Flaring on the rise in Permian Basin due to a lack of pipelines, Dallas Fed survey finds
Energize Weekly, January 8, 2020
Flaring of natural gas from wells in the Permian Basin, the largest shale field in the U.S., is on the rise, and industry executives say it is due to inadequate gathering line and pipeline capacity, according to a Federal Reserve Bank of Dallas survey.
The Permian Basin, which straddles West Texas and eastern New Mexico, is the largest oil and gas producing field in the nation, according to the U.S. Energy Information Administration (EIA). The basin is producing more than 4 million barrels of oil and nearly 18 trillion cubic feet of gas daily.
The fourth quarter of 2019 marked the 13th consecutive quarter of increased production, the Dallas Federal Reserve Bank said.
The practice of flaring – burning off excess gas from wells – has also been on the rise. An analysis by Oslo-based Rystad Energy, an industry analyst and consultant, found flaring in the basin rising from near zero at the outset of 2011 to a record 752 million cubic feet a day in the third quarter of 2019.
“This represents a new all-time high. Oil production in the Permian Basin is growing at an accelerated pace again, and we observe high, sustained levels of flaring and venting of associated gas in the basin,” Artem Abramov, head of shale research at Rystad Energy, said in a statement.
Flaring is a target of criticism by environmental groups for adding to regional air pollution and contributing to the buildup of climate-altering greenhouse gases.
The most recent flaring primarily came from the Delaware Texas part of the basin and accounted for about 40 percent of the basin-wide flaring of the third quarter of 2019, according to Rystad.
Infrastructure problems were identified by industry executives as the main reason for the increased flaring in a survey of 170 companies by the Dallas Federal Reserve Bank as part of its fourth quarter 2019 energy report – 111 of the companies were drillers, and the remaining were oilfield service companies.
“A lack of pipeline takeaway capacity for gas was the most frequently identified main reason for the increase in flaring in the Permian Basin in 2019,” the bank said.
Seventy-three percent of the respondents cited a lack of pipeline capacity as a problem. A lack of gathering and processing capacity was cited by 49 percent. Processing and transportation fees exceeding the value of the gas were indicated by 45 percent of respondents.