p–ISSN: 2723 – 6609 e-ISSN: 2745-5254
Vol. 5, No. 12, December 2024 http://jist.publikasiindonesia.id/

Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6233

Implementation of Latest Technology in Oil and Gas Industry
Business Processes: Case Study of Production Processes in

Upstream Oil and Gas with Zero Flaring Technology

Muhammad Ardani1*, Tri Widjaja2

Sepuluh Nopember Institute of Technology, Indonesia
Email: [email protected]*, [email protected]

*Correspondence

ABSTRACT
Keywords: gas flare,
electricity, oil and gas,
economic feasibility, fgr
technology.

This study aims to evaluate and implement the latest
technology in reducing flare gas (Flare Gas Recovery) in the
upstream oil and gas industry. Flare gases, which are often
burned and released into the atmosphere, are a significant
source of emissions and a contributor to warming. The
results of the SWOT and AHP analysis show that the
technology of converting flare gas into electrical energy has
advantages compared to other technologies. From an
economic perspective, calculations show that this project is
very feasible to implement, with an NPV value of IDR 48.82
billion, an IRR of 23.03%, a BCR of 1.14, and a payback
period of only 4.27 years. The LCC of IDR 400.37 billion
and the CoE of IDR 285.98/kWh indicate that this project
can keep energy production costs at a competitive and
sustainable level. This study concludes that Flare Gas
Recovery to Electricity technology is the optimal solution to
support zero flaring initiatives and make a real contribution
to reducing flare gas emissions, as well as providing high
added value in terms of economy and environment.

Introduction

The upstream oil and gas (oil and gas) industry in Indonesia plays a crucial role in
contributing to national energy security (Winarto, 2021). As one of the largest natural
resources, this industry not only provides vital energy for the community, but also
becomes the main support for economic growth (Khalili-Garakani, Nezhadfard, &
Iravaninia, 2022). In this study, attention to the implementation of the latest technology
in the upstream oil and gas industry business process, especially in the use of flare gas
which is currently still burned in the flaring system, becomes increasingly urgent (Putri
& Rahmanida, 2023).

The oil and gas industry faces significant challenges as the world transforms
towards a clean energy transition. One of the impacts is the large number of financial
sectors that have stopped funding new oil and gas projects (Aripin, Prabowo, Haryanto,
& Kumara, 2023). However, oil and gas demand is still growing, especially in developing

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6234

regions such as India, Africa, and Asia, where economic growth, urbanization,
industrialization, and the number of vehicles are predicted to increase significantly.
Therefore, investment in oil and gas projects is still needed to provide energy security and
meet the increasing demand for oil and gas, before renewable energy technology becomes
more competitive (Soesanto, Angelicleatemia, & Julia, 2024).

The government also targets oil production of 1 million barrels and 12 BSCFD gas
by 2030, with a focus on domestic utilization. Indonesia has 68 potential unexplored
basins and proven oil reserves of 2.4 billion barrels, as well as proven gas reserves of
around 43 TCF (Prasetyo & Windarta, 2022). To encourage upstream oil and gas
investment, the government has made policy breakthroughs through contract flexibility,
improvement of terms and conditions in oil and gas work area auctions, and fiscal/non-
fiscal incentives. The government is also ready to revise the 2001 Oil and Gas Law to
improve the investment and economic climate of oil and gas projects in Indonesia. IOG
2022 was held in a hybrid manner with the active participation of the Ministry of Energy
and Mineral Resources, which participated in discussions and exhibitions related to the
oil and gas industry (Amanda, Putri, Arifan, Hidayat, & Ikaningtyas, 2024).

On May 22 - 24, 2023, the special task force for upstream oil and gas business
activities (SKK Migas) held a workshop on technology and gas utilization, which was
initiated as a follow-up to the gas expo forum in 2022 (Manalu & Setyadi, 2010). The
workshop covered various aspects, ranging from the implementation of gas technology,
gas potential estimation, gas market absorption capabilities, to conversion methods from
oil to gas. This workshop will also be a reflection of awareness of the importance of
continuing to develop more efficient gas management technologies and strategies
(Newnan, Eschenbach, & Lavelle, 2004).

