Report looks at natural gas flaring boom
November 20, 2014
Surging oil production in shale hotspots, like the Bakken in Montana and North Dakota, and Eagle Ford in Texas, has increased waste of natural gas through flaring, venting, and leaking, according to a new report released today by Northern Plains Resource Council in conjunction with the Western Organization of Resource Councils (WORC), a network of conservationists and family farmers and ranchers.
The report, The Flaring Boom, describes the causes and effects of flaring, venting, and leaking of natural gas by examining efforts to curtail these wasteful practices in Alaska, Colorado, Montana, North Dakota, Texas, and Wyoming.
In regard to Montana specifically, The Flaring Boom highlights the glaring problems associated with the state policy. The lack of transparency that exists at the state level on flaring data prevents Montanans from knowing how big the problem is. Current rules also allow the Montana Board of Oil and Gas Conservation an excessive amount of flexibility to grant flaring exemptions beyond the state's 100,000-cubic-feet-per-day limit.
Natural gas is a finite resource and Montana should be taking every step to capture the flared gas associated with oil development. At the 2015 Legislature, Northern Plains will be working with lawmakers to require gas capture plans at the permitting stage of development, and reduce the allowed volume of flared gas in order to establish balanced rules to calculate accurate royalties to landowners and state and local taxes paid on mineral rights.
"Flaring lowers quality of life in oil-producing communities through increased air pollution, deprives royalty payments to those owning the rights to the natural gas, and contributes to climate change," said Donald Nelson, a rancher from Keene, N.D., and Chair of WORC's Oil and Gas Campaign Team.
Nelson has 30 to 40 flares on his ranch. "It's easy to count them at night," he said.
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The report identifies three factors spurring the waste.
The price of oil. Oil prices are not particularly high, but natural gas prices are much lower. Incentive is too low for companies to spend capital to capture and process gas.
Companies are anxious to recoup investments before their leases end. Most oil and gas leases run three to five years. If a company fails to drill and produce within the lease period, it must shell out additional up-front capital. For example, many leases in the Bakken that went for $100 or less five years ago are worth 20 times that, or more, today.
Regulation and enforcement are weak in five of the states studied and in federal agencies. Montana, for example, allows flaring gas from all wells for the first 60 days of operation, and a 100,000 cubic feet limit that is easily exempted.
The report recommends that oil-producing states adopt Alaska's flaring regulations. The state has prohibited flaring since 1971 except for emergencies and system tests. In those instances, Alaska requires a written report and statement of compliance actions for any gas "release, burning, or escape into the air."
For states not yet ready to follow Alaska's example, the report suggests those states:
Adopt hard limits on flaring and enforceable deadlines for compliance, and make continued permitting of oil and gas wells contingent on compliance.
Require companies to pay full royalties to all mineral owners, public or private, on all oil and gas wasted through flaring and venting.
Maintain accurate records of flaring and venting and issue meaningful fines to violators.
Review and reconsider air quality laws and rules, including placement of monitors, to develop adequate oversight of temporary oil and gas-related temporary air pollution sources, and to fines to violators.
According to The Flaring Boom, natural gas flared in 2011 across the United States could have provided nearly 2.9 million American homes with all of the natural gas needed that year. North Dakota lost nearly 32 percent of gas produced, Montana flared or vented over 7 percent, and Alaska, New Mexico, Texas, and Wyoming lost 2 percent or less.
The report outlines the health implications of flaring. More than 250 toxins, including benzene, naphthalene, styrene, toluene, and xylene, have been identified as being produced and released during flaring.
Exposure to benzene is a well-known cause of leukemia. Naphthalene can damage the membrane of red blood cells. Styrene is a skin and eye irritant. Toluene can affect the nervous system. Xylene can affect the central nervous system and stunt human development.
Other known effects of exposure to these toxins include renal failure, cardiovascular failure, emphysema, bronchitis, endocrine and immune dysfunction, reproductive disorders, and autoimmune diseases.
"Policy should not be set to benefit one industry, but to benefit the long term interests of the state and its residents," Nelson said. "We need to make sure we can keep farmers and ranchers on the land to raise our food. That's what we're going to be about in the long run."
–Northern Plains Resource Council