Articles Posted in Flaring

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As evidenced by the fight between Williams MLP Operating and EXCO Operating over EXCO’s flaring of Eagle Ford wells on the Briscoe Ranch, now pending on appeal in the 345th District Court of Travis County, flaring continues to be an issue in Texas. I thought a little history might enlighten the subject.

Controversy over gas flaring is not new. In the 1940’s flaring of gas was also an issue in Texas, and the Texas Railroad Commission successfully fought to reduce flaring as a waste of Texas’ valuable resource.

In the early days of oil exploration and production there was very little market for natural gas. It could not be stored and had to be transported by pipeline. In 1930 oil sold for about a dollar a barrel, and gas sold for 3.6 cents per mcf. Six mcf of methane gas produces the same heat as one barrel of oil. So based on heat equivalency, oil was five times more valuable than gas.

The giant Panhandle Gas Field was discovered in 1918 with the completion of the Masterson No. 1. Three additional wells soon followed, and those four wells were tested in March 1920 at 160 million cubic feet per day. Initially no one could be found to buy the gas. The City of Amarillo spent $60,000 advertising the resource but found no buyers. The city offered free gas for five years to any industry that would move to Amarillo. No takers.

But, by 1929 several gas pipelines were laid to move the gas to distant markets and fifty-three gasoline plants and twenty-four carbon black plants had been constructed. The value of gas had been realized. Continue reading →

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From POLITICO:

OIL IN THE TIME OF PANDEMIC: The global oil market is in an unprecedented situation, one that will hasten companies falling out of the sector, IHS Markit vice chairman and long-time energy industry doyen Daniel Yergin said Thursday. Yergin, in D.C. for an Energy Department board meeting, would normally have been in Houston to preside over the mammoth CERAWeek energy conference this week if the spread of the coronavirus hadn’t forced its cancellation for the first time in its nearly 40-year history. The economic distress, coupled with the flood of oil coming from Saudi Arabia and Russia, has put the overall industry in a situation it has never faced before and one that the federal government would be hard-pressed to fix, he said.

“I mean, there’s just so much weakness,” Yergin told reporters after the meeting. “There’s so much oil out there flooding into the market. It’s a problem of an oil price war in the middle of a constricting market and the walls are closing in. Normally, demand would solve the problem in a way. But not in this case, because of the freezing up of economic activity. Low gasoline prices and low oil prices don’t do much when schools are closed, when people are canceling all their trips and people are working from home. There have been many cases of an oil market collapse and competition for market share, but I can’t think of any one that was in the context of a larger global epidemic.”

Some of the possible solutions being bandied about probably wouldn’t work , Yergin said. Government purchases of oil to put into the Strategic Petroleum Reserve? “You’d have to write some very big checks, and I don’t know if they could deal with the amount of oil coming into the market,” Yergin said. Anti-dumping complaints of the sort Continental Resources CEO Harold Hamm said he’s pursuing? “I don’t think it would solve things overnight,” Yergin said, and it would be tough to prove Saudi Arabia is selling its oil below cost. “I think this is certain to accelerate consolidation” in the industry, Yergin said of the current market. “But it’s still early days.”

Here’s one idea: Railroad Commission should (1) order all flaring in the Permian to cease, requiring those wells flaring gas to shut in the wells or sell the gas, and (2) re-institute proration of production in the Permian, reducing economic waste.

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Happy New Year.

The decade now ending was the decade of the Permian Basin.  Its rise in production changed the US to a net oil exporter.

Permian-Oil-Production

Permian gas production, a byproduct of the search for oil, drove down gas prices and resulted in a frenzied effort to build pipelines to move the gas to the coast.

Permian-Gas-Production

Continue reading →

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The Cynthia and George Mitchell Foundation has funded research resulting in a report, “Emissions in the Stream: Estimating the Greenhouse Gas Impacts of an Oil and Gas Boom,” by to professors at UT Austin. The report focuses on downstream sources of methane emissions, and will be followed by a report examining policy and technology solutions to reduce emissions.

Here’s the abstract of the report:

The Shale Revolution has stimulated a large and rapid buildout of oil and gas infrastructure in the Gulf and Southwest regions of the United States (US), expected to unfold over decades. Therefore, it is critical to develop a clearer understanding of the scale and composition of the likely greenhouse gas (GHG) emissions associated with this activity. We compile a detailed inventory of projected upstream oil and gas production expansions as well as recently and soon-to-be built midstream and downstream facilities within the region. Using data from emissions permits, emissions factors, and facility capacities, we estimate expected GHG emissions at the facility level for facilities that have recently been constructed or are soon to be constructed. Our central estimate suggests that the total annual emissions impact of the regional oil and gas infrastructure buildout may reach 541 million tons of CO2 equivalent (CO2e) by 2030, which is more than 8% of total US GHG emissions in 2017 and roughly equivalent to the emissions of 131 coal-fired power plants. A substantial fraction of the projected emissions come from petrochemical facilities (38%) and liquefied natural gas (LNG) terminals (19%). Researchers have largely focused on upstream emissions such as fugitive methane (CH4) associated with new US production; our findings reveal the potentially greater prominence of midstream and downstream sources in the studied region.

The full report can be found here.

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Rice University’s Baker Institute for Public Policy recently published an Issue Brief, “Reducing Oilfield Methane Emissions Can Create New US Gas Export Opportunities,” written by Gabriel Collins, Baker Botts Fellow in Energy & Environmental Regulatory Affairs at the Institute. Collins argues that instead of flaring gas, it should be liquefied and sold in the international market.

Actions that improve environmental well-being are most effective and sustainable when the yield a bona fide economic benefit. This certainly would be the case with policies to reduce flaring and venting of natural gas in the US, as doing so would free up gas molecules for export to customers worldwide seeking cleaner, more secure gas supplies.

Some statistics from Collins’ brief: Continue reading →

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The fight between Williams and Exco over whether Exco can continue to flare gas from its wells has moved to District Court in Travis County.

Exco filed an application with the Texas Railroad Commission for permission to flare gas from more than 130 Eagle Ford oil wells on the Briscoe Ranch. Exco bought the wells from Chesapeake. Williams protested Exco’s application. It owns the gathering system, which it purchased from Mockingbird Midstream, at that time an affiliate of Chesapeake.  Under RRC Rule 32, a company must obtain a permit to flare gas. After a hearing, the administrative law judge recommended that the permit be granted, and the RRC granted the permit.

Exco’s wells had been connected to the Williams gathering system and dedicated to the gathering contract between Chesapeake and Mockinbird Midstream when the two companies were affiliated. Exco and Williams disputed whether the Exco wells were still under that contract. Exco was in bankruptcy, and that dispute was in the bankruptcy court.

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