Average emissions per facility also varied, with oil refineries having the highest
emissions per facility of 1.15 million metric tons of CO2. Accumulation and enhancement
had average emissions per facility of 0.25 million metric tons of CO2, followed by
onshore production of 0.20 million metric tons of CO2, natural gas processing and overall
production of 0.13 million metric tons of CO2, and offshore production of 0.05 million
metric tons of CO2 (Genc, Genc, & Goksungur, 2017). Of the total emissions, flare and
blowdown vent emissions reached 36 million metric tons of CO2, of which oil refineries
and onshore production were the main contributors with 3.2 and 18 million metric tons
of CO2, respectively (Mian, 2011). The largest percentage of emission sources from flares
and blowdown vents were found in offshore production (25.4%) and onshore production
(19.3%).
The objectives of this research are as follows:
1. Identify the latest technologies that can be applied to improve efficiency and

productivity in the upstream oil and gas production process.
2. Analyze the effectiveness of the implementation of the latest technology in minimizing

flare gas emissions in the upstream oil and gas industry.
3. Develop a strategy to optimize the use of beacon gas in Indonesia's upstream oil and

gas industry to support sustainable development goals.

Implementation of Latest Technology in Oil and Gas Industry Business Processes: Case Study
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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6235

4. Analyze/identify changes in business processes in the application of zero flaring
technology.

Method
This research method will use the SWOT (Strengths, Weaknesses, Opportunities,

Threats) and AHP (Analytical Hierarchy Process) approaches to analyze the potential
implementation of beacon gas reduction technology in the oil and gas industry. A SWOT
analysis will help identify internal and external factors that affect the success of the
project, while AHP will give weight and priority to the various criteria involved in
decision-making. In addition, economic analysis such as IRR (Internal Rate of Return),
BEP (Break-Even Point), NPV (Net Present Value), and ROI (Return on Investment) will
be used to evaluate the financial feasibility of this project. The data from this economic
analysis will provide an overview of the potential benefits and risks of investment,
helping companies determine whether these projects can provide significant added value.

The plan for new products such as electricity generated from the conversion of flare
gas will be designed to meet the company's internal energy needs and can also be sold to
the national power grid. The risk and economic feasibility assessment will include a
comparative analysis between existing regulations and the technical aspects of the
implementation of these technologies. This evaluation will consider various factors such
as initial investment costs, operational costs, potential revenue, and the impact of
applicable environmental regulations. Thus, the results of this method will provide a
comprehensive view of the advantages and challenges of implementing flare gas
reduction technology, as well as ensure that decisions are based on a holistic and informed
analysis.

The data analysis techniques that will be used in this study are:

1. Qualitative analysis, such as thematic analysis and content analysis.

2. Quantitative analysis, such as economic and risk analysis.

Literature Studies

A literature study is needed to gain a thorough understanding of SWOT analysis,
AHP, economic analysis, and risk evaluation as well as best practices in the use of the
latest zero flaring technology that will be discussed in this study. Literature studies can
be derived from academic literature, industry reports, and relevant case studies and
analyze the findings of literature reviews to identify key concepts, theories, and
methodologies. The purpose of the literature study is to be used as a comprehensive
literature review that summarizes the current knowledge of the latest zero flaring
technology with SWOT, AHP, economic analysis, and risk evaluation methods.

Data Collection

Quantitative data collection in this study will be carried out through various credible
and relevant sources, including:

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1. Annual Reports and Industry Statistics: Data from global energy agencies such as the
International Energy Agency (IEA), U.S. Energy Information Administration (EIA),
and the World Bank will be used to obtain statistics on flare gas volumes, oil
production, and CO2 emissions from different regions and time periods. These reports
provide detailed and reliable data on production and emission trends in the oil and gas
industry.

2. Public Databases and Archives: Access to national and international databases such as
the BP Statistical Review of World Energy, which provides historical and up-to-date
data on oil and gas production, as well as flare gas emissions.

3. Company Case Studies: Empirical data from oil and gas companies that have
implemented flare gas reduction technology, such as sustainability reports and case
studies on the implementation of Flare Gas Recovery (FGR) technology.

