 Thirdly, all parties are required to
periodically report the emission of greenhouse gases (GHGs), as
well as national mitigation and adaptation programs, although
different timetables are specified for annex 1 and non-annex 1
parties.33 The Convention explicitly embraces the concept of
common, but differentiated responsibilities (CBDR),34 which puts
the greater share of responsibility and cost for battling climate
change on the industrialized nations.35
The United States, since signing the Convention as an Annex I
party, has been taking actions to address the serious challenges
of climate change, and to promote a sustainable and prosperous
clean energy future.36 These efforts are occurring at all levels of
30 Ibid.
31 Id. art. 4(2)(a) & 4(2)(b).
32 Id. art 3(2), 4(1)(c), & 4(2)-(4).
33 Id art. 4.
34 Id art. 3(1).
35 These are mostly UNFCCC Annex 1 Parties.
36 United States, U.S. Climate Action Report 2010, 1 (2010 CAR)
20

government, and in the private sector. Over the past decade,


United States has promulgated several legislation and regulation
to provide a comprehensive long -term framework for combating
climate change.
While Nigeria, which became a signatory as an Annex II Party in
June 13, 1992, has the responsibility to perform its obligations
under the Convention. This includes a duty to promote and
cooperate in the conservation and enhancement, as appropriate,
of sinks and reservoirs of all greenhouse gases.37 Which duty
also include the phasing out of gas flaring within its capabilities
with regards to finance, manpower and technology. In 1994,
Nigeria ratified its commitments to the convention, and
thereafter entered the agreement and commitments of the
convention into force.
The United States and Nigeria are active participants in the
Conference of Parties (COP), which functions as the supreme
organ of the UNFCCC and has the legislative powers to create
additional protocols and amendments to the Convention, as well
as the power to make other decisions necessary to promote the
effective implementation of the Convention.38

3.3. The Kyoto Protocol


The Kyoto Protocol was signed at COP 3 in 1997 as a protocol to
the UNFCCC and entered into force on February 14, 2005. The
37 UNFCCC, art. 4(1)(d).
38 Id. art. 7(2).
21

detailed principles of implementing the protocol were adopted in


COP 17 at Marrakesh in 2001. The Protocol constitutes the most
important move by the international community to strengthen
undertakings embodied in the UNFCCC. The Protocol recognizes
that the industrialized nations are responsible for the high level
of greenhouse gases as a result of years of industrial activities,
and it sets binding targets for industrialized nations to reduce
their greenhouse gases emissions below 1990 levels by 5% over
a period of five years beginning from 2008 to 2012.39 The
Protocol covers the emission of six primary greenhouse gases:
carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, and
sulfur hexafluoride.
In 1998, parties adopted the Buenos Aires Plan of Action, which
established a list of 140 items that must be agreed upon before a
country could ratify the Protocol.
One important element of the Kyoto Protocol is its flexibility
mechanisms that enable nations to achieve their emission target
by means other than reducing their domestic emission of
greenhouse gases. Such mechanisms are the Clean
Development, Join Implementation, and Emission Trading
Mechanisms.
The United States signed the Protocol in November 12, 1998, but
the Clinton Administration did not submit it to the Senate for

39 Birnie, P. W. and Boyle, A. E., International Law and Environment, 2nd Ed. 526
(2002).

22

advice and consent, due to the Byrd Hagel Resolution.40 This


resolution declared that the United States should not be party to
any mandatory reductions of GHGs unless developing countries
are also parties to such an agreement. Thus the United States is
not a party to the Kyoto protocol, even though it came into force
after Russias ratification in 2005.
Nigeria became a signatory to the Kyoto Protocol on the 23rd of
October 1998, and ratified the Protocol in 30th of September
2004. Nigeria, as a non- Annex I country has the possibility and
the potentials to benefit from the market-based mechanism
created by the Protocol. Nigeria has indeed collaborated with the
United Nations Industrial Development Organization (UNIDO) and
CDM Secretariat in accessing some projects targeted at reducing
gas flaring such as the West African Gas Pipeline project and
other gas utilization projects.
3.4. The Global Gas Flaring Reduction Initiative (GGFR).
The Global Gas Flaring Initiative was launched formally at the
World Summit on Sustainable Development (WSSD), in
Johannesburg, South Africa, on August 30, 2002, with the
objective of reducing carbon emissions and environmental
impact of flaring, monetization of wasted resource, and improve
energy efficiency and access to energy. It was the World Bank
Group, in collaboration with the Government of Norway that
initiated this global public private partnership to facilitate gas
40 U.S. Senate Res. 98, 105th Congress (1997) 143 Cong. Rec. S8113 05 (daily ed.
July 25, 1997).

23

flaring reduction with a view to reducing air pollution, save


energy and money, and reduce associated poverty. The
membership consists of government representatives from oil
producing countries, state owned companies and major
international oil companies who are committed to reducing
wasteful and undesirable practices of gas flaring and venting
through policy change, stakeholder facilitation and project
implementation.
The GGFR has already achieved specific results aimed a reducing
flaring. Some of these results include: endorsement of a Global
Standard for gas flaring reduction, implementation of
demonstration projects for associated gas utilization in seven
countries; assistance to Nigeria, Equatorial Guinea, Cameron,
Algeria, Kazakhstan, and Qatar in meeting flaring out targets by
specific dates; potential avoided flared gas, through GGFR
facilitated carbon projects, which is approximately 12 billion
cubic meters per year; and development of a web- based tool to
report flared and vented data on country basis.
The GGFR work program, managed and facilitated by a World
Bank team, focuses on four key areas to overcome the obstacles
to gas flaring reduction in partner countries namely;
commercialization of associated gas; regulation of associated
gas; implementation of the global flaring and venting standard;

24

and capacity building to obtain carbon credits for gas flaring and
venting projects.
The United States is a sponsoring member, while Nigeria is a
member of the partnership. The work program in Nigeria has
continued to focus on supporting the ongoing dialogue between
the Nigerian government, the international oil companies, and
other relevant stakeholders in developing a feasible approach to
flare reduction through the Nigerian flare Reduction Committee
(NFRC).41

4. THE NIGERIAN INSTITUTIONAL AND REGULATORY


FRAMEWORK
4.1. Background History of Gas Flaring Regulation in Nigeria
Gas flaring started in Nigeria with the discovery of oil in
commercial quantity at Oloibiri, in the Niger Delta Region, in
1956. Since then the flaring of associated gas has continued
unabated, as the oil companies regard the practice as the
cheapest method of removing the associated gas and a majority
of the wells in the Niger Delta produces oil in association with
gas. The increase in oil production has proportionately increased
gas flaring in Nigeria. It is estimated that about 45% of Nigerias
gas is flared as it is produced in 2011, thereby accounting for
12.5% of the worlds flared gas second to Russia.42
41 Omeke Chukwuebuka, A Critique on the Legal Regime Governing Gas Flaring in
Nigeria
42 Gbite Adeniji, Approaches to Gas Flare Reduction in Nigeria, Paper presented at
GGFR Global Forum, London, (October 25, 2012).

