Private companies in America’s most productive oil region burn unwanted natural gas at nearly six times the intensity than publicly traded companies.
The majority of flaring by major operators in the Permian Basin – an area that accounts for more than half of U.S. oil production – still occurs regularly, despite the industry’s promises of cleaner supply chains over the next year. decade, according to figures from energy consulting firm Rystad.
Among the 29 largest operators in the region, nearly 80% of flaring – the process of burning gas to relieve pressure during oil extraction – by private companies occurs regularly, compared to 45% for listed companies. , according to data from Rystad.
Private oil and gas companies burned an average of 423 cubic feet of gas for every barrel of oil produced, compared to just 74 cubic feet per barrel for their listed rivals.
The environmental impact of gas flaring, which results in the emission of more than 400 million tonnes of CO2 into the atmosphere each year, has led investors to push companies in the sector to commit to ending the this practice.
Most of the major oil companies, such as Chevron, Royal Dutch Shell and ConocoPhillips, have pledged to end “routine flaring” by 2030, many as part of a global gas flaring partnership initiative led by the World Bank. However, private operators have yet to announce similar targets.
“Many companies will have to do a lot to eliminate routine flaring,” said Artem Abramov, head of shale research at Rystad. Yet it is now almost an obligation for state-owned companies to be able to meet their net zero emissions targets, he explained.
Each year, more than 5 tons of cubic feet of gas are wasted around the world instead of being captured and sold for energy supply. This is enough to meet the natural gas demand of all residential buildings in the United States.
There is no standardized definition of what is considered routine flaring in the industry, but it generally refers to a more consistent combustion of gas, as opposed to short bursts which usually take place for the sake of gas. security.
This type of routine flaring occurs when companies lack the infrastructure to capture the gas – often arguing that the low price of natural gas, at just $ 3 per million UK thermal units, is eroding commercial viability of its delivery to the market.
Among the major listed companies operating in the Permian, BP has the worst intensity flaring rate, burning 268 cubic feet per barrel of oil produced. But this is largely attributable to the poor infrastructure of the old wells he inherited from BHP in 2018.
“BP has actually done a lot to reduce the intensity of the flaring since it took over the operation of BHP,” said Abramov. “He has [much lower] increasing intensity of its own new projects, but it still experiences occasional infrastructure outages on existing BHP units. “
Controlling the flaring of new wells could have a significant impact on overall emissions upstream from the oil and gas industry. Flaring tends to be particularly bad in the early years of an oil region’s production, as gas pipelines and infrastructure have yet to be put in place. In 2019, the average volume of gas flared by new Permian wells – considered those established after January 2018 – was more than four times that of older facilities.
New wells are polluting less and less, according to a report commissioned by the Environmental Defense Fund, a nonprofit environmental advocacy group in the United States. But, according to EDF, companies should start expanding their commitments beyond routine flaring – to also ensure that new operations avoid burning gas even in the early stages of oil production, as Apache Corporation is already working. .
“It just has to be the new standard for oil and gas infrastructure in the future. . . that you can’t put your oil online if you don’t have the gas infrastructure in place, ”said Colin Leyden, director of EDF.
Additional reporting by Chris Campbell
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