Results and Discussion
Based on the results of data processing from 364 gas fields, it was found that the

composition of the gas association produced has a fairly good methane (CH₄) content, so
that it provides great potential to be used in various flare gas processing projects
(Bahadori, 2014). The significant methane content in these fields shows the potential
utilization of flare gas into energy, both in the form of electricity and fuel, in accordance
with the Flare Gas Recovery (FGR) technology proposed in this study.

Table 1

Gas Content and Gas Calorific Value

Field NHV/LHV (dry, real gas) [BTU/SCF]

Red Field 39 1102
Red Field 57 1055
Blue Field 5 1004

Blue Field 11 1437
Blue Field 13 1192
Blue Field 41 1123
Blue Field 42 1115

Green Field 41 1473
Black Field 6 1158
Black Field 8 1305
Black Field 9 1253

Black Field 10 1213
Black Field 11 1184
Black Field 22 1007
Black Field 24 1011

Implementation of Latest Technology in Oil and Gas Industry Business Processes: Case Study
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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6237

Black Field 28 1235
Black Field 32 1033
Black Field 58 2200
Yellow Field 9 1281

Yellow Field 23 1063
Yellow Field 48 1046
Yellow Field 53 1089
White Field 15 1654
White Field 16 1680
White Field 25 1013
White Field 33 1041
White Field 34 1195
White Field 35 1106

The results of data processing from 364 gas fields in Appendix 1, are presented in
Table 1 for several fields that have a calorific value above 1,000 BTU/SCF. In this case,
it is interpreted that the higher the calorific value, the higher the potential for electricity
capacity produced (Aoun et al., 2024). Therefore, these fields have very good potential to
be utilized into electrical energy or fuel. This is also supported by a reference to the gas
specifications listed in Table 2.

Table 2

Typical Pipline Gas Specification (Handbook of Natural Gas Transmission and
Processing, 2015)

Characteristic Specification

Water content 4-7 lbm H2O/MMscf of gas
Hydrogen sulfide content 0.25E1.0 grain/100 scf
Gross heating value 950-1200 Btu/scf
Hydrocarbon dewpoint 14-40 F at specified pressure
Mercaptans content 0.25-1.0 grain/100 scf
Total sulfur content 0.5-20 grain/100 scf
Carbon dioxide content 2-4 mol%
Oxygen content 0.01 mol% (max)
Nitrogen content 4-5 mol%
Total inerts content (N2 +
CO2) 4-5 mol%
Sand, dust, gums, and free
liquid None
Typical delivery temperature Ambient
Typical delivery pressure 400-1200 psig

However, in addition to the high methane content, some fields also show the
presence of impurities in the form of acid gases such as carbon dioxide (CO₂) and

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hydrogen sulfide (H₂S). This impurity content requires an additional purification process
before the gas can be utilized optimally. This purification process is important to increase
the efficiency of zero flaring technology to be applied and minimize the environmental
impact of toxic gas emissions.

In Table 3, it is found that the composition of the resulting gas association has a
high content of impuritis and impurities. Among them are H2S Gas, CO2, and Moisture.
With the content of impurity gases and water, the flare gas that will enter the FGR
technology must be processed first to separate H2S, CO2, and Moisture gases.

Table 3

Gas Content of H2S, CO2, and Moisture

Field
Carbon
Dioxide

[%(mole)]

H2S
content
[ppm]

Moisture Content
[Lbs/MMSCF]

Red Field 4 70,69 1100 15
Red Field 7 65,45 250 15
Red Field 8 59,25 50 15
Red Field 59 62,26 290 15
Red Field 60 76,37 250 15
Blue Field 1 52,63 1 15
Blue Field 2 53,79 130 15
Blue Field 3 52,53 100 15
Blue Field 38 71,8 25 15

Green Field 26 55,61 25 15
Black Field 12 79,67 14 15
Black Field 14 61,59 100 15
Black Field 15 73,67 100 15
Black Field 18 67,82 50 15
Black Field 19 58,57 50 15
Black Field 20 66,94 2000 15
Black Field 21 71,57 320 15
Black Field 26 53,99 400 15
Black Field 27 60,53 60 15
Black Field 29 80,91 140 15

