TX Flaring: Texas Oil Regulator Signals Flaring Crackdown After Backlash

[ceo_energemsier + 1,818]

Texas Oil Regulator Signals Flaring Crackdown After Backlash

 

(Bloomberg) -- Texas’s energy regulator is taking an uncharacteristically critical approach toward burning off excess natural gas, a sign that growing pressure from environmentalists and investors to curb the controversial practice is paying off.

The Texas Railroad Commission on Tuesday deferred a series of applications belonging to oil companies including Ovintiv Inc. One such request sought to flare more than $1 million worth of gas because it would be too expensive to build a pipeline to haul the fuel to markets, a claim the agency’s newest member said warranted “further investigation.”

“Flaring is a necessary last resort during an upset, and we have work to do internally at the commission to ensure that we are not approving requests that go beyond that,” Jim Wright, one of three Republican commissioners, said in a statement following the meeting.

The commission is at the center of criticism over the shale industry’s prolific flaring problem given the panel’s record of approving virtually every permit that comes before it. In the past, commissioners have argued that more stringent regulations would have the effect of discouraging some oil production, thereby wasting the state’s natural resources. But a recent report by Rystad Energy found that 40% of future flaring could be avoided at no cost to oil companies.

During Tuesday’s meeting, both Wright and fellow Commissioner Wayne Christian spoke about routine flaring -- industry jargon for burning that isn’t necessitated by pipeline malfunctions or other short-term events.

“For years the commission has been acting like this isn’t an issue, so it’s exciting to see that they now want to end routine flaring,” said Emma Pabst, a climate advocate for Environment Texas. “They’re feeling the heat both from investors and environmentalists alike.”

During flaring, most of the methane -- a potent greenhouse gas -- is eliminated from the gas stream, but the remaining emissions include carbon dioxide. While CO2 tends to be the focus of environmentalists and some investors, the Railroad Commission views the issue as one relating to waste. Recently, the agency noted the need for policies that help make the shale industry more attractive to Wall Street.

“Getting an exception for our flaring rules should not be easy,” Christian said Tuesday. “Staff should ask tougher questions, follow-up questions and generally just dig deeper.”

It’s unclear whether the latest remarks by commissioners signal an actual reduction in flaring permits is in the offing. At a previous meeting, Wright delayed decisions on several BP Plc permit applications, which received approval on Tuesday.

The London-based oil major, which had previously called on the regulator to commit to ending routine flaring, was seeking permits to flare at 121 sites until April 2022. BP said last month that its request for permits was not inconsistent with its long-term plan to reduce flaring.

 

[Old-Ruffneck + 1,246]

21 hours ago, ceo_energemsier said:

It’s unclear whether the latest remarks by commissioners signal an actual reduction in flaring permits is in the offing. At a previous meeting, Wright delayed decisions on several BP Plc permit applications, which received approval on Tuesday.

Same same, "we'll check into it." Not enough pipe run in the Delaware to "take-away" all the excess and garbage gases. A "feel-good" story with no happy ending for the foreseeable future. 

Edited February 12, 2021 by Old-Ruffneck

[surrept33 + 609]

I would just "ban" this at a federal level (btw I assume you know about mixed reality goggles. you can "see" the spectra of methane with the next generation WebXR app called a web browser 😛). The climate is *global* (this is like the tantra) so more treaties are needed for all of humanity. For example (from a physical sense, what we do here has an effect the other side of the globe. if you had multiple CAT5 problems recently, which one would you fix?. What happened to bipartisan action on climate related stuff? The interior department was started on TR's clock and he ended up on Mount Rushmore.  Do you remember when the Kyoto Protocol was torpedoed by the Russians in the late 90s because of the price of NG? We don't need much NG anymore. We need more clean fuels. We may not even need much electrons anymore. You can theoretically create the flow of information with skyrmions (but I wouldn't recommend walking into a MRI chamber without removing ferromagnetic stuff yet!)

This is all caused by some failures in people's interest in stay updated with "info". In the 2020s a more global internet will make an addressable market 7.3 billion people with your "audience". Probably starlink + 5g let you "say hello" (it's like some digital omnipresense?) to many more people on the globe way faster than before. 