25

The Nigerian economy is largely dependent on the oil and gas


sector, which accounts for about 95% of its foreign exchange
earnings, 40% of its GDP, and 75% of federal government total
revenue.43 This prompted the federal government to initiate
policies and regulatory framework to attract more investment,
guarantee increased production and ensure a sustainable
environment.
Initially government interest in the oil industry was limited to the
collection of royalties, lease rentals and taxes, but that changed
with the United Nations Resolution on Permanent sovereignty
over Natural Resources,44 which spurred the federal government
into enacting legislation to regulate the oil industry.
Consequently in 1969, the Nigerian government enacted the
Petroleum Act,45 which vested the ownership and control of all
petroleum resources in the Federal Government of Nigeria.46
Subsequently Nigeria joined the Organization of Petroleum
Exporting Countries (OPEC) in 1971, and in furtherance of OPECs
resolution urging member states to acquire controlling interest in
concessions held by foreign companies, the Nigerian Military
Government in 1971, established the Nigerian National Oil

43 IMF Country Report No. 12/194, 2011 Article IV Consultation Report on Nigeria,
(July, 2012).
44 UNGA Res. 1803 (XVIII), UN GAOS, 17th Sess., Supp. No17, UN Doc. A/5217, 15
(1962).
45 Cap. P. 10 LFN 2004.
46 Id 1(1).

26

Corporation (NNOC).47 Pursuant to the powers granted the NNOC,


it acquired controlling interests in the oil companies operating in
the country, thereby making the government a majority
shareholder in the oil and gas produced.
The provisions of the Petroleum Act was reinforced by 44(3) of
the 1999 Constitution of the Federal Republic of Nigeria that,
the entire property in, and control of all minerals, mineral oils
and natural gas in, under, or upon any land in Nigeria or in,
under or upon the territorial waters and the Exclusive Economic
Zone of Nigeria vests in the Government of the Federation
and the Federal Government is to manage such minerals in such
manner as may be prescribed by the National Assembly. Thus the
Constitution confers exclusive jurisdiction on the National
Assembly to legislate on matters relating to oil, gas, and other
minerals.
Due to the impact of the oil and gas production on the
environment, the Nigerian Government has promulgated many
laws and regulations aimed at abating gas flaring in the country.
However, this has not been successful. Some of these laws and
regulations are: The Petroleum Drilling and Production
Regulations of 1969,48 The Associated Gas Re-Injection Act of
197949 as amended and the Regulations made pursuant thereto,
47 Decree No. 18 of 1971. But the NNOC later became the Nigerian National
Petroleum Corporation in 1977, as a result of a merger between the NNOC and the
Ministry of Petroleum Resources.
48 Decree No. 51 of 1969.
49 Decree No. 99 of 1979.

27

The DPR Effluent Limitation Regulations 1991, and The


Environmental Impact Assessment Act of 1992.

4.2. The Gas Flaring Legislative and Regulatory Framework in


Nigeria.
The Petroleum Act remains the primary law regulating oil and gas
exploratory activities in Nigeria. The Petroleum (Drilling and
Production) Regulations,50 made pursuant to the Petroleum Act
provides that the Licensee or lessee of an Oil Mining License
(OML) shall not later than five years after the commencement of
production, submit to the Minister of Petroleum Resources, a
feasibility study, program, or proposals that it may have for the
utilization of any natural gas that has been discovered in the
relevant area.51 Although the regulation require oil companies to
submit their strategies for gas utilization, the provision was not
seen to be mandatory and no penalty was provided for
defaulters. The regulation also allowed producers to flare gas for
a period of five years before submitting the feasibility study.
A concrete step at regulating gas flaring was reached in 1979
with the enactment of the Associated Gas Re-Injection Act
(AGRA),52 which is a legal framework for gas utilization that
applies to both land and the Exclusive Economic Zone (EEZ). The
50 The Regulations are made pursuant to 9 of the Petroleum Act, see Note 49.
51 Regulation 42.
52 Decree No. 99 of 1979. (Cap. A.25 LFN 2004)
28

Act imposes a duty on oil and gas companies to submit, not later
than April 1st 1980, a preliminary program providing for schemes
for the viable utilization of all associated gas produced from a
field, and projects to re-inject all non- utilized associated gas in
an industrial project, not withstanding the provisions of
Regulation 42.53 Thus, this section transformed Regulation 42
into a mandatory provision. The Act also makes it illegal for any
oil and gas company to flare gas after January 1st 1984, without
the written permission of the Minister.54 The penalty was
forfeiture of concession and the Ministers discretion to order the
withholding of all or part of any entitlement of an offender.55
However, the Act also empowers the Minister to issue a
certificate specifying such terms and conditions for the continued
flaring of gas in a particular field, if the Minister is satisfied that
gas re-injection is not feasible.56 In addition the Act also reserves
the right to the Government to take gas at the flare free of cost.
The huge financial resources required for gas re-injection and the
inability of the Government to meet their financial obligations in
the various joint ventures, coupled with the lack of required
infrastructural facility, and the insistence by the oil and gas
companies of their inability to meet the 1984 deadline,57 led to
53 Id 1(a) & (b).
54 Id 3(1).
55 Id 4(1) & (2).
56 Id 3(2).
57 Akaakar, F.O., The Law and Natural Gas Development in Nigeria, in Natural Gas:
The Energy for the Next Millennium. Proceeding of the 29th Annual Conference of the

29

the promulgation of the Associated Gas Re-Injection (Continued


Flaring of Gas) Regulation.58 The Continued Flaring of Gas
Regulation, which commenced on January 1st, 1985, gave more
powers to the Minister under certain conditions to issue a
certificate to oil companies for continue flaring of gas under
section 3(2) of the Associated Gas Re-Injection Act. The Act and
the attendant regulations could not be enforced, and gas flaring
continued unabated in the country, thus prompting the
government to amend the Act by resorting to an economic
enforcement mechanism.
The Associated Gas Re-Injection (Amendment) Act,59 introduced a
penalty of two kobo per 1000 standard cubic feet (scf) of gas
flared at any place authority to flare was not granted. This
amount was increased to fifty kobo per 1000 standard cubic feet
of gas in 1990, and the amount was further increased in 1998 to
ten Naira per 1000 standard cubic feet of gas. The penalty
amount has been further increased in 2008 to $3.50 per 1000
standard cubic feet of gas flared. The international oil companies
are disposed to paying the meager penalty to flare the gas which
is comparatively cheaper than utilizing the gas.
In 1991 /1992, the Government, in consultation with international
oil companies, introduced the Associated Gas Framework

Nigerian Society of Chemical Engineers, 201-210 (November, 1999).


58 S.I. 43 of 1984.
59 Decree No. 7 of 1985.

30

Agreement (AGFA),60 which served as a broad based fiscal


incentive for natural gas utilization in regard to its processing,
production, transmission, and supply to NLNG and other
facilities.61
The government also enacted the Nigeria LNG (Fiscal Incentive
Guarantee and Assurances) Decree (FIGAD),62 as incentive to
encourage and facilitate the development of the Nigerian
Liquefied Natural Gas Project (NLNG), which in turn will reduce
gas flaring. The Act grants ten years tax holidays to the NLNG
companies and also exempts the companies involved in the
NLNG project from import duties and certain taxes.63
The government in furtherance of its policy to encourage
investment on projects that will facilitate the utilization of gas,
entered into a treaty with three west African countries for the
West African gas Pipeline Project in January 31, 2003, and the
treaty was domesticated into national law by the National
Assembly in the Treaty on West African Gas Pipeline Project
(Ratification and Enforcement) Act.64 The Treaty established the
West African Gas Project Authority (WAGP Authority), an
international institution having legal personality and financial

60 AGFA is incorporated into 11 of the Petroleum Profit Tax Act.


61 Omeke Chukwuebuka, A Critique on the Legal Regime Governing Gas Flaring in
Nigeria. University of Nigeria (2011)
62 Decree no 30 of 1990
63 Id. 2 & 7
64 Act of 2004.