Yellow Field 48 64,84 100 15
Yellow Field 52 94,2 200 15
White Field 14 56,34 300 15
White Field 15 58,84 100 15
White Field 21 54,61 150 15
White Field 30 74,55 110 15
White Field 31 65,21 600 15
White Field 38 79,31 75 15
White Field 39 79,07 150 15

Implementation of Latest Technology in Oil and Gas Industry Business Processes: Case Study
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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6239

White Field 40 65,1 125 15
White Field 41 61 195 15
White Field 42 54,08 30 15
White Field 43 63,95 520 15
White Field 44 61,32 600 15
White Field 52 57,51 7 15
White Field 55 62,45 100 15
White Field 56 61,96 100 15

The removal of H₂S from flare gases through the purification process also offers
additional benefits, namely producing sulfur as an economically valuable by-product and
can be used as a feedstock in the chemical industry (Kohl & Nielsen, 1997). This step not
only reduces contaminants that lower the calorific value, but also creates additional
revenue potential from by-products. On the other hand, the use of Carbon Capture,
Utilization, and Storage (CCUS) technology to manage CO₂ separate from the gas stream
can support efforts to reduce carbon emissions, while maintaining the purity of methane
needed to achieve high generation efficiency.

Thus, the use of purification technology in the processing of flare gas not only
allows for increased value, but also strengthens the sustainability aspect from an
environmental and economic perspective. The utilization of previously wasted flare gas,
through an increase in the calorific value generated from refining, shows that Flare Gas
Recovery technology can be optimized as an effective step in supporting energy
efficiency and emission reduction in the upstream oil and gas industry.

In addition, the calorific value of the gas produced from each field varies, indicating
the potential for different energies from one field to another that will merge into multiple
gathering stations. This difference in calorific value will be an important consideration in
determining the most suitable type of project and technology to implement at each
collection station.

With the gas association profiles identified, this chapter will continue the discussion
related to project and development options that can support the implementation of zero
flaring technology. This evaluation was carried out to maximize the energy potential of
flare gas and reduce emissions, in line with the goal of reducing flaring in the upstream
oil and gas industry.

Interview Results

Interviews conducted with 3 (three) expert resource persons provided diverse
insights related to the processing operations of gas associations that are currently still
burned in flares. Although each resource person has a different approach in technical and
strategic views, they all have the same goal, which is to minimize flare gas emissions
through the application of zero flaring technology. This diverse approach reflects the

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complexity and challenges of selecting the most suitable project alternatives to be
implemented in existing gas fields.

One of the speakers emphasized the reliability of the current operation, where the
use of flares is considered an efficient solution in the short term to deal with excess gas.
However, he also acknowledged that long-term sustainability requires investment in more
environmentally friendly and economical technologies. Other speakers highlighted the
need to improve infrastructure and develop highly competent human resources to manage
new technologies such as Flare Gas Recovery (FGR). Meanwhile, the third speaker
focused on the regulatory aspects and policy support needed to encourage the
implementation of zero flaring technology, especially in facing economic and technical
challenges.

Although each speaker provided a different point of view, they agreed that each
planned alternative project has its own strengths and weaknesses. The reliability of
current operations must be carefully considered in determining the right solution, both in
terms of the technology to be used and in planning for the future of flare gas management.
The results of this interview provide an overview that the selection of project alternatives
must consider not only technical reliability, but also alignment with the long-term vision
in supporting emission reduction through zero flaring.

Alternative Analysis of Zero Flaring Technology Selection

In this evaluation, an alternative approach and selection are used that are generally
carried out in each oil and gas project at the pre-FEED (Prelimenary Front End
Engineering Design) stage. This approach aims to identify and select the most suitable
technology based on technical, economic, and environmental criteria. The pre-FEED
stage is an important step in determining the overall feasibility of the project before
proceeding to further studies and the detailed design and implementation stages.

