There are two primary drivers for consuming more natural gas close to where it emerges from production wells. One is to eliminate routine gas flaring, which is wasteful and environmentally detrimental, and the other — especially true in takeaway-constrained plays like the Permian — is to add value to gas that otherwise would be sold downstream at steeply discounted prices. In today’s RBN blog, we discuss some innovative approaches to maximizing gas value by consuming it “in-basin” — and the potential for a lot more gas to be used in West Texas and southeastern New Mexico.
We first blogged about gas flaring a dozen years ago, in the RBN blogosphere’s Stone Age, noting that one-third — yes, one-third! — of the associated gas then being produced in the booming Bakken was being flared. The main culprit was a dire lack of gas gathering systems, gas processing plants and long-haul gas pipelines, whose development was far outpaced by the increases in crude oil and associated gas production. Gas flaring wasn’t a new thing, of course. In fact, crude-oil-focused E&Ps have been flaring gas in the U.S. since the first oil was produced in western Pennsylvania more than 160 years ago, both for safety reasons and — then as now — for lack of infrastructure.
As we’ve discussed often (see It Don’t Come Easy and Cover Me), there’s a big push in the U.S. — and globally — to reduce greenhouse gas (GHG) emissions, with a special focus on both carbon dioxide (because of the gargantuan volumes involved) and methane (because of its heat-trapping potency). And that’s spurred broad efforts to eliminate all “routine” (non-emergency/non-safety-related) flaring of natural gas by 2030 (if not sooner). The U.S. and more than 30 other countries have agreed to work toward that target, as have more than 50 large oil and gas companies.
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