31

autonomy with powers to implement the project on behalf of


member states.
The Petroleum Profit Tax Act65 also provides some tax incentives
to companies engaged in gas utilization projects.66
The Nigerian National Assembly in 201067 amended the
Associated Gas Re-Injection Act by providing that, No company
engaged in the production of oil or gas shall after 31st December,
2012, flare gas produced in association with oil, or other than
such minimum allowed by the Minister.68 The amendment set
December 31, 2012 as the deadline for the abatement of gas
flaring,69 but went ahead to provide a new section that permitted
companies to continue the flaring of gas on the payment of a
temporary gas flaring penalty of $5.00 per 1000scf of gas
flared.70 However the President has not signed this amendment
into law.
A significant legislative effort by the Nigerian Government to
combat the menace of gas flaring is the provisions incorporated
into the Petroleum Industry Bill, 2012.71 This bill seeks to
consolidate all the existing oil and gas laws in the country into
one piece of legislation. The fundamental objectives of the bill
included amongst others, the prudent management and
65 Cap. 354 L.F.N. 1990; Cap. P14 L.F.N. 2010.
66 Id. 10A & 11.
67 Associated Gas Re-Injection Amendment Act of 2010.
68 Id. 3(1).
69 Id. 3(2).
70 Id. 3(2)(b).
71 The Bill was presented to the both Chambers of the National Assembly by the
Nigerian President in July 19, 2012.

32

allocation of petroleum resources and their derivatives in


accordance with the principles of good governance, transparency
and the sustainable development of Nigeria.72 The bill provide
that natural gas shall not be flared or vented in any oil and gas
production operation, block or field after the flare out date to
be prescribed by the Minister in regulations to be made pursuant
to the Act.73 The bill further provides that any licensee or lessee
who flares or vents gas without a permit from the Minister shall
pay a fine, which shall not be less than the value of the gas
flared.74 The bill prohibits the issuance of a license or lease for
the production of oil and gas to any applicant without an
acceptable comprehensive program for the utilization or
reinjection of natural gas.75 It mandates all operators to install
metering equipment within three months of the Act coming into
force to measure the volume of gas flared,76 and makes gas
flaring without a permit a criminal offence,77 and mandates any
person, group of persons or community to lodge a documented
report of gas flaring or venting with the nearest office of the
Inspectorate.78 An officer of the Inspectorate is required to
inspect the facility within forty eight hours of receiving the
72 Petroleum Industry Bill 2012. 8 9.
73 Id. 275.
74 Id. 277(3).
75 Id. 278.
76 Id. 279.
77 Id. 281.
78 Id. 280(1)
33

report, and within seven days submit a verification report to the


Inspectorate, which is required to make a determination on the
matter, and if satisfied impose a fine or issue a shut down
order.79 The proposed provisions are an innovation to the
provisions of the Associated Gas Re-Injection Act.
The PIB in addition to the Ministry of Petroleum Resources,
provide for the establishment of two regulatory agencies, three
funds, three companies and one support bureau namely;
Upstream Petroleum Inspectorate, Downstream Petroleum
Regulatory Agency, Petroleum Technology Development Fund,
Petroleum Equalisation Fund, Petroleum Host Communities Fund,
National Oil Co., National Gas Co., National Petroleum Assets
Management Co., and Petroleum Technical Bureau.
The government also enacted the Environmental Impact
Assessment (EIA) Act,80 which requires the developers of major
development projects to subject their projects to the provisions
of the EIA Act by conducting an environmental impact
assessment before commencing work.
The National Environmental Standard and Regulations
Enforcement Agency (NESREA) Act81 was also promulgated to
establish the NESREA as a regulatory and enforcement agency
under the Federal Ministry of Environment.

79 Id. 280(2) (6).


80 Act No. 86 of 1992.
81 NESREA Act published in FRN Official Gazette No. 92, Vol. 94 of July 31, 2007.
34

4.3. The Institutional Framework for Regulating Gas Flaring in


Nigeria.
There are Institutions established by the Nigerian government to
regulate and enforce gas-flaring regulations in the oil and gas
industry. Most of these institutions are established by legislation,
which prescribe the nature and extent of their powers and
functions.
Ministry of Petroleum Resources (MPR):
The MPR is the main executive organ of the federal government.
It is responsible for the articulation and implementation of
policies relating to petroleum and other mineral resources,
excluding solid minerals. The MPR also maintain standards,
monitor quality and quantity, and regulate practices in the
industry. The Minister of the MPR is responsible for coordinating
the affairs of the MPR and issuing the necessary regulations and
permits under the Petroleum Act and other laws heads the MPR.
The MPR has several departments and corporations under its
control and supervision, including the state oil company the
Nigerian National Petroleum Corporation (NNPC), and the
Department of Petroleum Resources (DPR). The MPR delegates
most of its functions to the DPR to perform.
The Federal Ministry of Environment (FMENV):
The FMENV is the federal ministry saddled with the primary
responsibility to protect and improve water, air, land, forest, and
wildlife of Nigeria. The ministry was established for the first time
in 1999 to comprehensively prepare, coordinate and implement
35

environmental policies and programs. It is also mandated to


prescribe standards for and make regulations on water quality,
effluent limitations, air quality, atmospheric and ozone
protection, and monitor and enforce environmental laws and
regulations.
The FMENV has some parastatals and departments under its
control and supervisions, such as the National Environmental
Standard and Regulations Enforcement Agency (NESREA), and
the Department of Environmental Assessment (DEA). The DEA is
charged with implementing the provisions of the EIA Acts No. 86
of 1992.
The Department of Petroleum Resources (DPR): I
t was the first statutory agency established to supervise and
regulate the petroleum industry in Nigeria. In 1975, the DPR was
constituted into the MPR and in 1977, the MPR and the Nigerian
National Oil Corporation (NNOC) were merged to form the
Nigerian National Petroleum Corporation (NNPC).82 But the
Decree also created the Petroleum Inspectorate as an integral
part of the corporation with a semi autonomous status. In 1988,
the NNPC was commercialized and the Petroleum Inspectorate
Division was removed from the NNPC and merged with the MPR
as the DPR, which became the inspectorate arm of the Ministry.
The DPR oversees all the activities of oil companies that are
granted leases or licenses to engaged in oil and gas production
operations in Nigeria. It ensures that operations are carried out in
82 Decree No 33 of 1977
36

compliance with the applicable laws and regulations. The DPR


also enforces safety and environmental regulations and advise
government and relevant agencies on technical matters and
policies that would have impact on administration and control of
petroleum.
The National Environmental Standards and Regulations
Enforcement Agency (NESREA):
This is a parastatal of the FMENV, established by the NESREA
(Establishment) Act of 2007.83 NESREA is empowered to enforce
all environmental laws, guidelines, policies, standards, and
regulations in Nigeria, as well as enforcing compliance with all
international treaties, conventions, protocols and agreements on
the environment to which Nigeria is a party. It is the regulatory
agency of the FMENV. It regulates air quality standards in Nigeria.

5. THE TEXAS INSTITUTIONAL AND REGULATORY FRAMEWORK


5.1. Background History on the Regulation of Gas Flaring in
Texas.
In the United States, exploration and production of oil and gas
occur in over 33 states. In order to conserve the natural
resources and protect the environment from degradation from
these activities, the federal and state governments have enacted
laws and created agencies to regulate the oil and gas industry.
Several conservation and environmental agencies have
83 NESREA Act, published in FRN Official Gazette No. 92 Vol. 94 of July 31, 2007,
repealed the FEPA Act Cap F. 10 LFN 2004.