Table 4
Alternatives and Selection of Zero Flaring Technology

Criterion FGR to
Electricity

FGR to Fuel
(LNG/CNG)

FGR
Reinjection

FGR to
LPG

Operational
Reliability

High, stable for
internal energy
requirements

Medium,
requires
distribution
infrastructure

Moderate,
maintaining
reservoir
pressure

Moderate,
requires
additional
purification

Cost High, large initial

investment but

potentially quick

payback

High,

transportation

and storage

costs

Medium, the

initial

investment is

high, and the

operational

Meanwhile,

the

processing

process is

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6241

costs are also

high

expensive

Regulatory

Aspects

Support, in

accordance with

zero flaring policy

Supports, but

requires

distribution

permission

Supporting,

part of

energy

conservation

programs

Support,

depending

on the LPG

market

Complexity of

Technology

Medium, requires

turbine and

generator

technology, but

implementation is

quite common in

the industry

High,

requires gas

liquefaction

facilities

Medium,

existing gas

injection

technology

Meanwhile,

the gas

separation

process is

complicated

Potential

Emission

Reduction

Very high,

eliminates gas

flares completely

High,

reducing

emissions

from gas

combustion

Meanwhile,

gas remains

stored in the

reservoir

High, gas

converted to

LPG

Implementation

Time

Medium, requires

the construction of

new facilities, but

can be integrated

with existing

operations

Long,

requires the

development

of LNG/CNG

infrastructure

Medium,

small

additional

infrastructure

Medium,

requires

additional

facilities

Economic

Benefits

High, energy can

be sold or used

High, large

fuel market

potential

Maintaining

oil and gas

production

High, LPG

has

economic

value

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Based on the evaluation carried out, the technology for utilizing flare gas into
electrical energy was chosen as the best alternative to be applied in gas processing in the
fields studied. The use of gas into electrical energy was chosen because this technology
was considered the most suitable for the gas association conditions produced from the
364 fields analyzed. In addition, this technology offers advantages in terms of operational
reliability, potential energy savings, as well as a significant contribution to the reduction
of flare gas emissions, in line with the goal of zero flaring.

AHP Analysis

In the AHP (Analytical Hierarchy Process) method, each alternative is assessed
based on several key criteria, such as operational reliability, cost, regulation, complexity,
potential emission reduction, and economic benefits. Each criterion is weighted based on
its level of importance, then a pairwise comparison assessment is carried out to determine
technology priorities. Here are the weights and results of the AHP analysis:

Table 5
AHP Zero Flaring Technology

Criterion Weight FGR to
Electric

ity

FGR to
Fuel

(LNG/C
NG)

FGR to
Reinjec

tion

FGR
to

LPG

Operational
Reliability

0.30 0.90 0.75 0.80 0.70

Cost 0.25 0.70 0.60 0.65 0.60

Regulation 0.20 0.85 0.80 0.70 0.75

Complexity
of
Technology

0.10 0.75 0.65 0.70 0.60

Potential
Emission
Reduction

0.10 0.95 0.85 0.65 0.80

Economic
Benefits

0.05 0.90 0.80 0.70 0.85

Relative Weight 0.835 0.735 0.715 0.720

FGR to Electricity (0.835) has the highest relative weight because it scores higher
in critical aspects such as operational reliability, potential emission reductions, and
economic benefits, although the initial cost and complexity are quite high. FGR to Fuel
(LNG/CNG) (0.735) is in second place, because its economic potential is high, but the
cost and complexity are greater. FGR to LPG (0.720) scored third with an advantage in
the LPG market and emission reduction, but its complexity and processing costs were
factors in the relative weight reduction. FGR Reinjection (0.715) is ranked last because

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6243

although it maintains reservoir pressure, this technology has limitations in emission
reduction and economic benefits compared to other options.

Figure 1

AHP Analysis Hierarchy Diagram

In Figure 1, the AHP Analysis hierarchy diagram shows the structure, criteria, and
alternative selection of technologies for beacon gas treatment. This diagram presents three
levels: the main objectives, the main criteria, and the technological alternatives, which
provide an overview of the relationships between the elements used in the decision-
making process.

Based on the results of AHP analysis, FGR to Electricity has the highest relative
weight, which makes it the best alternative to implement. This technology not only
supports zero flaring policies, but also has the most significant economic benefits and
emission reduction potential.

