When the Flames Go Out, the Permian’s Methane Problem Worsens

(Bloomberg) -- The orange flames that dot the Permian Basin have sparked criticism from investment bankers and shale pioneers who say the energy industry is wasting a valuable resource by burning off natural gas. Yet the flares are proving a bigger contributor to climate change if they are unlit.

The Environmental Defense Fund surveyed more than 300 sites in the Permian and found that roughly 1 in 10 flares was unlit or malfunctioning. That means more gas is being released straight into the atmosphere, contributing a lot more to the basin’s methane emissions than previously thought.

The findings are part of EDF’s PermianMAP initiative, launched last year as a way to quantify the methane emissions from America’s biggest oil field, which until recently was considered a black box.

The environmental group used satellite images to identify areas where flaring is prevalent, and then flew helicopters with infrared cameras to detect which sites -- called flare stacks -- were releasing methane. Two surveys have been conducted, one in February and another in late March, and EDF plans a third in the near future.

Flaring is meant to get rid of fuel that companies can’t or don’t put into pipelines by burning off methane, a greenhouse gas at least 30 times more potent than carbon dioxide at heating up the planet. The practice has skyrocketed in the last few years as output in the Permian, which stretches across West Texas and southeastern New Mexico, has surged.

Growing methane emissions globally have alarmed climate scientists. Methane levels in the air rose markedly last year, according to the U.S. National Oceanic and Atmospheric Administration.

Even as carbon emissions fall this year, because of lower consumption of fossil fuels during coronavirus lockdowns, EDF expects methane emissions to continue rising. That’s making it difficult for the world to hit the most ambitious goals set under the Paris climate agreement, which require halving global emissions by 2030.

Unlit flares are only the latest headache for the shale industry. Vast amounts of methane is also leaking in the process of extracting and transporting gas. A study published last week showed that Permian oil and gas fields have a leakage rate that’s 60% higher than the national average.

The prevalence of flaring has led to calls from some oil companies themselves to get the issue under control, with Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield calling it a “black eye” for the Permian.

Among all the ways that methane emissions could be cut, ensuring that flares are lit to burn it off is among the lowest-hanging fruit.

“It’s becoming clear that you’re not going to solve the methane issue in the Permian Basin without solving the flaring issue,” said Colin Leyden, senior manager of regulatory and legislative affairs for EDF.

Flaring Permits

In Texas, where the bulk of EDF’s surveys were conducted, flaring permits are granted by the Texas Railroad Commission. The three-member agency has faced criticism for never having denied a flaring permit and last year issued almost 7,000 orders allowing oil and gas companies to flare or vent gas.

Once a permit has been granted, however, it falls to the Texas Commission on Environmental Quality to ensure that flares are in compliance with emissions standards.

Typically, violations result in a notice from TCEQ that gives operators of that flare a specific amount of time to get the site back in compliance. If they don’t, the agency is authorized to issue penalties.

A representative for TCEQ said the agency has received EDF’s findings and is currently reviewing them.

“It’s clearly not performing the way the industry claims it to be performing, and therefore, it is a larger climate issue than just the CO2 emissions from the flare,” EDF’s Leyden said, adding that operators should be monitoring their flares better.

So-called auto-igniters are supposed to be standard equipment on a flare, “but it appears those are likely failing at an alarming rate,” he said.

Faulty Flares

Preliminary estimates show that unlit or faulty flares are responsible for more than 10% of the Permian’s overall methane emissions. According to EDF, the firms behind malfunctioning flares range from big producers to pipeline companies.

Flaring issues tend to be intermittent, EDF said, though there were a handful of cases where the site was unlit during both surveys.

What’s unclear is how flaring will be affected by a dramatic collapse in oil prices that started more than a month ago. Rystad Energy, a Norwegian consultancy, said the practice dropped in the first three months of 2020 to the lowest since the third quarter of 2018. As oil producers are forced to shut in wells, the associated gas that comes up with crude is expected to decrease.

Still, that doesn’t say much about the performance of those flares, according to EDF.

“While flaring may go down in volume, we don’t know if operators are able to maintain the same crews to check on these things,” Leyden said.

©2020 Bloomberg L.P.