37

promulgated rules and regulations that govern the oil and gas
exploration, development, and production process.84
Issues of oil and gas industry regulation in Texas started with the
discovery oil near oil springs in Nacogdoches County in 1866, the
drilling of the first gas producing well at Young County in 1890,
and the discovery of the Corsicana oil fields which was a major
oil field that was discovered while the City of Corsicana was
drilling for water in 1894.85 These discoveries caused a great oil
boom in Texas. The rule of capture motivated operators to
engage in unrestrained and competitive production with a view
to maximizing output. This caused physical and economic waste
of oil and gas resources and a drastic depletion of reservoir
pressure in the various fields in the state.
The situation prompted the Texas Legislature to pass a law
declaring that gas wells are to be shut in within ten days after
completion until it can be used for light, fuel, or power
purposes.86 The State Legislature in 1905, 1913, and 1917,
added further amendments to the statute. In 1917, the People of
Texas adopted what is now commonly referred to as the
conservation amendment to the Texas Constitution.87 It states
that the natural resources of the state are declared public
84 American Petroleum Institute website, Environmental regulations of the
Exploration and Production in the Oil and Gas Industry. Retrieved at www.ipo.org on
03/23/13.
85 Ernest O. Thompson, Conservation of Oil and Gas in Texas, 5th World Petroleum
Congress, 13 (New York, May 30 June 5, 1959)
86 Acts 26th Leg. Reg. Session, 1899, Ch. 49, p.8.
87 Tex. Const. art. 16, 59a.

38

rights and duties; and the Legislature shall pass all such laws as
may be appropriate thereto. This amendment primarily relates
to water but it was broad enough to cover oil and gas.88
Consequently the Legislature passed a comprehensive
conservation law in 1919, which requires the conservation of oil
and gas and prohibited waste, and granted extensive regulatory
and enforcement powers to the Railroad Commission (RRC).89
Thereafter the RRC, in July and November 1919 adopted thirtyeight rules to regulate the oil and gas industry.90
The next several years were eventful years as many famous and
prolific oil fields such as Goose Creek, Breckenridge, Ranger
Burkburnett and Panhandle were discovered.91 As the production
of oil increased, the flaring of gas also continued in an alarming
rate, and the efforts to stop it was met with stiff resistance from
oil producers who were not ready to lower their profits by
spending money on gas utilization, which was considered at that
time valueless.92 Though the 1899 statute and its subsequent
amendments prohibited the flaring of unassociated gas from a
gas well, Texas legislature succumbed to pressure from the oil
producers by passing a law in 1925 permitting the flaring of

88 James R. Norvell, The Railroad Commission of Texas; Its Origin and Relation to Oil
and Gas Industry, 40 Tex. L. Rev. 230, 239 (1961 1962)
89 Tex. Civ. Stat. art. 6029 (Vernom, 1948)
90 Ernest O. Thompson, see n 96 at 14 15.
91 David F. Prindle, The Texas Railroad Commission and the Elimination of the Flaring
of Natural Gas 1930 1949, The Southwestern Hist. Quarterly, vol. 84, no. 3, 293,294
(Jan, 1981).
92 Id. at p 297.

39

associated or casinghead gas from oil wells in Texas.93 This posed


great difficulty to the RRC in regulating and enforcing the laws
because of the difficulty in distinguishing between a gas well and
an oil well.94 The RRC after getting scientific data promptly
classified hundreds of wells as gas wells and ordered them to
stop flaring. The operators objected to these orders, which led to
several litigations commonly known as the Clymore cases95
where the court upheld the commissions orders.
After intense lobbying and political maneuvering, the Texas
Legislatures in 1935 passed house bill 266, which prohibited the
production of gas in any manner that causes underground waste,
and gave RRC power to enforce the Act.96 The courts upheld most
of the provisions in HB 266 and the RRC quickly adopted rules
prohibiting the flaring of unassociated gas in Texas, but flaring of
associated gas continued unabated.
In 1946, when commissioner Jester was elected Governor of
Texas, he immediately appointed William Murray, the foremost
waste prevention crusader to serve out his unexpired tenure in
the RRC.97 And on April 1947, the RRC issued an order shutting
in all 615 oil wells in Seeligson Field in South Texas until flaring of

93 Tex. Rev. Civ. Stat. 6008, 6014 (1925).


94 Berth P. Walker, What is an Oil Well? What is a Gas Well? What Difference Does it
Make? Southwestern Legal Foundation Proceedings of the Fourteenth Annual
Institute On Oil and gas Law, and Texation, 173-232 (Albany, 1963).
95 Clymore Production Co., v. Thompson, 13 F. Supp. 469 (W.D. Tex. 1936); Clymore
Production Co., v. Thompson, 11 F. Supp. 791 (W.D. Tex. 1935)
96 Tex. Gen Laws. Ch. 120 1935.
97 Oil and Gas Journal, 76 (June 16, 1945 ed).

40

casinghead gas was eliminated and measures taken to utilize the


gas. Major operators in the field such as Shell, Magnolia (Mobil),
and Sun immediately filed suits challenging the orders. The Texas
Supreme Court upheld the RRC orders98 The RRC having won the
cases, went further to issue several orders shutting down
seventeen fields for gas flaring.99 These orders were also
challenged in court, and the Texas Supreme Court once again
upheld the RRCs orders.100 Thus by 1949, the RRC had won the
battle and from henceforth gas whether unassociated or
casinghead could not be flared without a valid permit.101
In the 1963, the United States Congress enacted the Clean Air
Act (CAA) to regulate air quality, and in 1967, the Texas Air
Control Board adopted its first air quality regulations. In 1969,
the Environmental Protection Agency (EPA) was created by a
presidential executive order and Texas took over most of the air
monitoring responsibilities from the federal government. In 1970
the CAA was amended and states were required to develop a
State Implementation Plan (SIP). In 1971 Texas passes its new
Clean Air Act. In 1979, Texas submitted its SIP to meet
compliance by 1982 except Harris County. While in 1991, the
Texas legislature created the Natural Resources Conservation
Commission (TNRCC) with effect from September 1, 1993, which
98 Railroad Commission v. Shell Oil Co., 206 S.W. 2d 235 (Tex. Sup. 1947)
99 David F. Prindle, see note 102, at p 308.
100 Railroad Commission v. Flour Bluff Oil Co., 219 S.W. 2d 506 (Tex. Civ. App. 1949)
101 David F. Prindle, see n 102, at 308.
41

consolidated the Texas Water Commission and the Texas Air


Control Board.
In 1998, the EPA delegated to the TNRCC the National Pollutant
Discharge Elimination System (NPDES) program, which became
the Texas Pollutant Discharge Elimination System (TPDES),
administered by the TNRCC. The Texas Legislature established
the Texas Emission Reduction Plan (TERP) program in 2001. The
TNRCC in 2002 changed its name to the Texas Commission on
Environmental Quality (TCEQ). The Legislature through House Bill
1365 provided a stable funding source for TERP programs. 1n
2011, house bill 2694 gave the TCEQ another twelve-year
mandate until 2023.
5.2. The Legislative and Regulatory Framework in Texas.
There are four principal legislations that were enacted to prevent
wasteful gas flaring and control air quality in Texas by the state
and federal government.
The 1917 amendment to the Texas Constitution,102 declares that
the conservation and development of the natural resources of
the state are public rights and duties, and directs the legislature
to enact appropriate law to achieve these ends. This provision is
seen as given broad powers to the Legislature to enact laws for
the conservation of oil and gas, including the prohibition of gas
flaring.103
102 Tex. Const. Art. XVI, 59a.
103 Railroad Commission v. Sterling Oil & Refining Co., 218 S.W. 2d 415, 419 (Tex.
1949).