Protip: The "immersion" of the new WebXR-based mixed reality googles you can see the methane leaks (these were "tech" invented to "see" stuff on mars originally @ Caltech/JPL. I later saw them in Austin so those "hookups" were "introduced" to "each other" (via a semantically variant API youinstantlyyreleasee new "patches" every day. why is this good? *critical infastructure* https://lgtm.com/ digital computers are prone to horrible stuff in the last 20 years. think about SPECTRE/MELTDOWN. Think about actual nuclear power plants. Its a nightmare). Build chains between companies to let them see other's ethics about *pollution* (I think forwardly towards 2050)/ think about NASA's or NOAA's lessons about relativity and the Gravity Probe B. they are extremely accurate. actually you can do it other ways too, see it from the sky. also regulate it internationally. change incentivization structures. experiment rapidly with what works, then "fix" it the next day (autonomy ftw). remember most computer clocks are made up of very cheap components. how does time work on computers? how does one the huge new scales afforded by leverage quantum information theory? what are resources and resources to consume on a digital (perfect filtering is assumed) on a local basis it's like a commutator. does it matter how big the manifold is?)  Now, for dead mall spaces, you'd want to figure out how tribiology works econophysically. 

Protip: People can't see spectrum they can't see (like weather patterns. wave patterns, noisy patterns, fluctuating patterns, "perfect" digital matching patterns, or pattern matching theory, the theory of quantum information with relativistic effects should be "accounted" for around the globe). This is like moving from 10^10  events to e^e^e^e (or any commutative algebras and non-commutative algebras). What commutes?

Protip: people also generally suck at allocating resources, so maybe the algos should take those over and a qualified one term limited human overseer. Keep in mind overlay meshes are often created and destroyed all the time! ;D 

[JoMack + 549]

I didn't read the entire commentary regarding the backlash against The Texas Railroad Commission, but they caved after being sued by Public Citizen.  This is a group founded by Ralph Nader in 1971 and it's now a major activist organization with offices in Washington D.C. and Austin, Texas.  When I first saw the lawsuit, I thought this was not going anywhere, but then looking at the organization, it actually has different arms, one of which is the Public Citizen Litigation Group.  This is headed by Alan Morrison who argues for the org. from local jurisdictions to the Supreme Court.  They are worth millions so the RR Commission would probably do anything to keep out of a lawsuit by these Green New Deal activists with very very deep pockets.

We'll also see Deb Haaland coming up for approval by the Senate for head of the Department of Interior.  Now this is the creature from the black lagoon.  She's radical and more ego than brains and recently gave herself a pat on the back for bringing the Jackpile Paguate mine into a Superfund category.  She groaned on and on about how the lands were being stripped from her Native American heritage and she would stop oil and gas drilling on federal lands since it didn't serve the tribes.

Meanwhile, back to reality, the Jackpile mine was opened in1953 through1982 for uranium extraction and had 3 tribal leases from the Laguna Pueblo to ARCO.  In 1986 an Agreement was reached between the Laguna Pueblo, Department of Interior and Bureau of Indian Affairs where ARCO paid $43.6 million to the Laguna Pueblo who agreed to handle the reclamation.  Of course, they didn't do it so in 2016 they sued ARCO to break the terms of the Agreement but it was clear that the Laguna Pueblo had the responsibility.  Of course, they lobbied the BIA to let the Pueblo cede its responsibility resulting in inadequate remediation.  It's still in limbo as far as we know and is in Superfund.

So, it should be noted that Haaland is a member of the Laguna Pueblo and was a former Tribal Administrator.  So, she'll have a field day as head of the DOI pouring money into the Jackpile Paguate cleanup, while that 60 day moratorium by Biden on drilling and leasing on federal lands will become permanent.  One more item on Haaland's agenda will be the pipelines.  She is also working with the Standing Rock Sioux Tribe that sued to shut down the Dakota Access Pipeline.  So, that pipeline carrying 500,000 barrels will be shuttered after 3 years.  I'm sure we'll also see the Line 5 and Line 3 on the Haaland hit list.  

The weird thing about Haaland's march against oil and gas on federal lands is that  a major producing area of the Permian Basin is located in New Mexico where she is a Congressman.  40% of the NM budget comes from oil and gas royalties and taxes, so she's willing to devastate her state and the tribe she represents to satiate her ego.  At least that's the only conclusion I can come to, or perhaps she is insane.

 

[ceo_energemsier + 1,818]

The Fate of FlaringMarch 7, 2021

 

Here in the U.S., we are one of the top four countries in the world for gas flaring. Together with our top three peers – Russia, Iraq and Iran – we account for 45 percent of gas flaring worldwide and have done so for three years running, according to the World Bank. What’s more, the same source identifies a 23 percent flaring increase in the States from 2018 to 2019.

