The Gas Flaring Crisis in the US Oil Patch

In its relentless pursuit of oil, the shale industry burns more and more gas into the air. This wasted gas exceeds the yearly demand of nations such as Colombia.

By Nick Cunningham, Oilprice.com:

The rate of flaring in the Permian basin reached a record high in the first three months of this year, averaging 661 million cubic feet per day (MMcfd), according to Rystad Energy. That is more than double the amount of flaring for the same period from a year earlier.

There is little chance of a reduction in the next few months. “We anticipate that basin-wide flaring will stay above 650 MMcfd before the Gulf Coast Express pipeline comes online in the second half of 2019,” Artem Abramov, Head of Shale Research at Rystad Energy, said in a press release.

It’s an astonishing amount of gas that is being flared into the atmosphere. Rystad puts it into context, noting that the most productive gas facility in the U.S. Gulf of Mexico – Shell’s Mars-Ursa complex – produces about 260 to 270 MMcfd of gross natural gas. In other words, the most productive gas project in the Gulf of Mexico only produces about 40 percent of the volume of gas that is being flared and vented in West Texas and New Mexico every single day.

Things are not that much better in North Dakota. Bakken shale drillers flared and vented about 500 MMcfd in the first quarter of 2019, Rystad estimates. Together, the shale industry in the Permian and the Bakken flared or vented 1.15 billion cubic feet per day in the first quarter. “Converting to the metric system for comparative purposes, that represents 12 billion cubic meters of wasted gas per year, which exceeds the yearly gas demand of nations such as Israel, Colombia and Romania,” Rystad Energy concluded.

While the volumes are larger in the Permian, the industry is also much larger. Proportionally, the amount of gas flared or vented in the Bakken is actually worse. In the Permian, drillers are burning or venting about 5 percent of the gas that they extract out of the ground. In the Bakken, that share has topped 20 percent.

The problem in both regions is that as drillers pursue ever greater quantities of oil, they are extracting larger and larger volumes of natural gas, which comes out of the ground in tandem with crude oil. Lacking pipelines and storage facilities to move gas, the industry simply burns it off. Venting it is even worse in terms of its climate impact – unburned methane is a vastly more powerful greenhouse gas than carbon dioxide.

In North Dakota, state regulators have watched as drillers fail to comply with flaring limits. The state capped flaring at 15 percent in 2016, a limit that would lower to 10 percent by 2020. The current limit is 12 percent. However, the industry flared 20 percent in the first three months of this year. “Compliance with the state’s flaring policy is not working,” Wayde Schafer, spokesman for the North Dakota Sierra Club chapter, told the AP last month. “We need to revisit the policy.”

Even Republicans are not pleased with the extraordinary rate of flaring. “We need to find an excess flared gas solution immediately,” Republican Rep. Vicky Steiner told the AP. She represents a region that has seen a high concentration of drilling. “It’s a shame. I’d like to see us find a use for this.”

Individual companies are allowed to flare gas for a year without paying taxes or royalties, and can ask for a waiver extension that would allow them to continue to flare beyond the 12 months. The state typically grants those requests, the AP said.

The amount of gas flared in March in the Bakken is enough gas to heat all North Dakota homes ten times over, according to the AP, citing an analysis conducted by the North Dakota legislature.

Presumably, state regulators can require oil production cuts as a way of keeping flaring rates within limits. But the state, which is dependent on the energy industry for revenues, has declined to go that route. So, the flaring continues.

Earlier this year, the Environmental Defense Fund estimated that methane emissions at oil and gas sites in the Permian are five times higher than what the industry is reporting to regulators. Separately, EDF found that flaring in the Permian is likely twice as high as the companies say.

Shale companies have argued consistently that they have every incentive to capture the gas, because they can sell the product rather than simply burning it. New infrastructure is in the works in both Texas and North Dakota, but will take time to build. Meanwhile, natural gas prices at the Waha hub in West Texas have repeatedly fell into negative territory. In other words, the product is worthless, at least at current prices. Unless regulators get tougher and demand cutbacks in flaring, there is very little incentive for companies to do anything other than light the gas on fire. By Nick Cunningham, Oilprice.com

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  43 comments for “The Gas Flaring Crisis in the US Oil Patch

  1. 2banana says:

    Compared to the gas expulsion of just one volcano…what are we talking in comparison?

    ####

    “Venting it is even worse in terms of its climate impact – unburned methane is a vastly more powerful greenhouse gas than carbon dioxide.”

    • Matt P says:

      We can’t control volcano eruptions. We can control this.

      • 2banana says:

        Volcanic eruptions are completely natural.

        And have be happening for the last million years.

        And if they emit 10000x the gas man does over a given time period.

