Capterio’s CEO discusses Russian flaring at Portovaya

This article was first published on 27th August, but was updated on 5th September

Yesterday, the BBC reported a significant gas flare at the Gazprom-operated Portovaya LNG plant in Russia (click for location). Whilst the volumes are probably not “enormous”, the flare has attracted significant media attention because the flare is close to the mostly-shutdown Nordstream 1 gas pipeline that (when fully operational) sends 55 BCM of gas to Europe. Although, in actual fact, the flaring is not related to Nordstream 1 (but let’s not let that spoil the story). Nordstream 2 (if it had started up) would have doubled the capacity.

Beyond the issue of flaring at this facility, it’s excellent that the BBC has initiated coverage of this large global problem, a great example of leadership! What the world needs is (a) better transparency on this topic, and (b) to push for solutions. To deliver solutions, we need to focus on collaboration, capabilities and capital investment. See our articles for more,

This page covers (i) more details on the flare and (ii) Capterio’s media coverage. We will keep the details updated as we learn more. Did you know that you can sign up for Capterio’s *free* gas flare tracker FlareIntel Free here: https://flareintel.com/#register?

Thanks especially to Professor Jonathan Stern at OIES and Mehdy Touil, and several others, for inspiring conversations on this specific topic. Also thanks to Anita McVeigh, Matt McGrath, Tom Parfitt, Verity Bowman, Anna Cooban and Diana Magnay and others for putting this issue on the map. Please contact me if you have any questions at mark.davis@capterio.com.

What’s going on at this gas flaring in Russia?

First some context

The context here is that the world is in the middle of a cost-of-living crisis, an energy security crisis, and a climate crisis. This flare (which was reported by Rystad Energy in late August) had made news headlines not because it is particularly large, but because it is close to the start of the Nordstream 1 & 2 pipelines. It was first reported by a member of the public who is an environmentalist and took a compelling photo from a Finnish Island, some 40 km away.

It’s important to note that this flare is (probably) not particularly large – indeed there are many larger ones in Russia. The figure of £8m per day (from this flare, if correct) is actually dwarfed by a figure more like $200 million per day from the rest of Russia. After all, Russia is the world’s largest flarer (some 25 BCM per year). But there are many other countries with material flaring, including Iraq, Iran, US, Venezuela, Algeria, Nigeria, Mexico and Libya, as our paper here outlines.

In detail, the flare is at the $1.2 billion investment, soon-to-be commissioned LNG (Liquefied Natural Gas) plant at Portvaya – it is not at the compression plant at the start of the Nordstream 1 pipeline. The LNG plant is 5 km away from the compression station (and on a separate pipeline branch, where we also see flaring, but at a much smaller scale) that feeds the Nordstream 1 pipeline, but shares a common source of gas – from fields in Western Siberia and the Yamal Peninsula. These fields are known to be fairly “dry” gas.

The LNG facility’s main purpose is to provide gas to the Russian enclave of Kaliningrad. It’s actually a very small LNG terminal (1.5 MTPA, or 2 BCM per year), and is effectively an insurance policy to enable gas to reach the Russian enclave should the pipelines to it (from Russia) through Belarus and Lithuania be shut down.

The LNG plant was supposed to be operational several years ago and we understand that it is now in the process of being tested/commissioned for use. This has become substantially more urgent since April, when Lithuania announced it would no longer import Russian gas. If this includes a refusal to continue transit of gas, then the LNG plant would be the only means to supply Kaliningrad.

The Nordstream 1 pipeline has been in the news, of course, as it sends (at full capacity) 55 BCM of gas to Europe. However, the pipeline was shut down for 10 days in July and is – since July 27th – operating at only 20% capacity.  Gazprom, the operator, has since confirmed that the pipeline will be fully shut down (ostensibly due to an “oil leak”, although Siemens confirms that this is not the real reason).

We’ve been tracking flaring (using FlareIntel Pro, our satellite-based flare tool that tracks every flare for every asset, for every company, in every country worldwide, every day) at high rates since around June 13th, over 75 days ago (at the time of writing). FlareIntel incorporates data from the Colorado School of Mines which uses VIIRs to detect flares. [Incidentally, a free version of our flare tracker – FlareIntel Free) is available here]. According to Rystad, the flare is 4 million cubic metres of gas per day (which is 140 million scf/day, equivalent to an annualised figure of 1.4 BCM), but we think it is significantly smaller – by a long way. If Rystad’s numbers are right, whilst the flare is “world-class” in size, it’s still only 2-3% of the that could be exported by the Nordstream 1 pipeline (which is 55 BCM per year, or 5,400 million scf/day – this would have doubled if Nordstream 2 were to have started). However, if Rystad’s numbers are right, it’s about 70% of the gas that would be exported from the LNG plant.

What’s actually happening?

The LNG plant today is undergoing commissioning (of both LNG trains) – in fact, from around June 13th – and the flaring is a result of operational problems. As recently as Sunday 4th September, we see very significant flaring (see photo).