42

The Oil and Gas Conservation Act of 1919104 prohibited the waste
of oil and gas and delegated powers to the RRC to make rules,
regulations, and orders to prevent such waste.105 Although the
Act had undergone several amendments, its purpose of declaring
all waste illegal has been incorporated into each successive
amendment, and it is presently codified in chapters 85 and 86,
which deals with conservation of oil and gas, and regulation of
natural gas, respectively in the Texas Natural Resources Code.
The Act declares waste unlawful by prohibiting the production,
storage, or transportation of oil and gas in any manner that
constitute waste.106 The Act defined waste among other things
to include; operation of any oil well with inefficient gas oil ratio;
the permitting of any natural gas well to burn wastefully; and
escape of gas into open air.107 The Act also authorizes the RRC to
make and enforce rules and orders for the conservation of oil and
gas and the prevention of waste.108 It also empowers the RRC to
do all necessary things for the conservation and prevention of
waste.109 In addition the Act states that, no gas from a gas well
may be permitted to escape into the air after the expiration of
ten days from the time the gas is encountered in the gas well or
from the time of performing the casing opposite a gas bearing
104 Tex. Laws 1919, Ch. 155.
105 Id. arts 6008, 6014
106 Tex. Nat. Res. 85.045 and 86.011
107 Id. 85.046 and 86.012
108 Id. 85.201
109 Id. 85.202(b)
43

zone but the commission may permit the escape of gas into
the air for additional time if the operator of the well or other
facility present information for the necessity of the escape110
The RRC pursuant to the authority vested on it by the Texas
Legislature, adopted Rule 3.32, which states that gas well gas
and casinghead gas shall be utilized for legal purposes.111 The
rule stipulates that gas must be used for lease operations or
sold, if it can be readily measured by devices routinely used in
the operation of oil wells, gas wells, gas gathering systems, or
gas plants. However there are exceptions to the gas releases.
All wells that releases gas for more than twenty four hours period
must be burnt the gas in a flare, while gas releases of less than a
twenty four hours duration may be vented to the air, if not
required to be flared for safety reasons. But operators are
required to notify the RRC of gas being flared as soon as possible.
Operators must accurately measure or estimate all flared or
vented gas and obtain a Rule 32 Exception Form for the gas
flaring or venting for more than twenty four hour duration. The
form must be filed with the RRC on the next business day after
the initial twenty-four hours of venting or flaring, and a copy
must also be filed with the RRC district office where the operation
is taking place.
Paragraph h of the Rule authorizes the RRC or its delegate to
administratively grant an exception permit to flare or vent gas
110 Id. 86. 185
111 16 T.A.C. 3.32.
44

for a period of one hundred and eighty days. But such an


application must be accompanied with the prescribed fees as
required by 3.78(b)(5). But if the permit is for a period longer
than one hundred and eighty days, and the volume is higher
than 50 mcf/day, then the application will require a RRC
administrative hearing.
Whereas for permanent exception permit of 50mcf/day, the
applicant must submit cost benefit analysis, a map showing the
nearest pipeline capable of accepting gas, and the estimate of
gas reserve, together with a fee of $375.00 per gas well, oil
lease, or commingled venting or flare point.
Where an operator needs additional time to flare or vent gas, the
operator must re-file an application within twenty- one days
before the expiration of the existing permit. Once the application
is filed within the twenty-one days, the operator is authorized to
vent or flare until final approval or denial of the permit extension.
The application for extension permit must be accompanied with a
fee of $150.00.
The Rule 32 exception permits are not transferable upon a
change of operatorship. Therefore the new operator must re-file
the application for exception permit within ninety days of the
approval of the P-4 Transfer.
The Texas Clean Air Act of 1989,112 is another legislation that
regulates gas flaring in Texas. The original Act was enacted in
112 V.T.C.A., Health & Safety Code 382.001 et seq.
45

1965 with the purpose of safeguarding the state air resources


from pollution and protection of the public health, general
welfare and physical property, including the esthetic enjoyment
of air resources by the public and the maintenance of adequate
visibility.113 The Act had undergone several amendments and its
scope enlarged to incorporate changes made to the Federal CAA
and its amendments. The TCEQ, which is the successor to the
Texas Air Control Board, is empowered to administer and enforce
the TCAA, establish and control the level of air quality to be
maintained in the state.114 The Act enjoins the TCEQ to use
practical and economically feasible methods in controlling air
contaminants,115 and grants it the necessary powers to carry out
these responsibilities.116 The Act also authorizes the TCEQ to
adopt rules,117 issue orders,118 and issue special permits, general
permits and standard permits.119
The TCAA requires all persons planning to construct a new facility
or modify an existing facility that may emit air contaminant to
obtain permit before commencing such construction.120 The
permit process differs in requirement and applicability. The
facility may qualify for permit by rule (PBR), if it does not make a
113 Id. 382.002
114 Id. 382.011(a)
115 Id. 382.011(b)
116 Id. 382.011(c)
117 Id. 382.017
118 Id. 382.023
119 Id. 382.051
120 Id. 382.0518(a)
46

significant contribution of air contaminant to the atmosphere.121


But facility that does not qualify for PBR may be eligible for
standard permit for oil and gas facilities.122 But the TCEQ is
required to conduct a regulatory analysis, determine and
establish the emission limits based on the evaluation of credible
air quality data before issuing or adopting a new permit by rule
on oil and gas facilities.123
No person is allowed to operate a federal source without
obtaining a permit from the TCEQ under sections 382.0541,
382.0542, or 382.0543 of the TCAA.124 All major sources of air
emissions are subject to Title V of the Federal CAA.
The TCAA also empowers local government or municipalities to
enact and enforce ordinance for the control and abatement of
pollution that is consistent with the Act.125 The municipalities are
also authorized to inspect the air quality, and to enter public or
private property to determine whether the level of air
contaminants meet the level set by the municipality or TCEQ.126
The TCEQ pursuant to the TCAA had promulgated rules and
regulations to establish ambient air quality standards in line with
the federal air quality standard and the SIP, and a permitting
regime to control air quality in Texas. These permits ordinarily
specify the types and maximum amount of contaminant a permit
121 Id. 382.05196(a)
122 Id. 382.051961(a)
123 Id. 382.051961(b)(1), (2), and (3)
124 Id. 382.054
125 Id. 382.113
126 Id. 382.111
47

holder may be allowed to discharge into the air or waterways of


the state.127 The regulations relevant to oil and gas operations
that emit contaminants into the air are codified in chapters 106
and 116 of Title 30 of Texas Administrative Code. The TCEQ
regulations are required to be in compliance with the provisions
of the Federal CAA.128
The EPAs authority for air pollution control is derived from the
1990 amendment of the CAA. The amendment modified and
enlarged the federal authority provided by the Acts of 1963 and
1970. The goal of the Act is to protect and enhance the quality
of the Nations air resources so as to promote the public health
and welfare and the productive capacity of its population.129
Gas flaring activities of oil and gas companies create air
emissions that may be regulated under the CAA. In order to
attain the goals of the CAA, the EPA was authorized to establish
National Air Quality Standard (NAAQS), and establish the
requirement of SIP to achieve the NAAQS. The CAA also
authorizes the establishment of New Source Performance
Standards (NSPS) for new and modified stationary sources, the
establishment of National Emission Standards for Hazardous Air
Pollutants (NESHAP), and it also establishes the New Source
Review (NSR) permitting program.
127 30 TAC101 et seq.
128 42 U.S.C. 7401 to 7671q (1970)
129 Id. 7401(b)(1)
48

The oil and gas operators must determine whether their facility
requires a permit under the CAA. This involves a determination of
the amount of each regulated pollutant the facility is capable of
emitting during an operational year, the location of the facility,
and the geographical impact of its emissions.130 The CAA
regulates major sources of air pollution. However the definition
of major source can vary depending upon the location of the
emission source and the pollutant involved.
Two different regulatory approaches are used to achieve air
pollution control. The first approach is the NAAQS approach,
which is used to regulate six criteria air pollutants (sulphur oxide,
particulate matter, carbon monoxide, ozone, nitrogen dioxide,
and lead).131 The second approach is the NSR permitting
program, which is designed to maintain air quality by ensuring
that emissions from new and modified major source will be
reduced by technically practicable, and economically reasonable
air pollution control methods. The CAA in Title V codifies all
applicable requirements into a single authorization to ensure
ambient air quality standards.132
The EPA pursuant to the CAA had adopted rules and regulations
for the control and enforcement of ambient air quality standards.