But those numbers are for 2019. I don’t need to tell anyone that 2020 has been a year like no other, and 2021 will bring more change under President Joe Biden and the re-entry of the U.S. into the Paris Agreement.

What does the future hold for flaring, and how will the practice’s fortunes differ here in the U.S. than in the other countries in that top four cohort?

Mounting Pressure

The statistics I quote above come from the World Bank and its Global Gas Flaring Reduction (GGFR) initiative, the existence of which tells you everything you need to know about the perception of flaring on the global stage.

And why shouldn’t it be in question? After all, this gas is a valuable commodity, capable of fueling power plants, driving vehicles and heating homes. Instead, it is simply burned with all of the associated environmental impacts: all of the negatives, none of the positives. It’s a fairly simple conclusion to draw that this is an unacceptable waste.

But that simple conclusion is often trumped by even simpler economics. If gas is produced as a by-product of oil extraction and the potential sales price of that gas doesn’t cover the cost of setting up and operating takeaway infrastructure, then you’re not going to do it (unless you’re forced to). It’s business. And an oil price depressed by the pandemic makes it even less likely that operators can make decisions against their strict economic interests, as well as tipping the scales of risk away from investing in long-term infrastructure like gathering pipelines.

Yet that seemingly insurmountable economic disincentive appears to be losing its potency. Flaring in the U.S. does indeed seem to have increased from 2018 to 2019, but there are signs that the direction of travel has changed. In the Permian Basin, for example, flaring hit a record-high of 661 million cubic feet of gas over Q1 2019, but that number fell to 500 million cubic feet of gas by the end of the year and stayed there until the 2020 oil price crash. Similar statistics can be found elsewhere. For flaring, the pressure is on – and it’s mounting.

Here in the States, I expect that trend to continue. This year we have seen Colorado ratchet up the pressure by tying pipeline permits to flaring activity – not an outright ban but a clear statement of intent. Of course, Colorado isn’t quite in the same league as Texas or New Mexico when it comes to flaring, but it may well embolden regulators elsewhere. In fact, this year we’ve also seen the Texas Railroad Commission – traditionally laissez faire about flaring – publicly take a tougher stance.

Some have also pointed to Joe Biden’s victory in the presidential race as another nail in the coffin for flaring in the States. In my opinion, this has been somewhat exaggerated. His direct influence will only extend to federal lands, which make up a small parcel of the flaring-heavy oil fields in the country. No doubt the new administration will exert pressure and soft power on flaring – certainly more than the preceding one – but mostly power in this matter resides at the state level. In any case, the changing political landscape should help nudge along action on flaring and, after a year where COVID-19 stalled progress on pretty much anything, that is to be welcomed.

Changing the Equation

So, what does that mean for the operators? On the one hand, there is growing pressure from above to put a stop to flaring – and I know many privately acknowledge that the writing is on the wall in the long-term, at least. But that doesn’t change the basic economic reality that flaring remains an economic necessity in most cases. What can they do, then?

Innovate. Whenever faced with a challenge, the oil and gas industry has always found a way. That was true when deepwater fields were made economic; it was true when hydraulic fracturing opened up a whole new frontier of onshore activity – and it’s true now.

The pertinent challenge here is finding an economic way to get the gas to market without expensive gathering pipelines. Capturing the gas is not difficult. Using it is not difficult. It’s just that step in-between; it’s a midstream problem.

There are solutions to that problem. The industry has already found an inelegant one in CNG virtual pipelines – compressing the gas at the source and taking it to market by truck, rather than wait on pipelines. In most cases, however, the expense and limited storage capacity of each truckload has meant the numbers don’t add up. Certainly not for mass market deployment.

LNG is a much more promising alternative. The same basic principles apply, except each truckload can transport far more LNG than it could CNG: a big favorable swing for the economics. Historically, however, the industry has lacked a cost-effective, small-footprint liquefaction and storage solution that can reach and deploy the small-scale sites dotted around the country. However, it’s precisely those sites that are least likely to have a pipeline connection and therefore where the flaring problem is most stubborn. Fortunately, today such a solution exists in the Edge LNG Virtual Pipeline.

