Oil & gas firms failed to cut back on flaring in 2022 (Report)

04 March, 2023
Source: Oil Price

Despite bold promises from several oil and gas firms, many failed to reduce their natural gas flaring in 2022. With increasing pressure from environmental organizations and governments to reduce carbon emissions, will 2023 be any better? The International Energy Agency (IEA) has been clear in its warnings about how gas flaring will affect climate change if not curbed quickly, as well as the negative impact of methane from flared gas on people’s health. While some companies, such as Exxon, are leading the way in reducing their gas flaring from oil operations, stricter regulations are needed if the U.S. hopes to meet its climate targets.

In 2021, as oil and gas demand rebounded to pre-pandemic levels, gas flaring increased by around 1 percent, with approximately 143 bcm of gas flared worldwide. This is roughly equivalent to the total quantity of gas imported into Germany, France and the Netherlands put together. This also equates to around 270 Mt of CO2and almost 8 Mt of methane being released into the atmosphere. And the main culprits, having released half of all flared gas globally, were Russia, Iraq, Iran, the United States and Algeria. In the Net Zero Emissions by 2050 Scenario, all non-emergency gas flaring will have stopped by 2030, reducing flaring by around 90 percent.
In addition to concerns around climate change, experts have raised more health concerns around flaring in recent years. A study released in 2022 revealed that more methane is being released into the atmosphere through gas flaring than originally thought. Research led by the University of Michigan revealed that the current process of gas flaring is less effective than estimated, meaning that up to five times more methane is being released into the air.

The energy industry and regulators assume that flares are lit constantly, meaning they burn off 98 percent of the methane. However, recent studies show that many operations have unlit flares between 3 percent and 5 percent of the time, and when lit, many are operating at low efficiency. This brings the average effective flaring efficiency rate down to around 91 percent. Jon Goldstein, EDF’s senior director of regulatory and legislative affairs, stated: “This study adds to the growing body of research that tells us that the oil and gas industry has a flaring problem.” Goldstein added, “The Environmental Protection Agency and Bureau of Land Management should implement solutions that can help to end the practice of routine flaring.”

In the Permian Basin, in late 2022, Rystad Energy predicted that operators were set to increase the amount of gas flaring due to a lack of capacity to ship it elsewhere. Operations in the Permian basin have been reinvigorated over the last year thanks to President Biden’s push to deliver more national crude, in the wake of the Russian invasion of Ukraine and subsequent sanctions on Russian energy. Pipelines have quickly become saturated, and several pipeline expansions have not yet been completed. This left producers facing the ultimatum of increasing the quantity of gas flared from operations or reducing crude output – needed to ensure America’s energy security. Despite fears of increased flaring, operators have so far managed to scale back flaring plans, but with national production set to rise further in 2023, this is a problem producers will continue to battle with.

Despite big promises from oil and gas majors, many appear to be repeating mistakes in their gas-flaring practices and failing to act in line with climate targets. Although there have been some positive steps in the effort to curb gas flaring, from companies such as Exxon, the failure to accurately report emissions has made environmentalists naturally wary of their dedication to their climate pledges. This means the U.S. is unlikely to meet the IEA’s 2030 target to end all non-emergency flaring unless stricter regulations come into place for oil and gas companies.

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