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Energy Questions Answered

To Flare or Not to Flare?

There’s been a lot of talk in the energy world recently about a BLM rule finalized in the waning days of the Obama administration that would limit methane emissions on public lands. Among other things, the rule requires the flaring of methane on federal and Indian lands to be cut in half over time. The intention behind the rule is to capture more of the natural gas produced at oil and gas wells so that it can be used on- or off-site. Natural gas’s primary component is methane, which in the short-term is a much more potent greenhouse gas than carbon dioxide. When flared (a.k.a. burned) methane emissions become carbon dioxide, which is better (but still not good) for the climate*.

With the new administration and Congress signaling their desire to repeal this rule, we felt a little background is warranted. First, there are a lot of numbers being thrown around as to the exact amounts and value of methane that would no longer be vented or flared. Using data from the U.S. Energy Information Administration, about 40 billion cubic feet seems like a reasonable estimate of methane vented or flared on federal and Indian land. Cutting this in half would prevent over 1 million metric tons of CO2 from entering the atmosphere, the equivalent of emissions from a 225,000 passenger cars. On the financial side, this amount of methane would be valued at over $80 million by natural gas distribution utilities and produce about $10 million of government royalties.

The numbers for Colorado are a bit harder to tease out, but a relatively high amount of the state’s natural gas sales comes from federal and Indian lands (29% in 2015). EIA’s venting and flaring figures for Colorado are incomplete, however, and these figures can vary wildly. Across the U.S., for instance, about 1% of total gas withdrawals are vented or flared, versus about 18% in North Dakota. Colorado is unique in that we have a rule that limits emissions to 5%, so the effect of the BLM rule is doubly hard to quantify.

In any case, capturing natural gas requires additional investments in technology on behalf of industry. For a state like North Dakota, whose oil boom occurred in the absence of sufficient pipeline infrastructure to move gas from place to place, that infrastructure would also need to be built out. It’s not cheap, it takes time, and more expensive oil and gas development could affect industry growth and prices. How’s that for giving you the facts and letting you choose a side?

*Note that gas might be flared because a storage/distribution mechanism is unavailable, to test a recently drilled and fracked well, to release pressure as a safety measure, and to manage gas vapors at compressor stations (Ohio EPA).

 

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6 Responses so far.

  1. Irene says:

    I understand that the costs of building the infrastructure might be expensive, but it seems that with $80 million in uncaptured methane, the return on investment would be good, or am I missing something?

    • Cary Weiner says:

      I think that’s the essence of the tradeoff – the increased need for infrastructure investment to capture the resource vs. the value of the resource itself. The Government Accountability Office estimated costs to comply with the methane capture rule at $110-$275 million per year over 10 years. BUT they also estimated benefits to exceed that when including the social value of methane capture. However, low natural gas prices have put the industry into a more cautious posture when it comes to capital outlays, and they do not have to account for social benefits.

  2. Irene says:

    PS: I love the new logo!

  3. Tim says:

    Given that one of the largest byproducts of natural gas harvesting is atmospheric methane release, how do we quantify impacts on human health? Does all the methane that doesn’t get flared rise into the stratosphere and simply contribute to global warming, or are there impacts on the ground to the general population?

    • Cary Weiner says:

      Inquiring minds want to know! There have been a number of studies looking at this question, but results aren’t definitive. The Colorado Department of Public Health and Environment recently analyzed over 10,000 air measurements taken over 7 years in Colorado and did not find evidence that emissions from oil and gas exceeded federal limits for human health. That said, the study was deemed preliminary, and a CSU-led study on impacts along the Front Range is due out in 2018.

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