What we observe (beyond our quantitative assessments from satellite heat anomalies) is that the flare is producing significant volumes of black smoke, which is due to the (partial) combustion of liquids associated with the gas stream. This gives us some clear clues about the cause of the flaring, which has arguably been made more difficult as Linde (who also provided the LIMUM3 liquefaction technology) has left the project, due to sanctions.

Indeed, as industry expert Mehdy Touil notes, “performing the critical cooldown of the cryogenic sections of the plant without the licensor’s guidance is a tedious task, moreover when vendor support for the gas turbines has also been terminated“.

Specifically, in discussion with industry experts, we understand that the plant has a problem with the feed gas composition (which is very dry, around 98% methane), and is out of line with the original design, making the plant difficult to operate at the design pressure and temperature conditions. Indeed, for “reflux” to happen (a process which guarantees that the gas that enters the cryogenic process is, in fact, totally liquids-free), a limited amount of short-chained hydrocarbons (C2-C4) is required (they condense at the top of the column and sweep up any residual heavy (C5+) hydrocarbons in the feed gas). If the right temperature / pressure / composition conditions are not reached, then the liquids cannot condense and production of LNG cannot start.

Experienced LNG operators know how to deal with a wide range of feed gas (reflux can also be achieved without spiking the feed gas (i.e. adding additional C2+, although this would have required more storage), if the right pressure and temperature conditions are reached. A priority, therefore, for an experienced operator, is to correct the conditions and cool the column. But without detailed knowledge, the operator (Gazprom) and its contractor Peton (a Russian group delivering EPC services, and who is responsible for the commissioning) were likely unable to establish reflux and conduct a correct start-up. Whilst they were trying to do a correct configuration, they clearly chose to flare the gas (which arguably has limited value in Russia itself) and keep “tweaking”. It is also possible that the refrigerant contains ethylene, which – in addition to possible boil-off gas – may be being flared today (also leading to the black smoke).

What should have happened, as soon as the operator realised it couldn’t achieve reflux was a call for help. Since international assistance is likely unavailable, Russia should have used the in-house deep expertise from its other LNG operations. Equally, the operator should certainly have shut down the gas flow and the flare. An 80+ day commissioning process is certainly unheard of in the industry.

So net net, the flare happened due to a lack of deep expertise coupled with an unexpected feed gas composition – and all of this was made worse by the sanctions. In a final twist, there is arguably a link to Nordstream 1. Since the volumes flowing to Nordstream 1 are much higher than those to the LNG plant, it’s understandable that the spec for the gas is optimised for the eventual sales market in Germany and beyond. It’s perhaps not surprising that the feed to the LNG plant wasn’t optimised. But unlike most LNG operations, the upstream supply couldn’t be “tweaked” (by changing the mix of the wells – each of which have slightly different composition) to tune for the plant … for fear of failing to meet the stringent spec of Nordstream 1’s customers.

What do we expect to see next?

We expect the flaring to reduce in the coming days and the plant to prepare for its first LNG export, first going into storage on site. Yesterday, the Gazprom Deputy Chairman Vitaly Markelov confirmed that LNG production is underway.

Indeed, Kpler confirms that the LNG floating storage ship (PORTVYY, capacity 135,344 m3) has remained stationary at this site since November (and there is also 42,000 m3 of storage in tanks, delivered by Linde). But as spotted by analysts at ICIS, an empty LNG vessel (PSKOV) is now in the Baltic, possibly preparing to load LNG, likely in a couple of weeks from the Portovaya terminal, with a possible destination of Kaliningrad, where Gazprom’s sole receiving floating vessel (MARSHAL VASILEVSKIY) is situated. We can expect an average of 24 shipments per year of LNG (in small ships, sized at 63,000 tonnes) if the plant is fully operational.

Watch this space …

Capterio’s media coverage

• BBC News article: “Russia burns off gas as Europe’s energy bills rocket” outlining the issue and quoting Mark Davis (the lead article on BBC World)
• Mark live on BBC News / BBC World in a TV interview (may not work in the UK)
• Mark on BBC Radio 4’s 6’o clock news (at 10 minutes 50 seconds to 11 mins 54 seconds)
• Mark live on Steve Nolan’s late-night radio chat show on Five Live
• Mark is also quoted in The Times, The Telegraph (see below), CNN, Derby Telegraph, WENY, Spark Chronicles, NexTV Africa and Middle East, California 18, International Business Times, MSN, La Vangardia, BOL News, Mark Scoop, Saudi Gazette, Financial Exchange, CNBC Indonesia, Huff Post, la Republica, News Mondo, Sky News, and the Russian press, e.g. UNN.
• This story was also covered (without referencing Capterio) in The Sun, The Daily Mail and others. The latter two have some super interesting photographs.

In a completely separate story, Capterio’s CEO was also featured in German TV’s flagship programme Monitor this week, discussing the opportunity for the German government to work with international partners to reduce flaring.

See below for some images from our media coverage.