Frackers In Texas, North Dakota Finally Earn Credit For Addressing Flaring

It’s been a long time coming – far too long from a reputational standpoint – but natural gas producers in Texas and North Dakota are finally making progress worth noting in getting their flaring issue under control. The technology needed to achieve these reductions has existed for decades, but the companies have only in recent years finally suffered enough reputational damage to motivate industry-wide efforts to adopt it.

In Texas, the progress made over the last two years has been impressive, as demonstrated by a new report issued last week by the Texas Methane & Flaring Coalition. Using data compiled by the Texas Railroad Commission, TMFC is able to boast a very significant 73% reduction in flared gas volumes that occurred in the two years from June 2019 through May of this year. In all, flared gas volumes in Texas now represent less than 1% of total production, an important milestone in the group’s goal of eliminating flaring entirely by 2030.

“The data reflects the emphasis the industry is putting on this through best practices and investments in green house-mitigating technology,” Ed Longanecker, President of the Texas Independent Producers and Royalty Owners Association, said. “Oil and gas production grew 66 and 96 percent between 1990 and 2019 while emissions from U.S. energy production declined by 17 percent and methane intensity in the Permian Basin has been cut by 70 percent in the last eight years.”

Some of the improvement in the numbers can be traced to operators and midstream companies adopting technological solutions to capture and control their own flaring, which in the past had been considered prohibitively expensive. But years of self-inflicted reputational damage along with public and regulatory pressure at the state and federal levels have slowly begun to impact management decisions on such investments.

A bigger key to reducing flaring in Texas has been the buildout of adequate natural gas pipeline takeaway capacity for the massive Permian Basin, allowing gas that might have previously been flared to flow into a sales line. As recently as three years ago, the Permian was in a highly-constrained situation; but now, thanks to new capacity built by companies like Kinder Morgan

KMI
and EPIC Midstream, the needed capacity finally exists.

Odessa oilman Kirk Edwards acknowledged that reality in comments reported by the Odessa American. “Since 2019, many new pipelines have been built and that has alleviated the problem,” Edwards said. “There is no reason now why a new shale well doesn’t have that gas going into a market immediately.”

This has been the natural progression seen in every new shale play discovered in the U.S., starting with the Barnett Shale in the late 1990s. Flaring has become a major issue in every successive play area until the buildout of pipelines was completed, not because technology to capture the gas hasn’t existed but because upstream companies didn’t consider it to be an economic investment.

Nowhere has that issue been more severe and lingered longer than in the Bakken Shale play in North Dakota, where in June, 2019 as much as 23% of natural gas production was being flared by producers. As of March, 2021, that percentage had dropped to 6%. That’s still too high, but represents an almost 75% improvement

“It’s a testimony to the $20 billion that has been invested to get gas flaring under control in the Bakken,” said Department of Mineral Resources chief Lynn Helms in May.

North Dakota Governor Doug Burgum has challenged his state to become “carbon neutral” by 2030, an aggressive goal that will require further industry improvements in the flaring arena to achieve. But the progress over the past two years indicates an industry that is focused on doing exactly that.

It’s worth noting that the stronger commodity price environment producers find themselves in today will create additional available capital and likely result in management teams being more willing to invest in the wellhead technologies designed to capture and reuse the gas. All in all, the industry’s outlook where flaring is concerned has gone from a seemingly never-ending blackeye to a point of real progress and some justifiable pride in two short years.

If upstream companies can maintain their focus, they might eventually eliminate the issue for good. Better late than never.