As much as 40% of the natural gas that’s expected to be flared in the Permian Basin in 2025 could be avoided at no cost to drillers if regulators abandoned their hands-off approach to the controversial practice, according to a report. The vast majority of that would come from curbing so-called routine flaring, which is driven mainly by companies’ failure to adequately plan for the associated gas that’s produced alongside oil, the analysis by Rystad Energy on behalf of the Environmental Defense Fund shows.
Its findings run counter to arguments put forward by the state’s powerful oil regulator, which has said the cost of stricter policies would spur producers to shut in their wells, thereby wasting natural resources. Flaring, which plunged in 2020 as the pandemic forced shale producers to curtail output, is set to rebound as oil prices recover.
“Coming at this initially, we expected there would be potentially large challenges for the industry to overcome from a financial perspective,” said Mike McCormick, a principal at Rystad. “A lot of this is avoidable.”
Flaring is the process by which oil and gas companies burn off natural gas, eliminating most of the methane so carbon dioxide is the dominant greenhouse gas emitted into the atmosphere. It’s preferred to releasing gas directly because methane is 80 times more potent than carbon dioxide over its first two decades in the atmosphere.
But the practice has increasingly garnered criticism, including from major investors and even some producers. Surveys conducted by EDF have shown that roughly 1 in 10 flare sites are malfunctioning or unlit, meaning flaring contributes far more to the Permian’s overall methane emissions than originally thought. European supermajors BP Plc and Royal Dutch Shell Plc last year called on the Texas Railroad Commission, as the regulator is known, to “support an ambition of zero routine flaring in Texas.”
In a statement, BP said it has several projects underway to advance its goal of zero routine flaring but that, in the meantime, “exception permits are necessary for our operations as we continue to pursue our ambition.”