130 John S. Lowe, Owen L. Anderson, Ernest E. Smith and David P. Pierce, Casas and
Materials on Oil and Gas Law, 5th ed. 1131 (West, 2008).
131 See 40 CFR Part, 50.
132 For example 40CFR parts 51, 52, 60 and 61.

49

5.3. The Institutional Framework for Regulating Gas Flaring in


Texas.
There are three institutions responsible for regulating and
enforcing gas flaring laws in the oil and gas industry in Texas.
Two state institutions and one federal institution work in harmony
to regulate and enforce oil and gas conservation laws and air
quality in the state.
The Texas Railroad Commission (RRC):
The RRC is the state conservation agency with primary
jurisdiction over the oil and gas industry, while the TCEQ is the
state environmental agency responsible for air quality control.
There is a Memorandum of Understanding (MOU) between the
RRC and the TCEQ detailing areas in which each could exercise
jurisdiction.133
The RRC is authorized by statute to prevent waste of oil and gas,
and enforce the prohibition of flaring of gas without permit. The
Texas Legislature originally created the RRC in 1891 with
jurisdiction over rates, operations of railroads, terminals,
wharves, and express companies. But when the Oil and Gas
Conservation statute was enacted in 1919, authority was granted
to the RRC to prevent waste and take all necessary actions to
enforce the ACT. Presently the RRC consist of four regulatory
divisions; Oil and Gas; transportation and Gas Utilities; Surfacing
Mining Reclamation; and Liquefied Petroleum Gas. The Oil and
133 16 TAC 3.30; 30 TAC 7.117.
50

Gas Division maintains ten offices for the purpose of regulating


oil and gas operations.
The RRC pursuant to the powers delegated to it by the Texas
Legislature adopted statewide Rule 32 to regulate gas flaring by
oil and gas operators by requiring that gas well gas and
casinghead gas must be utilized for lawful purposes. The Texas
courts have consistently upheld the authority of the RRC to
prevent waste by regulating gas flaring in oil and gas fields.134
The Texas Commission of Environmental quality (TCEQ):
The TCEQ is the environmental agency created by Texas
Legislature in 1993, by consolidating the Texas Air Control Board
(1965 1993) and the Texas Water Commission (1985 1993).
The TCEQ is the primary state agency empowered to regulate
and enforce air quality standards, and regulates the design of
and emissions from flares in oil and gas facilities. It issues air and
water operating permits to businesses operating in Texas. The
EPA had given the TCEQ authority to enforce federal air quality
standards in Texas. The TCEQ regulates certain aspects of
exploration and production activities of oil and gas operations in
Texas.
Owners and operators of oil and gas stationary facilities are
required to obtain permit from the TCEQ to emit air contaminant
from the facility.135 The TCEQ is empowered to issue PBR, where
134 See Railroad Commission v. Shell oil Co., 206 S.W. 2d 235 (Tex. Sup. 1947);
Railroad Commission v. sterling Oil & Refining Co., 218 S.W.2d 415 (Tex. 1949)
135 30 TAC 116.10

51

the facility is not a major source pollutant, or a standard permit


for oil and gas facilities where the facility does not qualify for
PBR, or a NSR permit, where the facility does not qualify for PBR
or standard permits.

136

The oil and gas operator with major

source emission facilities are also subject to Title V of the CAA


and the TCEQ is also authorized to regulate and issue permits
under Title V.137
The Environmental Protection Agency (EPA):
The EPA is the federal agency responsible for administering the
CAA. It was created by an executive order of President Nixon in
1970, with the purpose of protecting human health and the
environment by adopting and enforcing rules and regulations
pursuant to the authority delegated to it by the United States
Congress. The EPA, in order to achieve its objectives collaborates
with state environmental agencies to ensure compliance with the
CAA. In this regard the EPA had delegated its authority to the
TCEQ in Texas.
The EPA has ten regional offices and Texas is under region 6
together with Arkansas, Louisiana, New Mexico, and Oklahoma.
The regional offices are responsible for implementing the
agencys programs within the states under their jurisdiction, and
they also enter into MOU with states to specifically delegate
authority to the states to regulate and enforce air quality on
behalf of the EPA. The regional offices are responsible for
136 See 30 TAC 116 Subchapter B.
137 See 30 TAC 112
52

ensuring that states SIP are in conformity with the NAAQS and
that the states rules comply with federal rules.

6. COMPARATIVE ANALYSIS AND CONCLUSION


6.1

Comparative Analysis of the Successes, Challenges, and

Failures of the Gas Flaring Reduction Enforcement Mechanisms


in Nigeria and Texas.
The Nigerian government has since 1999 vigorously pursued the
objectives of reducing gas flaring by encouraging accelerated gas
development and utilization projects through its pro- gas utilization
policy, rather than rely on gas flaring penalties.138 This has led to a
drastic reduction of gas flaring in Nigeria. Although Nigeria is still the
second largest flaring country in the world, gas flaring has been
reduced from 24 percent to 18 percent in the country between 2011
and 2012.139 The MPR has established an accelerated gas development
and utilization program, whereby the Ministry will give flared gas to
any third party company that is ready to invest in gas utilization and
monetization projects.
In addition the Nigerian Government has directed more efforts at
constructing a network of gas pipelines across the country in order to
deliver gas to domestic markets, notable among such pipeline include
138 Sarah Ahmed Khan, Nigeria: The Political Economy of Oil, 168 (Oxford University
Press, 1994).
139 Ministry of Petroleum Resources Bulletin, Achievements of the Ministry of
Petroleum Resources and its Parastatals During Mr. Presidents First One Year in
Office. 4 (May 22, 2012).

53

the East West Interconnector Pipeline, Calabar Umuah Ajaokuta


Maiduguri Pipeline, and Ob/Ob Owerri Umuahia Pipeline.
The establishment and the implementation of the National Domestic
Gas Supply and Pricing Policy also helped to reduce gas flaring. This
policy instituted a domestic gas supply obligation (DGSO) scheme that
ensured the supply of an adequate quantity and quality of gas by oil
and gas producers to all active power plants in the country. According
to the MPR, between 2011 and 2012, one Bscf per day supply of gas to
the domestic market was achieved through the scheme.140
The MPR has also commenced implementation of a zero flaring policy
for new oil and gas fields. Thus projects are designed and operated
from start up without continuous flaring and no permission is granted
for gas flaring in new projects. The Ministry had also installed pilot gas
flare meters on a few flare lines to help measure the value of the gas
being flared accurately and the actual penalty to be paid.