America First

But what about beyond our shores? What about the other countries in that top four and beyond? Suffice it to say, this really will be a case of America first. LNG is a large and growing market here. If you can get the gas to market, there is no shortage of buyers, whether they are power plants, chemical companies looking for feedstock or gas utilities – not to mention the swelling export market.

Elsewhere, that’s not the case. Russia is investing heavily in LNG but tends to do so where it can immediately be loaded for export by sea and at large scale. The vastness and remoteness of the country mean that there would be little to no profit in the major flarers sending their gas to these export terminals, even with a virtual pipeline, at least in the short term.

Likewise, Iran and Iraq look set to carry on flaring in the short-to-medium term. Unlike neighbors, such as Saudi Arabia, where a booming chemical industry represents a market hungry for natural gas, Iraq and Iran lack major buyers within their domestic markets. That’s not to say there is no demand, but it is low enough that there is little economic incentive to find solutions to flaring.

Perhaps in the future other countries’ governments and regulators will begin to exert similar pressure on flaring as we are beginning to see in the U.S. now. In the meantime, though, as we look ahead to 2021, it looks like a case of America first, and it’s up to us to show the world what we can do.

 

Mark Casaday

CEO - Edge LNG

 

[ceo_energemsier + 1,818]

 

[ceo_energemsier + 1,818]

 

[ronwagn + 6,290]

On 2/14/2021 at 8:12 AM, surrept33 said:

I would just "ban" this at a federal level (btw I assume you know about mixed reality goggles. you can "see" the spectra of methane with the next generation WebXR app called a web browser 😛). The climate is *global* (this is like the tantra) so more treaties are needed for all of humanity. For example (from a physical sense, what we do here has an effect the other side of the globe. if you had multiple CAT5 problems recently, which one would you fix?. What happened to bipartisan action on climate related stuff? The interior department was started on TR's clock and he ended up on Mount Rushmore.  Do you remember when the Kyoto Protocol was torpedoed by the Russians in the late 90s because of the price of NG? We don't need much NG anymore. We need more clean fuels. We may not even need much electrons anymore. You can theoretically create the flow of information with skyrmions (but I wouldn't recommend walking into a MRI chamber without removing ferromagnetic stuff yet!)

This is all caused by some failures in people's interest in stay updated with "info". In the 2020s a more global internet will make an addressable market 7.3 billion people with your "audience". Probably starlink + 5g let you "say hello" (it's like some digital omnipresense?) to many more people on the globe way faster than before. 

Protip: The "immersion" of the new WebXR-based mixed reality googles you can see the methane leaks (these were "tech" invented to "see" stuff on mars originally @ Caltech/JPL. I later saw them in Austin so those "hookups" were "introduced" to "each other" (via a semantically variant API youinstantlyyreleasee new "patches" every day. why is this good? *critical infastructure* https://lgtm.com/ digital computers are prone to horrible stuff in the last 20 years. think about SPECTRE/MELTDOWN. Think about actual nuclear power plants. Its a nightmare). Build chains between companies to let them see other's ethics about *pollution* (I think forwardly towards 2050)/ think about NASA's or NOAA's lessons about relativity and the Gravity Probe B. they are extremely accurate. actually you can do it other ways too, see it from the sky. also regulate it internationally. change incentivization structures. experiment rapidly with what works, then "fix" it the next day (autonomy ftw). remember most computer clocks are made up of very cheap components. how does time work on computers? how does one the huge new scales afforded by leverage quantum information theory? what are resources and resources to consume on a digital (perfect filtering is assumed) on a local basis it's like a commutator. does it matter how big the manifold is?)  Now, for dead mall spaces, you'd want to figure out how tribiology works econophysically. 

Protip: People can't see spectrum they can't see (like weather patterns. wave patterns, noisy patterns, fluctuating patterns, "perfect" digital matching patterns, or pattern matching theory, the theory of quantum information with relativistic effects should be "accounted" for around the globe). This is like moving from 10^10  events to e^e^e^e (or any commutative algebras and non-commutative algebras). What commutes?

Protip: people also generally suck at allocating resources, so maybe the algos should take those over and a qualified one term limited human overseer. Keep in mind overlay meshes are often created and destroyed all the time! ;D 

Natural gas is as clean as anything else available. You just need to look at the big picture and not pretend that other "renewables" or nuclear are perfectly clean. 

[ronwagn + 6,290]

15 minutes ago, ceo_energemsier said:

Page not found but there are plenty of ways.

