Pillar II: Our Commitment to the Environment

Reducing Flaring

The flaring of natural gas is a controlled process for eliminating emissions of otherwise vented hydrocarbons, such as methane. In some cases, flaring is a necessary safety feature in normal operations within the oil and gas production process. We actively monitor and prioritise our efforts to minimise gas flaring at the Khor Mor plant and have progressively reduced flaring year on year.

Our Khor Mor plant is centred around a cryogenic LPG plant comprising two gas trains and an early production facility (EPF).

In 2021, we initiated Project Near Zero Flaring (NZF) at the Khor Mor plant, which included:

• Engaging with a specialist engineering consultancy to calculate and benchmark total CO2 and CO2e emissions from the plant to baseline performance.
• Re-routing condensate from the EPF condensate stabilizer to the main plant stabilizer.
• Commissioning process modifications to eliminate flash gas from the EPF produced condensate stabiliser and re-routing it back into the process, reducing GHG emissions by an estimated 61,600 tCO2e per year.

 
As a result, flaring from our Khor Mor plant in 2021 was 0.31% of the total raw gas processed, representing a significant decrease from the 0.45% recorded during 2019 and 2020. In all, we reduced total flaring of hydrocarbons by 28% between 2020 and 2021 following implementation of the process efficiency efforts outlined above.

For 2022, we are continuing to evaluate options to further reduce flaring, including potential flare gas recovery systems. We continue to strive towards further reductions in the coming years through continuous process optimisation, improved maintenance initiatives, and greater liquids recovery.

Our overall carbon emissions reduction efforts also include efficiency improvements within our facilities, including evaluating methods of minimizing emissions from the Khor Mor plant’s thermal oxidizer.

Carbon Offsets

As part of our continual drive to reduce our carbon intensity, in 2021 we offset our remaining carbon emissions, allowing us to become one of the first oil and gas companies to reach carbon neutrality. In 2021, we executed a contract with Ecosphere+ to offset an estimated 264,000 tCO2e emissions annually by purchasing carbon credits from two projects: (i) Datang Chifeng Danianzi Wind Farm and (ii) Salkhit Wind Farm project.

The Datang Chifeng Danianzi Wind Farm Project is located in China and Datang China-Japan (Chifeng) New Energy Co.,Ltd is the project owner. The project aims to generate electricity using wind resources and to sell generated electricity to the Northeast China Power Grid (hereafter NEPG), with an estimated emissions reduction of 150,424 tCO2e per year.

The Salkhit Wind Farm project is located about 70 km southeast of Mongolia’s capital Ulaanbaatar, and was developed by Clean Energy LLC (along with Swedish Energy Agency). The wind farm has a capacity of 49.6 MW and generates (net) 168.5 GWh of electricity per year, with an estimated emissions reduction of 178,778 tCO2e per year.

In the second half of 2021, there was a significant increase in nature-based carbon offset prices as the market matured and a growing number of companies and sectors adopted offsets as a decarbonisation strategy. We will continue to review and revise our offsetting strategy as needed to improve cost efficiencies.

Fugitive Emissions

In order to gain a more comprehensive understanding of emissions relating to flaring and fugitive emission leak points during 2021, we implemented a number of improvements:

• Conducted a metering study to identify waste gas and flare streams that were previously not monitored.
• Contracted with a third-party Leak Detection and Repair (LDAR) company; ‘The Sniffers’ to help identify fugitive emissions resulting from un-detectable leak points using state-of-the-art optical gas imaging (OGI). The company identified 42,350 leak sources associated with >65% of the process plant, equating to more than 102 tonnes of fugitive emissions per year (less than 0.1% of overall emissions). The remaining 35% of the process plant shall be surveyed during 2022.
• Installed ultrasonic meters on the LPG and EPF flare systems, which are used to measure overall flared volumes and identify variations in flared figures. The meters also help us determine internal leak points and equipment failures.
• Of the leak sources identified, resolution of leaks associated with 217 fugitive emission sources identified by ‘The Sniffers’ led to a substantial reduction in methane discharges, a reduction in potential major accident hazards and reduced workforce exposure to BTEX chemicals (i.e.: benzene, toluene, ethylbenzene and xylenes).

 
Mitigation work is ongoing and we continue to evaluate ways to further reduce fugitive emissions, including the evaluation of new technology and further facility repairs and enhancements.

Energy Consumption

We monitor our annual energy consumption to assess our environmental impact and to identify opportunities to reduce our energy intensity. After a 46% decrease in our direct energy consumption between 2019 and 2020, energy consumption remained flat between 2020 and 2021. Indirect energy consumption, representing the electricity and steam produced by Crescent Petroleum, was 1,175,068 kWh in 2021. Encouragingly, Crescent Petroleum’s energy intensity during 2021 was 22.76 kWh per BOE produced, which is approximately 5% below the Middle Eastern average of 24 kWh/ BOE.