Financial Analysis

In this section, a financial analysis is carried out to evaluate the feasibility of the
project of utilizing flare gas into electrical energy through the calculation of three main
parameters: Net Present Value (NPV), Internal Rate of Return (IRR), Benefit-Cost Ratio
(BCR), payback period (PBP), Life cycle cost analysis (LCC), and Cost of Energy. These
six parameters are used to assess whether the investment in the project can provide a
decent return, as well as to determine the level of profitability of the project in the long
term.

Net Present Value (NPV)

The NPV calculation is done to find out whether the project provides positive added
value after taking into account the cash flow generated over the life of the project and
subtracting it from the initial investment.

In this analysis, it is assumed that the value of the initial investment project is Rp
350 billion with a power generation capacity of 10 megawatts. This project is planned to
operate for 20 years with an electricity price of Rp 1,300 per kWh. The discount rate used

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6244

is 20%, while operational and maintenance (O&M) costs are estimated at 10% of the total
annual revenue generated from electricity sales.

NPV = ��0 + ∑
��

(1+��)��
��
��=1

Where:

C0: initial investment (Rp. 100 billion)

Ct: annual operating expenses (Rp. 81.9 billion)

R: Discount rate (20% or 0.2)

N: Project lifespan (20 years)

Assumptions (base)

Project Value (Initial Investment): IDR 100 Billion

Electricity Generated Capacity: 10 Megawatts (MW)

Electricity Price: Rp 1,300 per kWh

Discount Rate: 20%

Project Lifespan: 20 years

Number of Operating Hours per Year: 7,000 hours (operational assumptions per year)

Operating and Maintenance (O&M) Expenses: 10% of revenue per year

Annual Revenue:

Annual Electricity Production: 10 MW × 7,000 hours = 70,000 MWh

Revenue per Year: 70,000 MWh × Rp 1,300/kWh = Rp 91 Billion per year

Operating Expenses (O&M): 10% × Rp 91 Billion = Rp 9.1 Billion per annum

Annual Net Cash Flow: Revenue – O&M Expenses = IDR 91 Billion – IDR 9.1 Billion
= IDR 81.9 Billion

The NPV calculation shows a positive value, which indicates that the cash flow of
this project can cover the entire investment cost and generate added value for the company
in the long run. In addition, the IRR rate obtained is higher than the discount rate used,
indicating that the project will provide an attractive rate of return for stakeholders. A BCR

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6245

greater than 1 also shows that the financial benefits of the project outweigh the costs. A
PBP of 4.27 years indicates a very short payback time. The PBP indicates that the initial
investment will return in about one year and three months, which indicates the low
financial risk of the project and the rapid acquisition of positive cash flow. The LCC of
Rp 400.37 billion shows that this project is not only profitable but also has controlled
costs in the long term. The CoE of Rp 285.98 per kWh shows that the energy production
cost of this project is very low, far below the average electricity market price. This low
CoE signifies that the project is able to generate electricity at a very competitive cost,
which can provide large operational cost savings or even generate additional revenue if
electricity is sold to the grid.

With the results of this positive economic analysis, gas conversion technology into
electrical energy is considered to be able to be implemented efficiently in the gas fields
that have been studied. This project not only helps to minimize flare gas emissions
through the implementation of zero flaring, but also provides economic benefits that can
improve overall operational efficiency. Therefore, from a technical and financial
perspective, this technology is considered feasible to be adopted in supporting the
sustainability of the upstream oil and gas industry.

Conclusion

The application of Flare Gas Recovery (FGR) to electricity technology is an
effective solution to support zero flaring in the upstream oil and gas industry, by
converting flare gas into electrical energy that can be used for the company's operational
needs. This technology not only significantly reduces carbon emissions, but also creates
economic added value through by-products, such as sulfur from H₂S purification that can
be utilized in the chemical industry, and carbon sequestration potential through Carbon
Capture, Utilization, and Storage (CCUS) technology for CO₂. In addition, FGR to
electricity supports operational efficiency by utilizing exhaust gas that was previously
wasted. While it requires large initial investments and adjustments to infrastructure and
workforce competencies, the technology offers long-term benefits, including energy
savings, reduced greenhouse gas emissions, and improved environmental sustainability.
Overall, this technology not only supports the company's sustainability initiatives, but
also has a positive economic and environmental impact.

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Indonesian Journal of Social Technology, Vol. 5, No. 12, December 2024 6246

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