 

[ceo_energemsier + 1,818]

Could Bitcoin mining be the solution to the oil and gas sector’s natural gas flaring dilemma?

The oil and gas industry is under continuing pressure to address issues related to natural gas flaring. The challenge is how to avoid reducing emissions in ways that would make smaller rigs unviable. Surprisingly, the solution could lie in Bitcoin mining.

Bitcoin has more than doubled in price this year. The Bloomberg Galaxy Crypto Index has risen by over 190% this year. These price movements dwarf even the biggest increases in major commodities like silver (up 35% YTD), gold (up 21% YTD), and natural gas (up 15% YTD). There is also increasing interest on the part of banks and institutions in cryptocurrencies.

According to a recent Fidelity study, a growing number of institutional investors believe that digital assets should be included in their portfolios. And millions of retail investors have flooded into the market, which is easier to access than ever.

This doesn’t change the fact that Bitcoin and other cryptocurrencies are highly volatile. But what if you could convert unused natural gas, on site, into electricity that mines digital assets?

What Is Natural Gas Flaring and Why Do Oil Companies Care?

The oil and gas industry has begun taking steps to tackle Scope 3 greenhouse gas (GHG) emissions in recent years. However Scope 3 emissions are not entirely under the control of oil and gas companies, and so reducing them is complex and difficult.

In order to make an immediate impact, many companies have begun looking at Scope 1 emissions. The bulk of these emissions are related to the flaring and venting of associated gas.

The majority of oil production sites produce associated gases as a byproduct of the production process. For safety and economic reasons, these gases are typically either burned off via flaring or vented directly into the atmosphere.

While neither option is necessarily good for the environment, venting gas into the atmosphere is much worse. When natural gas is vented it is primarily methane (CH4), which is around 25 times more impactful a greenhouse gas than CO2 over a 100-year timespan. This means it makes much more environmental sense to flare or otherwise use the natural gas (converting it into CO2 instead).

While emissions vary from site to site, in some cases natural gas flaring or venting can contribute up to 90% of a particular site’s GHG emissions.

Natural Gas Prices Are Plummeting

Natural gas production is growing rapidly and the market is already experiencing oversupply. This, coupled with reduced economic output due to COVID-19, has led to natural gas prices trending negative. This makes it economically impractical for many oil fields to process or store natural gas, which encourages venting and flaring.

This problem is exacerbated by the infrastructure necessary to process natural gas in the first place. If companies are able to connect their field to a pipeline it is possible to sell their natural gas for non-fuel purposes, such as plastics production. But many oil fields have no access to the pipeline networks.

This, coupled with poor economic incentives, means that for many sites the only option is to vent or flare gas. It also means that any potential solution needs to be able to be deployed on-site, and not require expensive infrastructure.

Bitcoin Mining Operations Could Make Natural Gas Processing Profitable

Somewhat strangely, the solution to the gas flaring challenge could be Bitcoin and other proof of Work (PoW)-powered cryptocurrencies. PoW is a consensus method that Bitcoin uses in order to process transactions.

When a user wants to buy or sell Bitcoin, their transactions are placed on a block together with a handful of other transactions. Large networks of specialized computers, called ASICs, then have to solve a complicated puzzle in order to process that block, and the transactions within it. The successful computer is then rewarded with some cryptocurrency for its efforts.

Bitcoin mining is energy intensive. In 2019, the BBC reported that global Bitcoin mining was using more energy than the entire nation of Switzerland. This figure has increased in 2020 and it is estimated that the Bitcoin network is consuming almost 80 terawatt-hours per year.

The cost of electricity is a very important factor in making a mining operation successful. And natural gas converted into electricity and utilized on-site would essentially be free.

 

In light of Bitcoin’s explosive growth over the past year, this could represent a significant opportunity for oil producers to diversify while meeting decarbonization goals. Such a solution could help producers open up a new revenue stream from their operations and it could act as a hedge against uncertain oil and gas prices in the short to medium term.

Bringing Bitcoin Mining Operations to Oil Fields

Bitcoin mining in an oil field isn’t a pipe dream; it’s already being done. Denver-based Crusoe Energy Systems Inc. has already deployed it’s low-cost/no-cost “Digital Flare Mitigation” program to around 20 data centers in oil fields in the United States. The company also recently signed an agreement with Kraken Oil & Gas to deploy 18 more.

