A West Texas oil boom brings an increase in natural gas flaring
An oil boom is in full swing in the Permian Basin in West Texas along with one of its expected but more unwelcome sidekicks — natural gas flaring, according to a new report.
Permian Basin producers were burning off between 3 and 4 percent of their natural gas, higher than the state average, in 2014 and 2015, according to a report being released today by the Environmental Defense Fund. The report looked at gas flaring and venting data collected by the state’s oil and gas regulator, the Railroad Commission of Texas, for the 15 biggest operators in the nation’s busiest oil field.
Overall, companies working in the West Texas portion of the Permian Basin, which also extends into New Mexico, burned off around 80 billion cubic feet of natural gas per year.
The largest Permian producers had flaring rates that ranged from around 1 percent to around 9 percent of the natural gas they produced.
Overall, less than 1 percent of gas produced in Texas is flared or vented, according to the Railroad Commission, whose data don’t distinguish between the flares that burn gas and the more environmentally harmful venting, which simply releases the gas to the atmosphere. However, the Railroad Commission’s 1 percent number for flaring and venting includes not just oil wells, but natural gas wells where flaring is rare because it’s the targeted hydrocarbon.
The amount of flaring in the Permian Basin has been rising since 2009 and since 2014 it has overtaken the Eagle Ford Shale in South Texas as the field in Texas where the most natural gas has been burned as a waste product.
Flaring is a common practice in developing oil fields and a particular issue as new wells come into production. While crude oil can travel by truck, pipe or rail, the only practical way to move natural gas to market is by pipeline, and those can take years to build.
Some of the large companies with the lowest rates of flaring in 2014 and 2015 included Pioneer Natural Resources, which holds more acreage than any other Permian operator, Laredo Petroleum, Parsley Energy and Crownquest Operating, according to the EDF.
Companies with high rates of flaring included Concho Resources Inc., whose flaring rate rose from 8 percent in 2014 to 9 percent in 2015, Energen Resources and XTO Energy according to the EDF report.
The issues that drive flaring in the Permian Basin are the same ones that caused flaring to surge during the development of the Eagle Ford Shale in South Texas — a lack of access to gas pipelines, several years of low natural gas prices, which make it unprofitable to pay to build new pipelines, and regulations that allow for gas flaring help drive the level of flaring, according to the report. In both the Permian and the Eagle Ford, drillers have been hunting the more profitable oil, making the natural gas a byproduct if a pipeline network isn’t available near the new oil wells.
The EDF looked at 2014 and 2015, two similar years with plenty of Permian drilling. Oil field activity — and therefore flaring — fell off in 2016, the low point of the recent oil bust when even the popular Permian was hit by low oil prices. Complete data isn’t yet available for 2017, but it’s been a robust year in the oil field, and more of the same is expected in 2018.
Colin Leyden, senior manager of state regulatory and legislative affairs at EDF, said the report hopes to draw attention to the issue of gas flaring and encourage companies to follow the examples of the oil and gas firms that capture and sell most of their natural gas. The report also calls for regulations to limit gas waste, applying the more stringent flaring rules used in the Barnett Shale in the Fort Worth area to wells statewide, and having companies report flared and vented gas separately.
“Hopefully it will lead to them paying more attention to it as an issue,” Leyden said. “If you look at the top 15 producers over two years of high production, it’s such a wide performance gap between companies. It implies that there’s more companies and regulators can do to set some sort of a standard which benefits the operators that are doing the right.”
Companies that do invest in the infrastructure to reduce flaring are at competitive disadvantage, Leyden said. “If you’re a company that’s made investments for this issue, it seems to not be a level playing field,” he said.
The report points out Houston-based Apache, which had one of the higher rates of flaring in 2014 and 2015. The company has been drilling wells but holding off of production in its new field, Alpine High, to reduce the amount of gas burned. It expects to spend $500 million this year on things such as pipelines and gas plants in West Texas.
The EDF report highlights the McDonald Observatory, considered the crown jewel of the University of Texas System. The observatory is nestled in Davis Mountains in the Big Bend region, and its astronomers depend on the veil of desert night. The view from the observatory now includes the glow from the Permian Basin oil field, incandescent with the work of 24-hour drilling, fracking and gas flaring.
The Permian Basin Petroleum Association this spring released a set of guidelines it worked on with the observatory — recommendations that if oil companies flare gas, they do it in an incinerator that conceals it better than the typical open flame.
Flaring has been an issue in South Texas as well, where the 400-mile Eagle Ford Shale oil field pumps 1.2 million barrels of oil per day. From 2009 to 2012, the energy industry flared 33 billion cubic feet of natural gas in Texas, including 21 billion cubic feet from the Eagle Ford, according to a 2013 San Antonio Express-News investigation.
The flares emit sulfur dioxide; carbon monoxide, a toxic gas formed from combustion; nitrogen oxides, or NOx, which can produce ground-level ozone; and volatile organic compounds, known as VOCs, which include a variety of pollutants such as benzene.
The EDF report, called “Vast energy resources wasting away in the Texas Permian Basin,” also notes that while West Texas is largely rural, air pollution can be a problem for those living near oil and gas facilities.
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