The NLNG project, the Escravos Gas Project and other gas gathering
projects embarked upon by the NNPC, in conjunction with other joint
venture partners had utilized a large quantity of hitherto flared. The
supply of gas to domestic and international markets enormously
reduced the quantity of gas flared in the country.
The 2008 amendment to the AGRA increased the gas flaring penalty
from $0.07 mmscf to $3.50 per mmscf, which is a considerable
140 Id. at p6.
54

improvement compared to the initial penalty. But the government had


departed from its previous command and control approach to gas
flaring reduction, to the provision of incentives to encourage
investment in gas utilization projects. Most of the incentive regimes are
incorporated into the Finance (Miscellaneous Taxation Provisions)
Decree,141 and the Finance (Miscellaneous Taxation Provisions) (No. 2)
Decree.142 These laws gave legislative force to the 1992 Associated Gas
Fiscal Incentive Arrangements. Other incentives include the creation of
Export Free Zone to encourage investment in gas utilization projects. 143
The government acceded to the Kyoto Protocol in 2004 and established
a Designated National Authority, although the awareness of the CDM
process is limited with a weak institutional framework. But only a few
projects have qualified for CDM.
The promulgation of the EIA Decree144 has incorporated EIA as an
integral and mandatory part of the planning process for the
development of oil and gas fields in Nigeria. Therefore, permit to flare
are now granted in consonance with the EIA procedures that are
supervised by the FMENV and DPR.
Despite these seeming successes in the gas flaring reduction efforts by
the Nigerian government, the country is still ranked second in the
global gas flaring chart and only a small percentage of gas produced is
141 Decree No 18 of 1988.
142 Decree No. 19 of 1988.
143 Oil and Gas Export Free Zone Decree No. 8 of 1996 as amended.
144 Decree No. 86 of 1992.
55

utilized. This is due to the challenges and the legislative and


institutional failures in the system.
The 1984 amendments of the AGRA was done to allow for continued
flaring of associated gas under permit issued by the Minister, subject
to the payment of penalties which is small compared to the cost of gas
re-injection or utilization. This was a great drawback to the
governments effort to stop gas flaring. Since then, subsequent
amendments have continuously postponed the abatement date with
the payment of penalty. The penalty is considered meager and does
not pose as a deterrent to oil and gas companies, which find it easier
to pay the penalty than utilize the gas.145 The amendments repeatedly
pushed back the deadline to end gas flaring. This demonstrates the
complete lack of seriousness and political will on the part of
government to end gas flaring.146
One of the major challenges of gas flaring reduction in Nigeria is the
governments role as a regulator and owner operator in the oil and
gas industry. The ownership structure of the Nigerian oil and gas
industry greatly impacts on the effectiveness of the regulatory regime.
The government owns the oil and gas in place, and through the NNPC,
owns major interests in joint ventures with oil and gas companies.
Therefore a regulation of the oil and gas operation is an indirect

145 Environmental Right Action, Gas Flaring: Assaulting Communities, Jeopadizing


the World, 6 (Dec 10 11, 2008,).
146 Justice in Nigeria Now, Gas Flaring in Nigeria: an Overview, JINN Newsletter, 3
(April, 2010).

56

regulation of the NNPC. Oil and gas companies usually blame their
inability to meet the gas-flaring deadline on the failure of NNPC to
meet its Joint Venture financial obligations.147 Most importantly, since
the government takes majority of the oil revenues, a stringent
enforcement of gas flaring regulations will adversely affect the
revenues that will accrue to the government, So the legislature and the
agencies relax the rules to allow for a continuous production of oil and
gas.
Nigerian oil and gas legislations are not aimed at the conservation of
the natural resources and prevention of waste. Therefore the
regulators rely merely on safe and good oilfield practice as the
standard for enforcement. This allows international oil companies to
dictate applicable standards in the industry.
A major challenge to the effective enforcement of gas flaring
regulations is the lack of autonomy and independence of the
regulatory agencies. The DPR is a department of the MPR, and is under
the control and direction of the Minister, while the NEASRA is a
parastatal under the FMENV. These agencies are subject to political
control from their respective supervising Ministers. These agencies
lack adequate technical manpower and funds to efficiently discharge
their statutory duties. The agencies do not have access to the best
available scientific technology to accurately measure, adopt
147 Ibironke T. Odumosu, Transferring Albertas Gas Flaring Reduction Regulatory
Framework to Nigeria: Potentials and Limitations, 44 Alberta L. Rev 863, 877 (June
2007)

57

appropriate rules, and enforce gas-flaring regulations. They mostly rely


on funds appropriated and remitted to them by their supervising
Ministries. The oil and gas companies fund most of the agencies
activities thereby raising serious conflict of interest issues.
There is also the problem of jurisdictional conflict between the MPR and
the FMENV on the one hand, and between MPR and DPR on the other
hand. The functions given to the agencies by the various statutes are
overlapping, and thereby create conflicts in regulating and enforcing
gas flaring laws.
There is lack of gas infrastructure, and it takes time and huge
resources to build the required pipelines, and gas gathering and
treatment plants in the country. The oil and gas companies are not
showing interest in committing investments to build the needed
infrastructures, and gas pipelines that will transport the gas to
domestic and international markets. Although the government, in
partnership with some international oil companies, are building
pipelines, they appear to be grossly inadequate for the country. The
lack of infrastructures greatly affected the development of the
domestic gas market. Nigeria has a population of over 150 million
people, with a 50 percent electricity generation capacity. The flared
gas would have been a valuable source of energy for the country.
Another challenge in the enforcement of gas flaring regulation is the
fact that only federal agencies are empowered to regulate and enforce

58

the laws on gas flaring. Petroleum is within the exclusive legislative list
in the Nigerian Constitution, which vest exclusive legislative powers to
the National Assembly. Although environment is in the concurrent list
where the federal and state government has concurrent jurisdiction to
enact legislation, the laws have virtually vested powers to solely to
federal agencies and these agencies lack the capabilities to establish
offices in all the states where oil and gas operations are going on, in
order to effectively monitor and enforce the laws.
The continues flaring of gas has resulted into a full blown conflict
between the host communities, the oil and gas companies and the
federal government in the Niger Delta region of the country where the
majority of the oil and gas is produced.

During the initial stage of oil and gas exploration and production
activities, Texas had serious problems on how to regulate and reduce
gas flaring. The oil and gas operators lobbied to ensure that gas flaring
was not prohibited. However the success story of the effective
regulation of gas flaring started when the RRC took the bold step to
issue orders prohibiting the production of oil or gas from the Seeligson
Field, until the operators ceased the flaring of casinghead gas, and
took measures to utilize the gas. The Texas courts supported the move
by declaring that the RRC had the authority to regulate gas flaring in
order to prevent waste.

59

Presently, Texas is the highest producer and consumer of oil and


natural gas in the United States, providing one- fourth of U.S supplies
and consuming one- sixth.148 In 2012, Texas produced about 546 million
barrels of oil and 7.3 billion mcf of gas.149 But it has a low gas- flaring
ratio of 0.4 percent,150 compared to states like North Dakota with a gas
flaring ratio of about 35 percent, and this success is as a result of a
plethora of factors.
There is an effective and efficient legislative framework in place that is
aimed at prevention of waste, and the safeguarding of air resources
and protection of the health, general welfare and physical property of
the People of Texas.
The Texas Constitution declares the preservation and conservation of
all natural resources of the state as public rights and duties.151 The
Texas Oil and Gas Conservation Act was enacted to conserve and
prevent waste of the oil and gas resources, protect correlative rights
and promote economic recovery. Pursuant to this Act, the RRC has
been able to effectively regulate gas flaring since 1947. The CAA and
the TCAA were enacted to safeguard air resources and protection of
the health, general welfare, and physical property of the people. One of
148 Texas Energy Report, Natural Gas Ch. 5, retrieved from
www.window.state.tx.us/specialrpt/energy/nonrenewable/gas.php on 2/7/13.
149 Railroad Commission of Texas, Monthly Oil and Gas Production by Year Jan. 2007
Jan. 2013. Retrieved from www. Rrc.state.tx.us/data/production/ogismcon.pdf on
4/20/13.
150 Railroad Commission of Texas, Gas Flaring Frequently Asked Questions (FAQs),
P. 3. Retrieved from www.rrc.tx.us/about/faqs/flaringfaq.hph on 4/20/13.