        What is the point of “controlling” what humans do?

        • Kent says:

          Methane is a hydrocarbon and generally unstable at high temperatures. So while I’m sure volcanos probably do emit methane, I’d expect it to break down into water, carbon dioxide and other similar compounds. How much would probably vary by volcano and eruption event.

          Not to mention that volcanic ash tends to float around in the atmosphere and reflect infrared radiation from the sun so it tends to actually cool the planet for a while.

        • intosh says:

          Do you have sources about that 10000 figure? How many eruption of such magnitude a year? If you don’t have any credible sources, then it’s not worth the fume you produce after you ate a can of beans.

        • Tim says:

          @2banana

          Why make up your own facts & reality when you could look up what academics have determined and cross-checked with painstaking accuracy?

          Volcanoes might seem big and bad, and a few massive ones over human history have affected the planet’s climate for a short time (a few years to a few decades – and usually cooled it) but for the last few centuries, human activity has dominated and dwarfed the outputs of volcanoes

          Volcanoes emit very little CH4 (methane)

          Source: Oregon State University
          http://volcano.oregonstate.edu/book/export/html/151

          They do emit SOME CO2 (carbon dioxide) but do they collectively emit more CO2 than all human activity?

          Categorically NO!

          Source: https://skepticalscience.com/volcanoes-and-global-warming.htm
          (this website is based at the University of Queenland, Australia, a well-respected institution)

          or if you like from the US Geological Survey (part of the US Government)

          https://volcanoes.usgs.gov/vhp/gas_climate.html

          So please disabuse yourself of the notion that volcanoes (or undersea vents or anything else you’d like to throw in from the denial department) are responsible for the current few centuries of global warming. It’s mostly human activity

    • Wolf Richter says:

      2banana,

      You completely missed the point. This is about dollars and wasting expensive-to-extract limited natural resources (natgas). You have — for outsiders a rather silly — allergic reaction to one phrase in the article, and your brain shuts down for everything else. Funny how that works.

      • d says:

        Although it would push up the global oil price (Which is what iran and Russia are trying to do) should Legislation not be enacted to prevent any more wells coming on-stream without gas recovery fitted.

        Further should there not be legislation to stop current extraction by a certain date if gas recovery systems are not installed and operative.

        There is a market for that Gas ,after middle men, it is however not profitable for the supplier.

        Other Industries have to PAY to dispose of their waste.

        Why should the oil industries be any different.

        Sometimes doing the correct thing is expensive.

        Which is why American companies manufacture in India and ccp china.

        Its not cheap labour that attracts then, but cheap (Frequently cost free dump whatever you like directly into the Environment), so Polluting waste disposal methods, and unfairly low tax rates/breaks.

    • NotMyPresident says:

      You are so right 2bananna! (sarc) Here’s a test of your concept of ethics…

      Say, for instance, that I make a product that produces massive amounts of toxic waste as a byproduct. I have two choices, dump it on the land (more toxic) or dump it in the ocean (somewhat less toxic). Is it better to…

      1) Stop production of the product until the creation of waste is eliminated, or at least mitigated

      2) Dump the waste on the land

      3) Dump the waste in the ocean

      I need to believe that any rational, sane and ethical person would choose option 1, rather than option 3. Just because it’s LESS bad, doesn’t negate the fact that it is BAD.

  2. NARmageddon says:

    It is obscene to waste natgas to pump oil. This has got to stop.

  3. Iamafan says:

    Does China do this also? We have to know.

  4. Senecas Cliff says:

    This is just one of the many extra costs involved in the uneconomic (mostly) production of tight oil. In conventional oil the life of a well can be 30 years or more so the capital costs of routing Nat Gas pipelines to these wells to capture the gas can be amortized out over that long period. But the high depletion rates of shale oil mean many wells only last a few years so the cost of running a gas pipeline to each well is cost prohibitive. In an energy sensible world we would require gas pipelines to be connected to every tight oil well, but the would drive the already negative free cash flows of these shale oil companies further in to the toilet, or oil and gas prices would need to increase dramatically to pay for the short lived infrastructure.

    • 2banana says:

      Is an “energy sensible world” something like a “financial sensible world?”

      Because after $4 billion in QE, $1 trillion in bailouts and ZIRP…the only sensible thing to do is to massively borrow and gamble for even a 1% return.

    • LostinRMH says:

      The nat. gas can be piped in the same line as the oil from the well. It’s separated from the fluids in a nearby collecting facility and sent on a separate line to a gas processing plant. So no additional cost per well.

      It’s a shame that these corporations (and politicians) are in such a hurry to make a quick buck. They have no problem wasting these resources that our descendants may need to rely upon.