Crusoe Energy delivers its portable and modular systems to be used on site. They handle logistics and operations via a service agreement and at no upfront cost to operators. These portable systems are up in running in a few days.

Crusoe’s solution is designed to eliminate the need for flaring as well as venting. The company uses EPA-certified emission control technology and catalytic converters to significantly reduce emissions compared to flare exhaust streams. For example, they estimate that it can reduce methane emissions by up to 95%.

This solution has proven popular and a number of other companies are looking into using Crusoe Energy’s natural gas-powered Bitcoin mining as a decarbonization solution and alternative revenue stream.

The Norwegian state-owned oil company Equinor has announced a partnership with Crusoe Energy Solutions to use its unique solution to reduce flaring. Bitcoin mining company EZ Blockchain has also looked into how it can leverage unused gas in its own mining operations.

How Could This Process Change In The Future?

Bitcoin mining using natural gas is already a new idea, but as it becomes more established we will doubtless see more innovation in this process. The most obvious form of innovation will likely be to bring in more varieties of ASIC computers to mine other cryptocurrencies. This will enable companies to diversify their crypto assets and hedge against any sudden changes in the cryptocurrency market.

Another way that oil and gas companies could maximize their revenue is by capitalizing on DeFi developments. Advances like WBTC will enable companies to “stake” crypto projects based on Bitcoin or Ethereum. This will allow them to gain interest from,  or invest in, promising cryptocurrency projects.

This will provide oil and gas company shareholders with exposure to one of the fastest growing asset classes in the world, and could be a major differentiator for smaller operators with rich natural gas production.

Environmentally Friendly Changes Need to Make Economic Sense

Part of the reason gas flaring continues to cast a shadow over the industry is economic viability. If an oil production project is not in a position to make a profit with associated gas release, the operators have little choice but to flare or vent. Punitive government measures might help in the short-term. But this risks a significant adverse effect on small to medium oil producers who may be unable to afford to comply.

Marrying cryptocurrency mining operations with natural gas energy is a simple and elegant solution to a regulatory problem and provides a new revenue stream. As more efficient, less polluting, uses for natural gas on-site become accessible, it is likely we will see a significant dip in 1st stage GHG emissions across the board.

Bitcoin mining represents an easy win for many oil companies who can then give themselves more breathing room to navigate uncertainty in the markets and plan for future actions on Scope 3 emissions.

[ceo_energemsier + 1,818]

Increasingly stringent flaring regulations have been a hot topic of discussion in the upstream oil and gas industry for several years. Levels of natural gas flaring in the U.S. have risen due to increased oil and gas production resulting from the “Shale Revolution” and pipeline infrastructure constraints. The most recent and significant instance of a potential regulation change regarding natural gas flaring comes in the form of proposed modifications to Statewide Rule 32 in Texas.

Significant proposed changes to Rule 32 include:

• Requires operators to more thoroughly document the circumstances surrounding the need to flare gas.
• Provides the RRC accurate information to assess compliance with the flare/vent authority.
• Encourages transparency in understanding the broader needs and reasons for flaring and/or venting during oil and gas production operations in Texas.

Domestic Flaring: Where Do We Stand?

According to a report published in Q1 2020 by RRC Commissioner Ryan Sitton, based on data from 2018, the U.S. is lower than the global average in terms of the amount of natural gas flared per-barrel-of-oil produced. Still, it’s inevitable that producers in Texas and the U.S. will be held to a higher standard than other producing nations. Flaring regulations will continue to rise in number and severity irrespective of our place in the emissions hierarchy.

Strategies to Reduce Flaring

New methods and technologies to reduce flaring will be most readily accessible to operators who begin to thoroughly investigate their options now. The most beneficial steps moving forward will differ from company to company based on several factors, including the typical production volumes of company wells, reservoir characteristics, access to infrastructure and incentives and restrictions added by regulatory bodies. Considering all options now will ensure operators do not fall behind their peers.

Here are three strategies operators can leverage to ensure they stay in line with increasingly stringent flaring regulations and continue to operate efficiently.

1) Natural Gas-Powered Frac Fleets

Companies like EOG, Shell, Exxon and others have already begun utilizing natural gas-powered frac fleets with demonstrated success. EOG’s Chief Operating Officer Billy Helms was quoted as saying, “Our experience with this new technology has been very positive. The electric operations are saving up to $200,000 per well and reduce combustion emissions from completion operations about 35%-40%”.

