Imagine you’re a wheat farmer in the Texas Panhandle. Last summer, you harvested a bumper crop. When the combines left, you baled the straw into round half-ton rolls and stacked them on the edge of your field.
And then you set them on fire.
No farmer would do such a thing, but that’s a pretty accurate representation of flaring, a common method of disposing of natural-gas byproduct at oil wells. According to the U.S. Energy Information Administration, Texas producers wasted 700 million cubic feet of natural gas every day in 2019. That’s enough to provide natural gas to every home in the state.
At times, producers have to burn off natural gas for safety reasons, but millions of cubic meters are wasted in what is called “routine flaring.”
Technically, flaring is illegal without a permit, but the Texas Railroad Commission, the agency that regulates the industry, hands out waivers like campaign flyers — more than 200 per month according to a 2018 analysis by The Texas Tribune. As of August, the commission had granted 35,000 flaring permits since 2013 without a single denial, according to Colin Leyden of Environmental Defense Fund. A spokesperson for the commission said it issued eight denials last year. Punishment for breaking the rules is rare.
BP recently announced it would end routine flaring in the Permian Basin by 2025. BP spent $300 million on a processing facility to bring the gas to market, which reduced flaring from 13% of the gas it produced in the second half of 2019 down to 3.5% in the second half of 2020. That’s still above the rates for Exxon (0.9%) and Chevron (0.4%).
It’s important to remember that these aren’t gas wells. What producers are after is oil, which is much more profitable than its gas byproduct. According to a 2016 report by the EIA, it costs $4.9 million to $8.3 million to drill a new well. So companies are asking themselves: “Do we invest $300 million in a long-term ROI on gas, or drill 40 new, profitable oil wells?”
There’s also the issue of pipeline capacity. If more producers collect and process their natural gas, they could need more pipelines, which would undoubtedly be contentious projects.
What should be done? First, more companies should follow BP’s lead to set an end date to routine flaring.
Second, the Railroad Commission needs to start saying no. Colorado and New Mexico have already outlawed routine flaring. We wouldn’t go that far, but we’d like to see the commission deny permits to producers who overuse them, and fine those who flare without a permit. The commission should also set a policy objective, announce it publicly, and work with operators to meet it.
Two bills before the Texas Legislature could help regulators find the right levers. But what shouldn’t happen is for waste to continue. We wouldn’t cotton to farmers burning up renewable resources like wheat. We shouldn’t stand for oil producers doing the same with our state’s precious nonrenewable resources.