Guest “Explanatory Reporting” by David Middleton
Hat tip to Kip Hansen for bringing this to my attention.
Despite Their Promises, Giant Energy Companies Burn Away Vast Amounts of Natural Gas
By Hiroko Tabuchi
Oct. 16, 2019When 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.
[…]
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.
[…]
But flaring releases carbon dioxide, 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.
Both practices are “a tremendous waste of a natural resource,” said Riccardo Puliti, global director for energy at the World Bank…
[…]
Shale oil has made the United States 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.
[…]
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 flare or vent 100 percent of the gas their wells produce, the data shows. In those cases, “gas becomes more like a liability,” said Artem Abramov, an industry analyst at Rystad Energy. “It’s just much cheaper for companies to get rid of it.”
[…]
Hiroko Tabuchi is a climate reporter. She joined The Times in 2008, and was part of the team awarded the 2013 Pulitzer Prize for Explanatory Reporting. She previously wrote about Japanese economics, business and technology from Tokyo.
New York Times
“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.”
If Arizona or South Carolina had a market for the excess natural gas, someone would figure out a way to sell it to them. These sorts of comparisons are meaningless. It doesn’t matter how much natural gas is flared if there’s no market for it or any way to get it to that market.
Trump’s Latest Executive Action Could Alleviate A Huge Problem For The World’s Most Productive Oil Field
MICHAEL BASTASCH
ENERGY EDITOR
April 12, 2019The Permian basin, now the world’s most productive oil and gas field, is booming — so much so that there’s not enough pipeline capacity to carry out all the natural gas it produces, meaning much of it is flared.
How much? Some 553 million cubic feet per day, or enough to power every home in Texas, according to data from Rystad Energy compiled by Bloomberg.
[…]
The Daily Caller
- The Permian Basin is not a “oil and gas *field*” (more ‘splaining later).
- Not every home in Texas is powered by natural gas.
- Marketed natural gas production in Texas is already way more than enough to power every home in the State.
Marketed natural gas production from Texas is about 20,000 million cubic ft/d (mcf/d)… That’s 40 times the 553 million mcf/d flared in the Permian Basin.
Operators could literally pay someone $2/mcf (thousand cubic feet) to take the gas. However, these companies are in business to make money. Flaring the natural gas is less expensive than paying someone to take it off their hands.
[T]hree oil fields, which include the Eagle Ford and Permian basins in the Southwest, and the Bakken…
Note to the New York Times Explanatory Reporters:
- The Eagle Ford is not a basin.
- The Eagle Ford, the Permian Basin, and the Bakken are not oil fields. They are plays, consisting of many oil & gas fields.
- The Eagle Ford and Bakken are plays related to specific rock formations.
- The Permian Basin is a collection of several smaller basins with numerous plays related to numerous rock formations.
I know this is a little bit of nitpicking, even The Daily Caller’s Michael Bastach referred to the Permian Basin as a field. It’s a common journalistic mistake and one even made by oil industry professionals. However, since the subject article is from “part of the team awarded the 2013 Pulitzer Prize for Explanatory Reporting,” nitpicking is in order.
Both practices [venting and flaring] are “a tremendous waste of a natural resource,” said Riccardo Puliti, global director for energy at the World Bank…
Leaving it in the ground would be “a tremendous waste of a natural resource.” Flaring the gas in order to produce the oil “wastes” a low value resource in order to produce a higher value resource. That’s how capitalism is supposed to work.
- 1 barrel of crude oil = 5,722,000 Btu
- 1,000 cubic feet of natural gas = 1,037,000 Btu
Current prices:
- Crude oil (WTI) = $53.48/bbl = $9.35/million Btu
- Natural gas (Henry Hub) = $ 2.24/mcf = $2.16/million Btu
I could “spend” 2 Btu of natural gas to produce 1 Btu of oil and make over a 2:1 return on capital. The bottom line isn’t denominated in barrels, mcf, joules, watts or Btu… It’s denominated in $$$.
Shale oil has made the United States the world’s largest oil producer.
And flaring made this possible… End-o-story.
