William Baker
Associate Editor
Loyola University Chicago School of Law, JD 2022
The oil and gas industry recently announced plans to end gas flaring by 2030. Flaring involves the controlled release of excess gas from natural gas wells. While this practice is commonplace in the oil and gas industry, it nevertheless harms the environment by releasing massive quantities of methane into the atmosphere. While drilling companies would prefer to capture every molecule of gas ever produced by a well, flaring is often utilized to maintain stable pressure within the well and to prevent the formation of subterranean cracks. As the repercussions of climate change become increasingly time-sensitive, flaring has become a contentious issue in dire need of ecologically based solutions.
The flaring process
Oil wells produce varying quantities of casinghead gas, which is a raw gas mixture of methane and other volatile hydrocarbons. Producers will often dispose of these mixtures because their transport costs exceed the product’s market value. Flaring provides an easy, fast way to dispose of the undesirable gas, as it is significantly cheaper to burn methane into the atmosphere than the alternative of costly chemical processing. Methane heavily contributes to ozone layer erosion and is 86 times more powerful as a pollutant in comparison to carbon dioxide. Likewise, benzene is another compound emitted through flaring with highly toxic properties. Benzene emissions have been linked to increased premature births by women who live near flaring sites. Thus, it is abundantly clear that flaring poses deleterious consequences to humankind and the environment alike. However, industry leaders and environmental groups have diverging interests that must be reconciled in order to eventuate a sustainable resolution to the issue.
Environmental impact
Flaring as a whole accounts for approximately 1% of global carbon emissions in any given year. In Texas, the state’s level of flaring is on par with annual residential consumption levels. In fact, Texas flared over $750 million worth of natural gas in 2018 alone. And while the effects on air pollution and the ozone layer are substantial, the negative consequences don’t stop here. Flaring also contributes to acid rain because high quantities of nitrogen are released into the air. Flaring affects human health as well, as increased nitrogen emissions can harm the eyes, nasal passages, and airway. Some individuals living near flaring sites have complained of waking up with scratchy throats and burning eyes, while others have become reliant on inhalers and breathing devices to combat the effects of breathing toxic, chemical-laden air.
The Environmental Defense Fund (EDF) recently conducted a survey of flaring sites throughout the Permian Basin in Texas. The results revealed that operators across the board have failed to develop sustainable, sufficient solutions for emissions control. What’s more is that the global downturn in oil demand, as catalyzed by pandemic-induced lockdowns around the world, failed to decrease flaring output by any notable margin. Earthworks, an environmental group, also conducted a study via helicopter and concluded that 75% of flaring sites lacked the proper permits under Texas law.
Signals from industry leaders
Regulatory bodies are beginning to take steps toward curbing flaring. The Texas Railroad Commission, the state’s regulatory agency for oil and gas production, has indicated that it may impose more stringent requirements on drilling companies seeking to obtain flaring permits. This is significant because Texas leads the nation in natural gas flaring. Meanwhile in New Mexico, the state’s Oil Conservation Division (OCD) has proposed a regulation that would cease flaring at drilling sites throughout the state, but it remains to be seen whether the regulation will be duly enacted.
Other associations and industry groups have made similar remarks in recent weeks. The Texas Pipeline Association, for example, recently announced that improvements in pipeline infrastructure may lead to flaring reductions. Likewise, the Texas Oil and Gas Association has claimed that Texas is making tremendous strides toward a cleaner energy future, but it is unclear what strides, if any, have been made aside from mere assertions that flaring will end by 2030. However, a recently proposed bill calls for imposing a 7.5% tax on the market value of gas being flared. Similar bills have been introduced, with some calling for a lofty 25% tax. Regardless, both bills seek to deter flaring as their primary objective, with the tax revenue serving as a bonus that can be allocated towards roads, schools, and a rainy-day fund for the state. The bill also seeks to incentivize companies that flare to instead invest in gas-capturing infrastructure that ultimately saves money in comparison to inaction. If flaring is set to end by 2030, then the aforementioned bills as well as additional legislative efforts will be crucial in order to achieve this lofty goal.