Energy Exchange

BP, Shell and investment giants call for Texas zero flaring regulations. Will others follow?

The first time I saw a natural gas flare in the oilfield was in 2015. Our team at Environmental Defense Fund was beginning to study methane emissions and collaborate with companies to solve the problem. Early one morning, we loaded into a van with industry collaborators and technology entrepreneurs, venturing out into the Eagle Ford Shale in south Texas.

Outside the van windows, flares dotted the landscape. A company representative explained that natural gas, or methane, was being burned on the spot rather than sent on for productive use in the economy. Why? Because there was no infrastructure in place to handle the gas coming from the region’s wells, most of which were built to produce only oil for market.

The good news, he explained, was that the problem was just temporary. Infrastructure would soon catch up with oil well drilling. The flares would soon be extinguished for good.

But more than five years later, flares are still burning nonstop.

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Also posted in Methane, Methane regulatons, Natural Gas / Comments are closed

Texas oil and gas regulators offer a weak fix to flaring

This post was originally published in The Dallas Morning News

After months of promising talk about curbing the oil and gas industry’s wasteful and polluting flaring habit, the Texas Railroad Commission unveiled a plan that does little to fix the problem. Despite calls from mineral owners, the public and even some in the industry itself to end routine flaring, the commission instead embraced largely empty measures advanced by an oil and gas trade group.

Flaring, setting fire to natural gas produced as an oil byproduct, is a colossal waste of resources and releases both carbon dioxide and methane into the atmosphere. In recent years, the Railroad Commission has served as little more than a rubber stamp for oil and gas flaring in Texas. Since 2013, operators have obtained 35,000 flaring permits without a single denial.

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Also posted in Air Quality, Methane, Methane regulatons, Natural Gas / Comments are closed

Zero routine flaring by 2025 and the Texas policy needed to get there

Routine flaring at oil and gas production sites in Texas has been a chronic issue for years, as the rampant process burns off viable fuel product while emitting carbon dioxide, methane and toxic pollutant emissions into the atmosphere. Yet momentum for eliminating the practice is building among investors, operators and landowners, pushing the state’s regulatory body, the Texas Railroad Commission, to consider new flaring policy.

Several major operators, such as Chevron and Pioneer, have already significantly reduced flaring rates to less than 1%. In a recent blog touting Exxon Mobil’s greatly improved Permian flaring performance, the operator stated their experience, “demonstrates that zero routine flaring is within everyone’s reach.”

But as J.P. Morgan Asset Management stated in a recent flaring report, “voluntary operator actions to reduce routine flaring, while necessary, have proven insufficient to deliver on the industry’s full potential,” while reiterating “zero routine flaring by 2025 represents an important and achievable goal.” In order to achieve this goal, policymakers must step in to ensure widespread adoption and outline actionable goals.

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Also posted in Air Quality, Methane, Methane regulatons, Natural Gas / Comments are closed

5 questions on flaring for investors to ask oil and gas companies

For investors concerned with environmental, social and governance issues, flaring poses one of the most immediate and material risks to shareholder value in the oil and gas industry. For an industry that prides itself on operational excellence, flaring is a waste of potentially saleable product and an unsustainable industry practice with detrimental climate and public health effects.

But the practice of routine flaring, which burns off natural gas at oil and gas sites when producers are unprepared to transport or store the fuel, is also a challenge with clear opportunity for solutions. As J.P. Morgan Asset Management recently observed, “flaring is a problem with multiple solutions and a compelling long-term economic proposition.”

As industry, investors and Texas regulators begin to acknowledge the problem, how can shareholders support management teams’ continuous improvement and understand which operators are getting it right and which are not keeping pace?

Asking the right questions through shareholder engagement is a good place to start.

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Also posted in Air Quality, Methane, Natural Gas, New Mexico / Comments are closed

To fix flaring, Railroad Commission must tackle the incentive problem

Previously published in Shale Magazine

By Colin Leyden and Scott Anderson

A remarkable thing happened at the Texas Railroad Commission these past few weeks. Throughout the contentious debate over proration, a growing chorus of voices on both sides was calling on the commissioners to address flaring — an incredibly wasteful, environmentally damaging practice that has been giving producers a black eye for years.

During the epic 10-hour proration hearing on April 14, it wasn’t just environmental and health groups banging the drum on flaring. Large and small producers (both for and against proration), mineral rights groups and investors all called for action on flaring. So while proration may be off the agenda for now, the need and desire to address flaring lives on.

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Also posted in Air Quality, Climate, Methane, Methane regulatons, Natural Gas, PermianMAP / Comments are closed

A zero flaring policy is long overdue, and investors can help make it reality

As investors take a hard look at the U.S. energy sector during this time of volatility, natural gas flaring is one of the most important and immediate risks to manage.

The eyesore of the oilfield, flaring natural gas destroys shareholder value and creates environmental, social and governance risk — exactly the kind of problem that an increasing number of asset managers, investment banks, and even private equity firms have promised to address.

Routine flaring is damaging the environment in several ways. In addition to the CO2 emissions from combusted gas, flares can release significant amounts of methane into the atmosphere. EDF’s recent helicopter survey found that more than one in every 10 flares at oil and gas sites across the Permian Basin was either unlit — venting uncombusted methane straight to the atmosphere — or only partially burning the gas they were releasing. In fact, the survey suggests that flaring could be among the region’s largest sources of fugitive methane and a troublesome contributor to local air pollution.

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Also posted in Air Quality, Climate, Methane, Natural Gas, New Mexico, PermianMAP / Comments are closed