Even if the costs associated with running natural gas-powered frac fleets are similar or slightly higher than traditional fleets, the coming incentives and restrictions limiting flaring may lead to their adoption being worthwhile for operators. However, most large service companies haven’t been quick to adopt the technology, largely due to the substantial capital investment required. This means the market for natural gas-powered frac fleets is small and may not be readily accessible to operators who put off planning for increased flaring regulations.

2) Natural Gas-Powered On-Site Equipment

Currently, a handful of companies offer equipment that allow for the utilization of stranded gas as fuel. Several firms offering power generation technology solutions listed in the U.S. Department of Energy’s 2019 Natural Gas Flaring and Venting Report include Capstone Turbines, Alphabet Energy and CompAp. The scale of the solution offered varies based on company and selected product. Capstone Turbines’ generators range in power from 30 kilowatts (kW) to 1000 kW and make use of 10 thousand cubic feet per day (Mcf/d) and 264 Mcf/d of gas, respectively. Capstone Turbines’ list of past clients includes both BP and Pioneer.

3) Small Scale LNG

One of the more speculative, but potentially industry-altering options being discussed, involves super cooling (or “liquefying”) the would-be flare gas and transporting it to other locations for sale. The recent approval of bulk transportation of LNG by rail from the Federal Railroad Administration sets the stage for significant expansion of small-scale LNG in multiple producing regions, including the Permian and Bakken shale plays. The combination of the recent LNG-by-rail approval and improvement of small-scale LNG technology may soon provide operators with the capability to monetize a large percentage of their natural gas that would otherwise be flared.

However, the transport of LNG by rail from the Bakken is only possible if rail capacity remains available. Ongoing litigation surrounding the Dakota Access Pipeline is cause for concern in this regard. Even though the initial order to shut down and empty the pipeline by August 5^th has been vacated, protests by environmentalists and litigation are unlikely to cease any time soon. If the pipeline is shut down in the future, much of the rail capacity from the Bakken would be used to transport crude oil. In this case, LNG transport-by-rail would likely be priced out and would no longer be a viable alternative.

Conclusion

While the aforementioned strategies won’t completely eliminate a company’s need to flare natural gas, they do, however, provide viable paths to compliance in an increasingly regulated and competitive domestic energy market. Irrespective of form, the development of a contingency plan to account for increasingly stringent flaring regulations will be critical for oil and gas producers moving forward. Those who are prepared will be far better equipped to weather the turbulent conditions in the current energy landscape.

 

Brody Sherman

Consultant - Opportune LLP

[ceo_energemsier + 1,818]

With growing worldwide momentum in decarbonization, the oil and gas industry is starting to acknowledge its impact on climate change, and is now increasingly committing to carbon neutrality goals and taking part in collaborative decarbonization initiatives. The majority of greenhouse gas (GHG) emissions associated with the oil and gas industry are Scope 3 in nature, i.e. emissions from the combustion of fossil fuels. Oil and gas majors are taking steps to eliminate their Scope 3 emissions, but this is a long-term and complex endeavor; tackling Scope 1 emissions is easier as they are within the direct control of oil and gas companies. 

The majority of Scope 1 emissions for the oil and gas industry comes from flaring of associated gas, a form of natural gas that is frequently produced as a byproduct in oil production. Due to a variety of safety, economic and convenience factors, it is common practice in the oil and gas industry to burn associated gas via flaring or vent it directly into the atmosphere. The flaring of associated gas represents a growing source of GHG emissions for the sector, particularly in regions like the U.S. that have experienced rapid development in recent decades. While flaring volumes and rates vary significantly depending on the reservoir and its characteristics, flaring emissions can make up a significant portion of upstream GHG emissions. In the U.S. Bakken oilfield, for example, venting, flaring and fugitive methane emissions contribute nearly 90 percent of the field’s upstream GHG emissions due to its moderate gas content and high flare rates.

Image source: Oil-Climate Index, adapted by Lux Research

Flare reduction goals have been at the forefront of decarbonization with growing commitments from both industry players and government entities to eliminate flaring altogether by 2030. In order to meet these flare reduction goals, particularly in regions without direct access to gas markets, operators must find a productive use for the associated gas.

There are several existing options for oil and gas operators to reduce flaring at new and existing facilities. The simplest and most optimal solution is to leverage gas pipeline infrastructure to capture, gather and transport associated gas to local gas markets, but this is not always a feasible or economical option for all assets. In remote offshore facilities, for example, the high capital expense of building new pipelines may not be justified for the volume of associated gas that could be sold to onshore markets. 