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…
Shale wells don’t “dry up,” much less “dry up more quickly than conventional oil fields.” Shale reservoirs do tend to deplete more quickly than conventional reservoirs… But all oil reservoirs deplete or water out. All all oil & gas “producers must drill constantly to keep their oil production steady.” If you stop drilling, production declines.
Rather than delay drilling, producers will choose to vent or flare.
I really shouldn’t have to explain this to “the team awarded the 2013 Pulitzer Prize for Explanatory Reporting.” “Producers” have to make money in order to stay in business. Oil “producers” make money by selling oil and gas. The only way to produce oil & gas is to drill. Oil companies that delay making money until market conditions improve cease to be “going concerns” fairly quickly.
“It’s just much cheaper for companies to get rid of it.”
BUSINESS // ENERGY
Baker Hughes chooses Permian Basin to debut ‘electric frack’ technology
Sergio Chapa April 30, 2019Houston oilfield service company Baker Hughes is using the Permian Basin in West Texas to debut a fleet of new turbines that use excess natural gas from a drilling site to power hydraulic fracturing equipment — reducing flaring, carbon dioxide emissions, people and equipment in remote locations.
Baker Hughes CEO Lorenzo Simonelli spoke about the company’s “electric frack” technology during a Tuesday morning investors call. The company said its first quarter profit fell more than half to $32 million from $70 million during the same period a year earlier. Revenues rose to $5.6 billion from $5.4 billion revenue in the first quarter of 2018.
As production continues to outpace pipeline construction in the Permian Basin, operators are burning off, or flaring, an estimated 104 billion cubic feet of natural gas per year instead of shipping it to market. Simonelli said he views wasted natural gas, a byproduct of oil drilling, as a business opportunity.[…]
The Houston Comical
I’m not knocking this innovation. It’s a great idea in a mature producing area with so much excess associated natural gas that they have to flare -$200 to $300 million worth of natural gas every year to produce $243 million worth of oil every day…
There have actually been times when the price for Permian Basin natural gas has been less than $0/mmBtu, AKA negative.
Reducing flaring
There are two ways to reduce flaring in the Permian Basin and other shale plays:
- Ban the practice; which would crater US oil production.
- Make producing the natural gas at least as economically desirable as flaring it.
While I have little doubt that the New York Times “team awarded the 2013 Pulitzer Prize for Explanatory Reporting”, “Riccardo Puliti, global director for energy at the World Bank” and every passenger in the 2020 Democrat presidential candidate clown car would vote for option #1, President Trump is going with option #2. Returning to the Daily Caller article…
More natural gas will be flared off rather than brought to market if the trend continues. That’s a problem President Donald Trump is looking to tackle.
Trump signed a pair of executive orders Wednesday aimed at expediting oil and gas pipelines, including asking the Environmental Protection Agency to clarify how states and environmentalists can challenge Clean Water Act permits.
Some states, like New York, have used water quality permits to block major gas pipeline projects. Democratic New York Gov. Andrew Cuomo vowed to challenge any changes Trump makes to state permitting authority, despite gas shortages hitting some parts of the state.
Democratic Gov. Jay Inslee of Washington, who’s campaigning for president in 2020 solely focused on climate change, also promised to challenge Trump’s planned permitting reforms. Washington used water permitting to block coal and oil export terminals.
Trump also ordered the U.S. Department of Transportation to update rules for transporting liquefied natural gas by rail, and make it easier to finance new energy projects.
“Too often, badly needed energy infrastructure is being held back by special-interest groups, entrenched bureaucracies and radical activists,” Trump said at an International Union of Operating Engineers training center near Houston, before signing executive orders Wednesday.
Daily Caller
“This obstruction does not just hurt families and workers like you. It undermines our independence and national security,” Trump said.
MAGA!
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If my rig is flaring, it’s because the gas is a danger, we have to get rid of that pressure or we’ll suffer a blowout. We never want to flare, we never want gas to get that high, but there’s little choice when the gas pressure reaches certain levels or it becomes a danger to everyone at the rig site. Burning the gas is the least dangerous way for us to get rid of it. If it floods the area, our generators could explode it, causing injuries to the crew.
Yep.
That’s why we did it, but we lived at the rig.
A most excellent article! Thank, Sir Anthony.
The Daily Caller’s Michael Bastach –> The Daily Caller’s Michael Bastasch