  5. OutLookingIn says:

    Nothing new.
    This current flaring of gas volume is small, compared to what has taken place in the past. The Turner Valley Alberta, oil play had so many flares burning it was known as “Hell’s Half Acre”. The glow from the flares at night could be seen in Calgary some 20 miles away!
    The northern Alberta Nisku/Fox Creek oil plays was 10 times as bad as the Turner Valley play. However these could not hold a candle to the amount of flaring that took place in Texas and Oklahoma in their oil boom hay days.
    Oil drillers hate natural gas because of the danger of a blow out and H2S poison gas.

  6. Sinbad says:

    It’s not just methane that is being wasted, a large part of most natural gas is ethylene. Saudi Arabia makes a lot of money supplying ethylene to the petrochemical industry. All our milk and oil bottles come from the ethylene in natural gas.
    As for venting natural gas, ethylene is the plant hormone that causes plants to fruit, so crops down wind would likely flower earlier than normal.

    Such a waste, it’s like burning money.

    • Sinbad says:

      Correction, that should be ethane, which is converted to ethylene by heating.

    • rhoro says:

      Saudi Arabia is generating its electricity mostly with crude oil but it trying to switch to gas so as to have more oil available for export. Their problem is that whenever they drill for gas, they find oil! So sad…

      • Sinbad says:

        Actually they have 7 trillion cubic meters of known natural gas reserves, but they consume it all internally, or convert it into petrochemicals, fertilizer etc

  7. Old Engineer says:

    Not only is this practice an economic waste, it would appear to be a significant contributor to the CO2 in the atmosphere, contributing to global warming. The chart in the news recently showing the amount of CO2 in the atmosphere at historically high values seems to be increasing in its rate of increase. The flaring could be a significant contributor to that. In addition the rest of us in the country are paying extra for products and services to reduce CO2 and other greenhouse emissions and that would appear to be wasted by the offsetting CO2 generated by the flaring.
    But over the very long term (10s of thousands of years) global warming will self correct.

  8. RD Blakeslee says:

    “Lacking pipelines and storage facilities to move gas, (etc.)”

    There’s no discussion of the whys and wherefores of this lack.

    Here in WV, “environmentalists” are doing everything they can, illegally on the ground and in court, to impede pipeline construction.

  9. Prairies says:

    Sadly the race to the bottom has led to this. A lot of companies in Canada have been forced to implement systems to capture the excess gas, it is worth a fortune in the long run but the up front costs of capturing and processing the gas can be pretty high. The low oil prices cause the companies to look to cheaper options where this system isn’t an issue for the expenses and shift the operation.

  10. Brant Lee says:

    Are there no entrepreneurs out there who could take advantage of the wasted gas? Maybe instead of pipelines, railroad tracks that could be moved? On-site electric generators. Hell, there are windmills within sight of some of these wells. C’mon people, has the stock market profits made everyone too lazy to make a physical buck.

    • Prairies says:

      You can’t just pour it in a slip tank and sell this stuff. This is highly volatile and dangerous gas with a lot of safety measures to handle and transport. Far from a cheap back yard start up company project.

      • rhoro says:

        Wouldn’t it be convenient to have electricity generators near the well head? Problem is that the gas has to be processed before it can be fed to a combustion turbine or internal-combustion engine, else it will have a *short* life.

        • Mark says:

          How about a steam turbine?

          Since the gas is being flared anyway, use the heat to create steam to drive a turbine, to generate electricity.

  11. intosh says:

    Human stupidity for profit.

  12. Cynic says:

    A man goes to a wood and cuts down a tree.

    On the edge of the wood, he makes bonfire, on to which he throws a large part of the felled wood, and burns it up just for the hell of it and not even to keep warm.

    He takes the remainder home.

    Insane, wouldn’t it be? Even though the wood will grow again, all things being equal.

    • Sgt Grumble says:

      There are burn pits all over the country disposing of trees downed for land clearing because the trees are not worth even chopping into firewood. So what? I guess we should have a moratorium on land clearing until we have a tree pipeline set up.

  13. I M says:

    https://www.houstonchronicle.com/business/energy/article/Baker-Hughes-chooses-Permian-Basin-to-debut-13808592.php

    Houston oilfield service company Baker Hughes is using the Permian Basin in West Texas to debut a fleet of new turbines that use excess natural gas from a drilling site to power hydraulic fracturing equipment — reducing flaring, carbon dioxide emissions, people and equipment in remote locations. …

  14. David Hall says:

    In some oil fields they reinjected natural gas to maintain field pressure and oil flow.
    Natural gas is stored in salt caverns along the Gulf Coast for use in the gas utility pipeline system during the winter home heating season.
    During the peak oil crisis some discussed using compressed natural gas to power vehicles as the price of oil soared.