Another practical solution is to use associated gas to power operations on-site. One emerging idea from Crusoe Energy Systems involves the use of associated gas to power modular onsite data centers for digital operations like bitcoin mining. This is a unique approach to flare mitigation that enables operators to make a profit on produced gas in areas with limited takeaway capacity, but would not be feasible for most offshore assets due to its large footprint.

One way to overcome the lack of gas pipeline infrastructure is to simply leverage oil pipelines instead. Doing so requires the conversion of associated gas to a liquid form, which can be done through Fischer-Tropsch technology, in a process known as gas-to-liquids (GTL). Fischer-Tropsch technology is proven at the commercial scale in Malaysia and Qatar but it has only been deployed for large-scale operations. To date, there is no small-scale Fischer-Tropsch project that proved successful. The economic viability of GTL projects is dependent on the price differential of natural gas and crude oil; in periods of low natural gas price and high oil prices, GTL projects can be economically viable. The world witnessed such a situation in the early 2010s when oil prices were over $100/barrel. At that time, multiple companies offering small-scale Fischer-Tropsch solutions popped up and targeted associated gas streams; however, oil prices crashed in 2015 and destroyed the economic prospects of GTL projects using associated gas. The ongoing pandemic suggests that it is unlikely oil prices will reach their heyday of the past decade. 

Despite the challenging economic situation caused by the crash in oil prices, small-scale Fisher-Trospch technology developers survived and have turned towards greener pastures – renewable fuels. Companies such as Fulcrum Bioenergy and Velocys are currently developing GTL projects converting solid municipal waste into renewable hydrocarbon fuels in the U.S. and U.K., respectively, leveraging the financial credits available for low-carbon fuels in those countries. Over the past few years, Fischer-Tropsch technology has found yet another use-case – CO2 utilization. In this area, CO2 and hydrogen (presumably obtained from water electrolysis) are converted into liquid hydrocarbon fuels via a series of processes including Fischer-Tropsch. The application of Fischer-Tropsch in CO2 utilization has so far only been tested at the demonstration scale, but the first commercial-scale project will be built in 2026 by Norsk e-Fuel in Norway. 

Producing hydrocarbon fuels from CO2 is counterintuitive as the CO2 itself originally came from fossil fuels. Norsk e-Fuel is essentially building a plant that is based on reversing the combustion process. Despite its challenging economics, the process is necessary for the energy transition. Unlike the road transportation sector which can be decarbonized with electricity, the aviation and marine sectors will still rely on hydrocarbon fuels due to its unparalleled energy density compared to batteries. If we cannot change the type of fuel we use, then we need to change its source – in this case, swapping crude oil with CO2 and green hydrogen. 

Fischer-Tropsch technology offers a unique opportunity for oil and gas companies looking to succeed in the transition to a low-carbon economy. Synthetic fuels made from CO2 are indispensable for the industry to neutralize its Scope 3 emissions; however, the market for CO2-based fuels is still immature. But Fischer-Tropsch technology can also be used in the more pressing case of eliminating the industry’s Scope 1 emissions through abatement of flaring. Admittedly, producing synthetic fuels from associated gas merely offsets Scope 1 emissions to Scope 3 emissions, but deploying Fischer-Tropsch technology today will provide the oil and gas industry with valuable expertise and know-how in anticipation of the technology’s much-broader deployment for CO2-based fuels. This means oil and gas companies should prioritize Fischer-Tropsch technology today in their quest for carbon neutrality.

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New Mexico enacts tougher emissions rules on oil and gas, calls for 98 percent gas capture

 

https://www.currentargus.com/story/news/local/2021/03/25/new-mexico-enacts-tougher-emissions-rules-oil-and-gas/6971937002/

[Cadillac Oilfield Services 0]

Cadillac Oilfield Services supports this move. Considering the winter storm that proved Texas is lacking in the electric generation, the flare gas can be captured and turned into electricity. The operators and midstream companies need to get rid of the excess gas and for decades have decided to burn it into the atmosphere. One facility burns an average of 2 MMCF of gas per hour. That could be turned into 2 MW of electricity per hour. That’s where we come in. 
 

To learn more about Cadillac Oilfield Services, give us a call.

James Matlock 

936-244-6203