Investors managing more than $2 trillion are calling on Texas regulators to ban the routine burning of natural gas from shale fields, arguing that the energy industry hasn’t moved quickly enough to curb the controversial practice. AllianceBernstein, California State Teachers’ Retirement System and Legal & General Investment Management said they support eliminating gas flaring by 2025, according to a letter to the Texas Railroad Commission, which oversees oil and gas in the state. All three investors have been vocal on environmental issues before, but it’s the first time large institutional investors have taken such a public stance to the Texas regulator.
Investors and environmentalists are increasingly drawing attention to flaring because of its wastefulness and contribution to climate change. Flaring is utilized around the world as a way to deal with gas that producers can’t — or don’t want to — transport or store. Much of what’s burned, especially in the shale fields of Texas, is so-called associated gas coming from oil wells.
The Texas Railroad Commission has come under attack for allowing companies to effectively flare at will over the past decade as shale production boomed and helped make the U.S. the world’s top oil producer. The commission allows companies to flare during the start-up of wells and during emergencies. It also issues waivers that can be utilized right through the early and most productive phase of a shale well’s operation.
After more than a year of public pressure, the commission recently proposed reducing the amount of flaring time allowed under some waivers and requiring operators to provide information on why they need to flare, but it set no targets and resisted calls for an outright ban. Lower oil production due to the Covid-19 pandemic has meant flaring rates have dropped significantly this year, the commission said in a statement last month.