Permian Basin flaring expected to rise from lowest point since 2012
Natural gas flaring in the Permian Basin fell last quarter to the lowest level in nearly a decade because of plunging production during the pandemic, but it is expected to rise again after the recent increase in crude prices.
An estimated 1.6 percent of natural gas production in the West Texas shale play was flared during the fourth quarter of 2020, the lowest rate since 2012, an analysis by Norwegian energy research company Rystad shows
“One needs to go back to early 2012 to see flaring levels that low,” said Alexandre Ramos Peon, vice president of Rystad’s shale research team. “As reporting standards nine years ago were not as reliable, flaring could have been a bit higher than what we see in the data, so it is safe to assert that wellhead flaring has never been this low in the Permian in the shale era.”
The oil industry has long contended with the problem of flaring, the burning of excess natural gas produced as a byproduct of crude production. Flaring releases greenhouse gases such as methane, which scientists say is 84 times more potent than carbon dioxide and contributes to climate change.
Rystad estimates that 390 million cubic feet of natural gas per day was flared in the fourth quarter. Flaring was down in almost all shale plays, except for the Delaware North basin in New Mexico. The Delaware East basin is the only region where flaring intensity remains above 2.5 percent, Rystad said.
Rystad expects a small increase in emission intensity during the first quarter of the year as oil production ramps up after crude prices crossed the $50-a-barrel threshold.
Production has already shown signs of returning as the number of drilling rigs operating in the U.S. continued to grow this week. The rig count, a leading indicator of the nation’s oil and gas produc
“As reporting standards nine years ago were not as reliable, flaring could have been a bit higher than what we see in the data.”
Alexandre Ramos Peon, vice president of the shale research team at Rystad
tion, jumped by 13 to 373, according to oil field services company Baker Hughes and Enverus, which provide the weekly tally.
The number fell as low as 244 in August before climbing in recent months as oil prices stabilized. With the price of U.S. crude, West Texas Intermediate, settling above $50 a barrel last week, more rigs are expected to come online. The industry, however, still has fewer than half the 796 rigs operating a year ago, just before the pandemic wiped out crude demand and sent prices tumbling.
WTI settled at $52.36 on Friday in New York, down more than a dollar on the day as a stronger dollar and weak U.S. economic data stoked concerns over an economic rebound. The 2.3 percent drop was the largest drop in three weeks.
The decline followed news that U.S. consumer sentiment cooled more than forecast in January and other economic data such as sluggish retail sales and producer prices reveal the obstacles still facing the country as it emerges from the pandemic.