In a first attempt of its kind in India, state-owned Oil India Ltd (OIL) plans to start a pilot project in Assam to convert the gas used for flaring into liquefied natural gas (LNG), hoping to not only reduce carbon emission levels but also help in saving gas, an increasingly scarce commodity.

Flaring is used to dispose of natural gas liberated during oil production and processing. This is often done in remote areas where there is no infrastructure available on site to make use of the gas and during the period of April to December 2007, Indian hydrocarbon companies flared 497mmscmd of gas.

Technology used for the pilot project is called small LNG technology and there are four suppliers from Australia, the US and Europe. OIL produces 5 mmscmd of natural gas and has a dedicated pipeline network for collection and supply of gas to nearby industries such as refineries, fertilizer and petrochemical plants, power generation plants and 200 tea gardens. At least 90% of these internal needs of oilfield plants and equipment is met by natural gas.

As per the initial estimates of the project, the cost of liquefaction, transportation and re-gasification is likely to be around $4-4.5 per million British thermal units (mBtu), compared with price of $16-17 per mbtu of LNG imported in to India.

Analysts note that gas flaring depletes valuable resources and pollutes the planet and therefore, any capture and use of the flared gas can help reduce global carbon emissions. For every tonne of carbon dioxide the project will reduce, it will earn one carbon credit or certificate. Developed countries, which have ratified the protocol, are mandated to reduce their emissions by certain targets.