151 Tex. Const. Art XVI, 59a


60

the main goals of the federal and Texas clean air acts was to set and
achieve NAAQS with a view to address the public health and welfare
risk posed by some widespread pollutants. These statutes provides for
a tripartite regulatory mechanism where the federal, state and local
governments were authorized to regulate and enforce the laws. This
gives a sense of responsibility to all the tiers of government in making
concerted efforts to reduce gas flaring.
The Institutions created to enforce these laws at the federal and state
levels are independent with guaranteed tenure, and a clear area of
authority. The agencies are well funded and adequately staffed with
the requisite technical expertise to effectively enforce the laws. Thus,
the agencies have been able to evolve operational processes and
efficient regulatory procedures aimed at reducing the health, safety
and environmental impacts of gas flaring. The EPA, RRC and TCEQ have
all adopted comprehensive permit systems that are based on scientific
and technological data and evidence. The agencies also coordinate and
cooperate with each other in order to achieve their set goals by
entering

into

MOUs

that

enumerate

spheres

of

authority

and

cooperation between the agencies.


The availability of gas utilization infrastructures and pipelines in Texas
and its environments has considerably helped in reducing gas flaring.
There are over 1,200 pipeline operators with over 366,274 miles of
pipeline in Texas. Natural gas pipeline runs through all the 254 counties

61

in Texas.152 This has encouraged the emergence of a well-developed


local and international natural gas market.
The operators in the oil and gas industry strive to be in full compliance
with existing rules on gas flaring. The operators work to ensure that
they comply with all regulations to avoid sanctions and they report to
the RRC on a monthly basis the volume of gas flared on the Production
Report form (PR form). The agencies also amend their rule regularly to
reflect increase in production and take into account latest available
technologies that will encourage the use of the most efficient emission
reducing flares.
The RRC encourages operators to utilize gas for on-lease power
generation, instead of flaring, and it collaborates with Texas electricity
energy regulators to identify opportunities for the utilization of excess
gas as a source of power generation.
Despite these successes in reducing gas flaring in Texas, the number of
permits to flare gas has more than quadrupled from 2008 to 2012. The
RRC issued 1,963 permits in 2012, compared to 651 permits in 2011,
306 permits in 2010, 158 permits in 2009 and 107 permits in 2008. 153
The situation prompted some Ranking Members of the U.S. House of
Representatives, Henry A. Waxman, Bobby L. Rush, and Diana DeGette
to write a letter dated May 14, 2012 to the Chairman of the House
Committee on Energy and Commerce, Hon. Fred Upton, requesting for
152 David J. Porter, Effective Regulations for Flaring Reduction GGFR Forum, 3
(London October 24 25, 2012).
153 See n. 150 at P. 2

62

a hearing on the practice of natural gas flaring at oil production


facilities in the U.S., and its potential energy and environmental
impact. They stressed that Members of the Committee realize the
importance of natural gas to the nations energy future, and therefore,
they are ready to work together with all stakeholders in order to reduce
the harmful waste of precious natural resource. The letter specifically
cited the increase in gas flaring permits in Texas. 154 Therefore it can be
seen that though Texas has not been able to completely solve the
problem of gas flaring, it is far ahead of Nigeria in this regard.

6.2

CONCLUSION

It is obvious from the foregoing discussion on the institutional and


regulatory

framework of the gas flaring reduction mechanism of

Nigeria and Texas, that despite the fact that both are experiencing a
boom in oil and gas production, their regulatory regimes have a lot of
differences.
Texas has been able to record a high degree of success in reducing gas
flaring to 0.4 percent due to several factors which includes; purpose
driven laws, effective and efficient regulations, independent and
capable regulatory institutions, willing and committed operators, well
developed gas gathering infrastructures and network of pipelines,
available domestic gas market, government non-interference, accurate
154 Letter retrieved was from
http://democrats.energycommerce.house.gov/index.php?q=news/reps-waxman-rushand-degatte-call-for-hearing-on-natural-gas-flaring on 2/14/13.

63

flare

measuring

and

reporting

procedures,

investment

in

new

technologies, realistic policy targets, regular update of flaring rules to


meet changing circumstances, three tier enforcement system and
collaboration amongst agencies and stakeholders.
While Nigeria had recorded some results in reducing gas flaring, its
effort has not been that successful in eliminating gas flaring because of
several factors that have prevented the country from realizing its set
goal of abating gas flaring. These factors include ineffective, inefficient,
and non transparent gas flaring laws and policies; lack of political will
to implement policies that will eliminate gas flaring; the absence of
capable, independent and well funded regulatory agencies with the
requisite technical and scientific knowledge; conflict of interest on the
part of the government, regulatory officials and the oil and gas
companies; unavailability of gas infrastructure and market; large scale
corruption in the oil and gas industry; no coordination amongst the
federal, state, and local governments, and the oil and gas producers;
lack of proper alignment between incentives and punitive based
mechanisms to eliminate gas flaring, absence of accurate and regular
flare reporting system; and the delay in passing the PIB into law.
For Nigeria to succeed in its effort to eliminate gas flaring, it must
adopt the Texas regulatory and enforcement measures. Nigeria must
demonstrate the political will by immediately passing the PIB as
submitted to the National Assembly. This must be accompanied by the

64

formulation of realistic policy targets aimed at utilization of flared gas


by

encouraging

the

construction

of

gas

infrastructure,

and

development of viable gas market. This could be achieved by resorting


to international financial institutions, and reliance on public private
partnership to raise the needed funds. The challenge of the Nigerian
government is to formulate and adopt a natural resources conservation
and

management

objectives,

and

introduce

combination

of

regulatory and non-regulatory measures that balances punitive and


incentive based approaches to reduce gas flaring.
This study have been able to show that there are competing claims
between oil and gas production for economic development and
environmental protection in all oil and gas producing countries. And for
a country to be able to protect its people and its environment from the
impact of the oil and gas industry, the country must have the political
will to set a natural resources conservation and management objective
and create the appropriate regulatory and institutional framework to
regulate the activities of the oil and gas industry. This study had made
a comparative analysis of the successes and challenges inherent in the
gas flaring laws in Nigeria and the state of Texas, and why Texas had
recorded much success than Nigeria. The study had enumerated
measures Nigeria needs to take in order to attain its target of
eliminating gas flaring.

65

This study will be helpful not only to Nigeria but to other countries
suffering similar fate with Nigeria, to effectively and adequately enact
and establish the right regulatory and institutional framework to
reduce or abate gas flaring. This study is relevant to oil rich
underdeveloped countries in Africa and other parts of the world with
high gas flaring ratio. The study will also be relevant to developed
countries like the United States to ensure that the development of gas
infrastructure is in tandem with oil development especially in new
fields and offshore areas, so as to reduce gas flaring.
Though it is obvious that there is no single approach that is considered
the best in eliminating gas flaring for all countries, there are basic
fundamentals such as an effective and efficient political, legal, and
institutional framework that are essential for a country to develop its
own regulations to curb the menace.

66