Why Banning Flaring is a Bad Idea
A recent Forbes op-ed by Baker Institute contributor Jim Krane calls for Congress to propose a potentially devastating compromise in an attempt to persuade the Obama administration to support lifting the 40-year-old ban on crude exports:
“Congress should allow U.S. producers to export crude oil – as long as they capture and market the associated natural gas they produce, rather than waste it. In other words: Let’s replace the ban on crude exports with a ban on natural gas flaring.”
Krane’s misguided lift-one-ban-and-impose-another exchange is premised on the all-too-common misconception that flaring is completely unnecessary and even deliberately wasteful. Krane states in the op-ed:
“… flaring is flat-out waste – about $1 billion a year in U.S. natural gas that could have generated electricity, heated homes, or kept chili simmering on the nation’s stove-tops.”
Of course, the fundamental problem with this notion is that flaring is a necessary component of oil and natural gas production. Simply put, it an outright ban on flaring would create massive safety concerns for oil and natural gas workers, as well as severely impact U.S. oil and natural gas development.
Here are three examples of why banning flaring is a bad idea.
Example 1: Safety During Processing, Drilling and Maintenance
Even in cases in which natural gas is being captured for commercial purposes or re-injected, small amounts still need to be flared or vented for safety reasons.
For example, natural gas processing plants rely on safety flares in emergency situations in which piping becomes over-pressured. If flaring were banned, plants would be at much higher risks for fires and explosions. Flares are also essential in oil and natural gas fields during maintenance and equipment repairs, including pipeline pigging events or cleaning wells. Again, the risk of fires or explosions would be great if not for these safety precautions.
Flaring is also a necessary safety requirement during drilling operations. Having the ability to divert any gas bubble that may move up the borehole during the drilling process is essential. This flare is typically needed for a short time during regular drilling activities, but may be needed for an extended period on multi-pad operations in which as many as 20 wells are being drilled.
Example 2: Well Testing Before Production
Before a well goes into production – and before it can be determined that a well can produce at levels high enough to justify enormously costly infrastructure (such as pipelines) – temporary flares are needed during well production testing.
Once the flow of liquids and gas from a well’s pressures are stabilized and a well is determined to be commercially productive, permanent infrastructure can be installed to capture natural gas. However, this process can take days or weeks, making temporary flaring essential. Otherwise, many oil wells will simply never get drilled, because the companies would have to spend millions (or even billions) of dollars on infrastructure for each of those wells, many of which may not even be productive enough to justify the cost.
And, let’s not forget that many of the same groups (into which we would not loop Mr. Krane, to be sure) that have criticized flaring are also campaigning against new pipelines.
Example 3: Managing Gas During Compression and Processing
Some natural gas simply cannot be efficiently captured and processed, particularly at compressor stations. Dehydrator units are used at compressor stations to remove water from gas before it enters the pipeline system, and flares are used to burn off this gas, which is not practically recoverable.
Minimizing flaring is the pragmatic alternative
For the fundamental reasons listed above, a complete ban on flaring is simply unfeasible. Minimizing flaring is the more pragmatic approach, and steps continue to be taken throughout the United States, including in those areas that have received the most press attention.
At the height of the Bakken oil boom, about one-third of North Dakota’s natural gas was flared. But that percentage has been steadily declining since 2013, and was down to 24 percent in 2014. Roughly 18 percent is flared now, and a new restriction will require 85 percent of natural gas to be captured by the fourth quarter of 2016 and 95 percent to be captured by 2020.
The primary driving force behind North Dakota’s reduction in flaring is that companies have no interest in wasting natural gas. But that also requires infrastructure. North Dakota is making progress towards addressing the need for new pipeline and processing facilities, as nearly $13 billion has been spent on natural gas transportation and storing infrastructure since 2006, including gathering lines, processing plants and export pipelines to capture, transfer and store natural gas. The same can be said for the Eagle Ford Shale in Texas.
Building pipelines is a time-intensive process, however, as right-of-way negotiations with surface land owners can take months, and in some cases years, to obtain.
Banning flaring may sound like an “easy” solution, but the easy option is rarely the one that best reflects engineering realities, not to mention basic safety protocols. The fact is, flaring is an absolutely necessary component of oil and natural gas production, even as industry and regulators continue to explore ways to reduce its use. A ban on all flaring would ultimately prove crippling to an industry that has provided one of the few economic bright spots in recent years.
Continued efforts to minimize flaring represent the more pragmatic approach. While it is useful to explore alternatives to a policy that makes the United States as the only major energy producer to ban crude oil exports, pairing that pursuit with a policy that creates far more problems than it would solve is certainly not the answer.