Gas flaring: can we rein in the waste and pollution?
Controlled burning of unwanted natural gas during oil and gas recovery is a commonplace procedure in the energy industry but it is both wasteful and damaging to the environment. Reporting from Houston, Texas, the FT’s Justin Jacobs discovers that moves are now being made to curb flaring, but how effective will they be?
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I'm on a journey into a burning issue for the oil business here in the US and around the world. Flaring is the controlled burning of unwanted natural gas during crude oil production which results in more than 400m tonnes of CO2 being released into the atmosphere each year. That's more than the annual greenhouse gas emissions of the entire UK economy.
Flaring happens because it's not in the economic interest of the company to invest in taking care of that natural gas, and that needs to change. If they don't want to spend the money to connect to a pipeline for that natural gas they'll just burn that natural gas that comes up on the spot. And that's a waste of a resource and it's a source of pollution.
Globally, seven countries account for around 65 per cent of the world's gas flaring. Russia contributes the highest amounts, with the USA in fourth position. From 2019 to 2020, however, there was a 5 per cent decline in flaring worldwide, with the US seeing the biggest decrease of 32 per cent. According to the World Bank, this was due to low oil production during the pandemic, but also due to infrastructure improvements to capture and use the gas, instead of flaring it.
Hi, Clay. Good to see you.
Good to see you.
I've come to Houston, the headquarters of Apache Corporation.
Flaring is something that we have seen in the industry as truly being a black eye. It's something that's very evident. People see it. They see a waste of resource. What we're trying to do is tackle this problem.
The oil and gas company has set a target to eliminate routine gas flaring by the end of 2021.
We've invested in our own infrastructure to take natural gas away from our wellheads and to take those to third-party midstream providers.
Are you putting yourself at a disadvantage to operators who aren't as aware of these issues, who aren't putting the investment into stopping flaring?
No. I think that's a short-term metric. Yes, it does cost more. What we're doing is going to make us sustainable into the future.
For some independent watchdogs industry commitments to reduce flaring do not go far enough.
There needs to be actual, direct measurements made to prove that those commitments are being made. It's one thing to say that you're going to do a certain thing. It's another thing to prove that you're actually doing it.
The Environmental Defense Fund has been monitoring gas flaring in the Permian Basin in West Texas, an area that accounts for about half of total US onshore oil outputs. Using infrared cameras the NGO can measure levels of methane, the invisible gas that is 80 times more potent than CO2.
What we're finding is that methane is escaping directly into the atmosphere. These flares are not burning the actual natural gas. And methane, right now, is contributing about 25 per cent of the warming. So one of the things that we can do in the immediate sense is to reduce methane emissions from man-made sources as quickly as possible.
There has been some progress with companies making commitments around reducing their methane emissions and reducing their flaring, as well. But at the regulatory level in the state of Texas there has not been much progress.
When it comes to regulations in the US, there's a disparity of rules between federal and private land.
If it's federal land where the work is being done then the rules will be federal rules. Texas is 95 per cent private land, so the rules in Texas are governed by what private landowners prefer.
In 2019, Texas accounted for almost half of the total gas flared in the US. Despite these challenges the professor was encouraged by the progress that is being made.
The oil and gas industry has always invested a lot in engineering innovation. There's a lot of interest in the industry now in reducing greenhouse gas emissions, both in the upstream, which is where we produce the oil and gas, bring it to the surface, and all the way to the sale point for consumers.
We want to be cleaner as a company. We want to be part of the solution. We recognise that society is demanding cleaner energy sources and resources.
Led by the World Bank, there are global efforts to eliminate gas flaring by 2030. But ultimately, it may be economic considerations that have the greatest influence on the issue. One potentially positive development is that in the United States, this summer's natural gas price is the highest it's been since 2014. And in the short term, at least, that could prove to be the strongest incentive of all for companies to reduce flaring.