Oil bust helps slash Permian gas emissions.
Pollution from burning excess natural gas at Permian Basin wells is expected to reach a record low this year as lower oil prices have halted most production in the West Texas shale play.
The carbon dioxide intensity of oil production in the Permian is expected to fall to 8.6 pounds of emissions per barrel by November, according to Norwegian energy research firm Rystad Energy.
Emissions in the Permian reached a high of 26.5 pounds of carbon dioxide per barrel of oil produced in June 2019 due to an industry practice known as flaring in which operators burn off excess natural gas at wells.
Colin Leyden with the Austin office of the Environmental Defense Fund, said emissions decreased from many industrial sources during the coronavirus pandemic. And although flaring is possibly decreasing as fewer new wells are drilled and production is shut in, Leyden warned that it could ramp back up if oil prices rebound.
“The underlying dynamics driving flaring in the oil field haven’t changed,” he said. “So it is also reasonable to expect that flaring will snap back if and when commodity prices recover and drilling and production resume.”
Farmers, ranchers would get tax credits
A bipartisan group of senators is seeking to extend tax credits for carbon capture beyond industrial sources such as power plants and cement factories to farmers, ranchers and forest landowners.
The bill, introduced Thursday, would create a certification program at the Department of Agriculture for the carbon dioxide naturally pulled from the atmosphere by crops and trees.
“This legislation is an important step in encouraging farmer and forest landowner participation in carbon markets,” said Jeff Kupfer, president of Conserv-America, a nonprofit.
The bipartisan action comes as Republicans have grown increasingly proactive on the issue of climate change after years of questioning the validity of science showing that the continued burning of greenhouse gases was damaging the planet.
Shale producers restart production
As OPEC+ producers head toward a consensus on extending output curbs, oil’s rally is prompting some U.S. producers to open their taps once again.
Futures last week settled at their highest since March 6, the day the Saudi-Russian alliance broke down just as a global pandemic dimmed the outlook for demand. Oil’s rebound over the past month brings back concerns that Russia could again hesitate to extend output cuts, with rival shale producers signaling they are ready to reopen wells that were shut during the market’s collapse.
Further evidence of that threat emerged last week, when U.S. driller Parsley Energy Inc. said it’s turning oil wells back on just weeks after shutting them off, illustrating the shale industry’s agility in responding to rising crude prices.
“If everybody magically decides to turn the taps back on and lets the oil back to the surface, now you’ve got 1.5 million to 2 million barrels a day that needs to find a home,” said Stewart Glickman, an energy analyst at CFRA Research.
Refiner coverting to cleaner fuel
In a sign of changing times, a U.S. oil refining company is converting one of its plants into a producer of clean fuel.
HollyFrontier Corp.’s Cheyenne refinery will stop using crude oil and be repurposed to pump out renewable diesel, which is typically made from soybean oil, recycled cooking oil and animal fats. That’s after processing margins plummeted on the collapse in fuel demand due to COVID-19-related lockdowns. Besides, the old facility’s maintenance costs were “uncompetitive,” the company said, and the government is promoting cleaner fuel production.
It’s the latest example of how the traditional fossil fuel industry is changing amid rising calls for the protection of the environment and increased demand for green sources of energy. Cheaper renewable energy projects have already led to decreasing coal output across the U.S., and now — in the wake of oil’s historic crash — some fuel producers are grappling with diminished returns from turning crude into fuel.
Emissions in the Permian reached a high of 26.5 pounds of carbon dioxide per barrel of oil produced in June 2019 due to an industry practice known as flaring.