We continue to evaluate options to utilize more renewable energy sources to reduce our overall carbon intensity. We are studying the feasibility of installing photovoltaic arrays in our new infrastructure projects to sustainably generate 20% of our power needs, as well as to move towards the use of electric vehicles at Khor Mor.

Separately we are working to improve our overall energy efficiency in other ways:

• All lights are switched off after working hours.
• Non-critical IT equipment switched off after working hours.
• All laptops have energy star ratings.
• Reducing travel when possible by using alternative communication tools like video conferencing.
• Leveraging SSD hard disks, which consume less power, in all laptops.
• Using cloud network where possible to reduce energy consumption in servers.

 
We also continue to seek ways of reducing energy consumption further by encouraging greater attention to such consumption in all activities.

Managing Natural Resources

We have long strived to manage the resources entrusted to us as stewards in the community. We take our responsibility for environmental impact seriously by promoting responsible use of water and other resources.

Water

Unlike many other industrial operations, our operations are not particularly water intensive. Our primary source of water consumption is the testing and cooling phases of our gas operations. We seek to minimize our impact on local water supplies by reducing consumption. However, total water consumption increased by 20% between 2020 and 2021 in part due to increased activity post COVID-19.

We have also identified a variety of historical issues with the produced water system at the Khor Mor plant that have led to ineffective water management and disposal. To begin tackling these issues we established a Produced Water Task Force that includes employees from the operations, maintenance, and engineering departments, to identify potential improvements across the operation, implement operational best practices and plant modifications where possible.

To date, the Produced Water Task Force has implemented the following improvements:

• Lining of the EPF interceptor pit to improve the separation of oil, water and oil effluent in the evaporation pond.
• Retrofitting a modified interface level control system to the produced water degasser, a device used to remove gasses from drilling fluid during well drilling. This will enhance process control and further improve oil and water separation.

 
We are also evaluating plans for treating and reusing produced water at our Khor Mor plant. In doing so, we will be able to minimize water consumption and effluent discharge from our operations.

We are also working to verify wastewater sources and to develop a sampling and documentation process, conduct an education and awareness program around wastewater management, and ensure that Khor Mor operations and HSE teams are involved in the review of the wastewater process development at KM250.

Waste

The proper management of non-hazardous and hazardous waste from our operations helps mitigate our environmental impact, promotes safe operations, and protects human health and safety. The non-hazardous waste we generate ranges from paper, food, glass, tires, scrap metal, wood and plastics.

Hazardous waste produced at the plant includes used filters, medical waste, waste oil, lubricants, batteries and e-waste. In 2021, 334 tonnes of hazardous waste resulted from an abnormal build up in our evaporation pond, stemming from a reduction in oil skimming and decanting activities used for recycling purposes. In the KRI, both types of waste are either incinerated or sent to approved recycling facilities and/or a landfill.

Other ways we are currently seeking to reduce our waste generation include enhancing waste management guidance, exploring waste assurance processes to monitor waste volumes, and assessing options to compost organic waste and to purchase a plastic or carboard baler.

We intend to reduce waste at the source through increased recycling and reuse of resources. Compared to 2020, our recycling of non-hazardous and hazardous waste increased by 2% and 7%, respectively. To help further reduce our e-waste, we engaged with E-Scrappy, a third-party certified recycling company located in the region, to recycle our e-waste. While most office staff worked from home for six months during 2021, we were able to recycle more than 467 kgs of e-waste. We also increased the number of employees at Crescent who utilize e-signatures for contract signing to 100% in all our offices.

In recognition of these recycling efforts, we were singled out as one of the top five companies in the Middle East Waste and Recycling Award, dedicated awards for the waste and recycling industry.

Reducing and Responding to Spills

Numerous measures are in place across our operations to prevent unnecessary releases to the environment. We prepare and maintain spill prevention and management plans at all our locations and have a dedicated team in place to respond in the event of an incident.

We also track, record, and determine the cause of any oil, produced water, or other spill or release. This allows us to identify trends to mitigate issues and take steps to prevent future releases.

In 2021, we had a total of eight hydrocarbon spills, zero deemed significant, six of them amounting to less than one barrel in volume, and the remaining two amounting to between one to ten barrels.

Additional ways we plan to mitigate spills and prevent contamination include:

• Identifying and confirming sources of contamination, especially for water wells.
• Establishing boundary monitoring wells to identify and determine any contamination arising from condensate storage and loading areas.
• Conducting onsite bunding reviews.