Energy companies' practice of burning, venting natural gas bad for the climate

Typically, venting or flaring occurs because there aren't pipelines close enough to a well to capture and transport the gas, or because gas prices are so low that it's cheaper to discard the gas than to try to sell it.
Typically, venting or flaring occurs because there aren't pipelines close enough to a well to capture and transport the gas, or because gas prices are so low that it's cheaper to discard the gas than to try to sell it. PHOTO: REUTERS

NEW YORK (NYTIMES) - When leaders from Exxon Mobil and BP gathered last month with other fossil-fuel executives to declare they were serious about climate change, they cited progress in curbing an energy-wasting practice called flaring - the intentional burning of natural gas as companies drill faster than pipelines can move the energy away.

But in recent years, some of these same companies have significantly increased their flaring, as well as the venting of natural gas and other potent greenhouse gases directly into the atmosphere, according to data from the three largest shale-oil fields in the United States.

The practice has consequence for climate change because natural gas is a potent contributor to global warming. It also wastes vast amounts of energy: Last year in Texas, venting and flaring in the Permian Basin oil field alone consumed more natural gas than states like Arizona and South Carolina use in a year.

Exxon's venting and flaring has surged since 2017 to record highs, both in absolute terms and as a proportion of gas produced, the numbers show. Exxon flared or vented 70 per cent more gas in 2018 than it did the previous year, according to the data, bringing an end to several years of improvements.

Flaring and venting are legal under state laws, and oil companies acknowledge the practices are wasteful. Typically, venting or flaring occurs because there aren't pipelines close enough to a well to capture and transport the gas, or because gas prices are so low that it's cheaper to discard the gas than to try to sell it. Venting can also occur during equipment breakdowns.

Since 2011, the period for which reliable numbers are available, Exxon has flared or vented more gas overall than any other operator in the three oil fields, which include the Eagle Ford and Permian basins in the Southwest, and the Bakken straddling the Canadian border. Companies often treat natural gas as a byproduct when drilling for oil, which is far more lucrative.

The data also shows that BP this year acquired some of the most polluting sites in the Permian and then allowed flaring and venting to increase. BP burned off 17 per cent of the gas it produced in the Permian between April and June of this year (the first full quarter after the acquisition) making it the worst performer in percentage terms among the top 50 producers. In the year-earlier quarter, BP had burned only 10 per cent.

When asked about its practices, Exxon Mobil said it was committed to a 25 per cent reduction in flaring globally by 2020, compared with 2016 levels, to address environmental concerns.

BP said it was investing in upgrades at its Permian wells that would eliminate much of its flaring. The company also said it was not putting new wells in the area unless they had access to a gas pipeline, reducing the need to burn off or vent excess natural gas.

 
 
 

The analysis provides one of the clearest pictures to date of the companies behind the vast emissions of natural gas that have resulted from America's shale oil boom, fuelled by the use of hydraulic fracturing, or fracking, to unlock fossil fuels from shale rock.

Last year, operators across the three basins together flared or vented a record 320 million cubic feet of gas, more than 40 per cent above levels seen just five years ago. The pace for the first two quarters of 2019 has been even higher.

Rystad Energy, an energy analytics company that compiles industry data from state-level corporate disclosures, provided the venting and flaring data to The New York Times, which performed an independent analysis. Separately, an organisation affiliated with Greenpeace, Unearthed, also did its own initial analysis of a similar set of data.

But flaring releases carbon dioxide (CO2), a major greenhouse gas, into the atmosphere, where it traps the sun's heat, driving climate change. Venting directly emits methane, an even more potent greenhouse gas in the shorter term.

'WASTEFUL PRACTICE'

Both practices are "a tremendous waste of a natural resource", said Mr Riccardo Puliti, global director for energy at the World Bank, which leads a global public-private partnership that aims to reduce the practice. The World Bank estimates that flaring last year emitted more than 350 million tonnes of carbon dioxide globally, equivalent to the greenhouse gas emissions of almost 75 million cars.

"We can't afford for this to continue unabated," Mr Puliti said.

Shale oil has made the US the world's largest oil producer. But shale wells tend to dry up more quickly than conventional oil fields. That means producers must drill constantly to keep their oil production steady, while venting or flaring off the gas before pipelines can catch up.

The increase comes even as a group of the world's biggest oil companies, including Exxon and BP, announced last month on the sidelines of the United Nations Climate Action Summit in New York that they had made progress in reducing global methane emissions, and that its members were on track to meet a target of keeping methane emissions to below 0.25 per cent of global production by 2025. BP separately said this year that it had already met an even more stringent target of 0.2 per cent.

But environmental groups have urged companies to provide a better accounting of how they measure their emissions and tally those percentages, which are not easily calculated from flaring or venting statistics.

"They're saying, 'Here's our number. Trust us,'" said Mr Ben N. Ratner, a senior director with the Environmental Defence Fund, a group that works with oil companies to track and reduce methane.

"There's been no breakdown of how they arrived at that number. And we don't have all the facts, the transparency, to assess whether that's accurate or not."

When an energy company strikes oil and begins to pump, less-valuable natural gas comes up alongside the oil. That gas could be gathered into pipelines and sold, but drilling has far outpaced pipeline construction, particularly in the booming oil fields of the Permian and Bakken.

Rather than delay drilling, producers will choose to vent or flare.

Many smaller oil producers vent 100 per cent of the gas their wells produce, the data shows.

"Gas becomes more like a liability," said Mr Artem Abramov, an industry analyst at Rystad Energy. "It's just much cheaper for companies to get rid of it."

Shale-oil producer Exco Resources highlights this trend. This year, it applied with Texas regulators to flare almost all the gas it produced in South Texas, even though a pipeline already exists to move it away, because it is cheaper to release the gas than pay the fees to pipe it off and sell it.

In an unusual showdown, the pipeline's operator, Williams Cos, is now challenging Exco, saying that allowing it to flare even though its wells were already hooked up to a pipeline would lead to "unnecessary and wasteful flaring of billions of cubic feet of natural gas".

Still, Texas regulators granted Exco's flaring permit. Williams is urging the state to reconsider.

 
 

Exco declined to comment.

The Trump administration, as part of its wide-ranging rollback of regulations designed to fight climate change, is moving to eliminate Obama-era rules that would have required oil and gas producers to more aggressively detect and fix gas leaks, and to rein in flaring or venting. Fossil fuel companies argue the rules were too costly.

Chevron, on the other hand, has demonstrated more discipline over the past three years, keeping flaring and venting to less than 3 per cent of the gas it drilled, the data shows. Analysts said the company appeared to have stricter internal rules that discourage drilling in areas that offer few prospects of economically recovering the natural gas produced.

"We built a strategy early in our Permian development that, whenever possible, we would not flare to produce," Ms Veronica Flores-Paniagua, a Chevron spokesman, said in a statement.

In an interview, Mr Brian Pugh, chief innovation officer at BP's onshore oil and gas business in the US, said the company was investing in new, centralised gathering and compression facilities in the Permian that would enable it to capture and sell more gas instead of flaring and venting it.

Nearly all new wells there will connect to the new facilities, the first of which will go online in the first half of 2020, he said.

"If you look at us this time next year, we'll be starting to look very, very different," he said.