  15. Willem says:

    Thank you for such a thought provoking post about an aspect of shale that I had no previous knowledge of.

  16. Thor's Hammer says:

    Talk about circular thinking! When you “pour” natural gas into a pipeline it doesn’t just appear magically at the other end. It must be pressurized in order to move through the pipeline. And as it moves it creates friction which eventually slows it to a stop. So a gas pipeline system consists of a pipe and regularly spaced pumping stations to re-pressurize it. On a major line there will be multiple compressors running 24/7, all powered by gas turbines that are a derivation of the same engines that power jet planes. The waste heat from the exhaust is sufficient to heat a small city, but it is wasted just like gas flared at the wellhead.

    About 10% of the total energy that exits the well is lost to pumping , and another variable % to pipeline leaks.

    One commentator suggested that NG should be burned to heat water into steam to drive steam turbines. LOL Sounds as logical as using super hot atomic reactions to heat water, pressurizing that water to 40 atmospheres to keep it from boiling off and exploding, storing the spent fuel rods that still contain 95% of their fission energy in swimming pools on top of the reactor vessels, and then locating the reactors and all their supercritical back up systems behind a little sea wall when generations of former inhabitants had left markers and notices marking the height of previous far higher tsumais.

    Before I wander too far afield into the history of human irrationality, I second a previous commentators’ observation that well flaring is a derivative of fracking depletion rates, and the fracking industry that is ballyhooed as making the US energy independent is a Ponzi scheme entirely dependent upon central bank near-zero interest rate policies.

    The fossil fuel energy from coal, oil, and gas that has enabled human’s brief industrial civilization is indeed renewable. It was created by algae growing and dying in dead oceans over millions of years. And it will be re-created in the same time frame and the same way.

    • DV says:

      It is about the cost of capturing and then delivering gas. If you cannot expect a site to be operational for longer than five years, any fixed infrastructure would money wasted. NG has to proceed before it can be used – dried, separated, etc. Mobile solutions may be helpful, but even then gas capture would most likely generate a loss.

      Flaring is result of erratic shale development. If you do it properly, you would first build infrastructure for the volumes you expect to be extracted. This is good industry practice. But you also need to see how you can sell what you extract.

      Just by way of example. A new gas development in Russia is expected to be producing for 102 years. In the US any new infrastructure built is likely not to be needed within years.

  17. Brian says:

    Perfect use case for bitcoin mining. Turn all of that energy into mining rigs on the bitcoin network and the producers will get paid for something that is a sunk cost anyway. One of the beautiful things about crypto is anywhere where there is an energy source, it can be turned into money.

    • Sgt Grumble says:

      That doesn’t produce network traffic. THAT is what is turned into money, eventually.

  18. MCH says:

    Oh my, talk about insanity. Forget the environmental aspect for a moment, and these guys are literally burning away money. There should be something said for how one goes about properly exploiting resources.

    This is definitely not it. I am wondering if there is some way to capture it and store, but my guess is that the cost benefit analysis doesn’t add up here.

    Part of me is wondering why some of these places are still fracking with oil prices as it is. I think the Permian might actually be profitable for fracking, but what about places like the Bakken. Has the cost of shale come down far enough for their to be a marginal benefit?

  19. tommy runner says:

    wolf/nick thanks for the article. sure its about fun tickets but the context of this quote Republican Rep. Vicky Steiner told the AP. She represents a region that has seen a high concentration of drilling. “It’s a shame. I’d like to see us find a use for this.” may be a little misleading turns out flaring reduces oil production output. she sponsored some legislation to invest state money to stop flaring.. it was killed. rep. steiner is/was executive director of the North Dakota Oil and Gas Producing Counties. (it takes three years to build a gas processing plant). as far as volcanoes go, maybe ‘fracking’ isn’t the correct term for it, drilling and the injection of cold water into hot rocks used in geothermal energy plants does fracture the rocks, which can induce earthquakes.. I believe this was the situation at Kilauea, Hawaii last year..hmm burning fracking fluids, well im living in the usa somebody get me a beyond cheese burger! (w/props to mr miller)

  20. Andrew says:

    Canadians have an unsung hero in Alberta, the late Ludwig Wiebo, who took on the gas flaring issue because it poisoned the health of his family and livestock.

    I imagined the smug smile of an Enron executive reading the first few comments about how volcanoes caused global warming and there was nothing we could do. Those executives have directed their research departments to “spin” scientific evidence, and under report emissions as you point out, so that they can continue to draw massive salaries while putting climate protestors in prison. There, I’ve said it.

    Keep up the good fight for journalism.

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