Despite the February freeze limiting oil and gas operations in west Texas and New Mexico, hydraulic fracturing or fracking to produce oil and natural gas recovered to pre-pandemic levels by March.
Conversely, associated wellhead gas flaring, the burning of gas when storage and pipeline capacity is unavailable, in major oil and gas regions in the United States, the Permian, Bakken, Eagle Ford, Powder River, and Denver-Julesburg, saw another sequential decline in January.
Rystad Energy, an energy research and business intelligence company, reported 967 fracking operations were started in March, a 12-month high. They later revised that number to 1,064 wells, about 6.5 percent above January 2021 activity. For 2021’s first quarter, the number of completed wells in the Permian Basin exceeded the output required to keep oil and gas supplies and stocks from declining.
Rystad predicted rising oil production in the second quarter, but a slowdown later this year. The fracking increases conflict with Rystad’s September 2020 estimate that U.S. fracking services would not return to pre-pandemic levels until 2025.
Flaring Falls Even As Production Increases
Rystad reported a decline in gas flaring since the early fourth quarter of 2020 despite a significant recovery in fracking activity. The reason for this decline, according to Rystad, is that the industry is committed to gradually eliminating routine flaring of natural gas for environmental reasons.
Rystad found the amount methane released or flared per unit of oil and gas produced, methane emissions intensity, has declined significantly. As of January 2021, only 5.7 percent of gas was flared in the Bakken, reports Rystand. Permian flaring intensity fell to 1 percent – the same intensity as in the Eagle Ford region, which historically has flared much lower percentages of gas than the Permian due to better infrastructure being in place.
Rystad estimates flaring in the Permian for the first quarter of 2021 would be at its lowest level since 2017.
Pipeline Infrastructure Critical
The oil and gas industry has no interest in losing revenues by unnecessarily venting or flaring a viable commercial product when it is unnecessary says, Jason Modglin, president of the Texas Alliance of Energy Producers.
“The Texas Alliance has worked with the Texas Methane and Flaring Coalition to continue making significant progress in reducing the amount of natural gas flared from operations,” said Modglin. “A new report from the Texas Independent Producers and Royalty Owners Association found methane emissions intensity in the Permian Basin had declined more than 70 percent the past eight years even as oil production more than tripled over the same period.
“Industry shares the goal of reducing flaring and venting, and has taken steps absent of new regulation to reduce both,” said Modglin. “Securing takeaway capacity for waste gas is the best way to conserve it for a beneficial use, and these improvements have happened because of market investment and innovation, not regulation.”
Fearing regulation, oil and gas operators began to refocus production efforts in regions with good infrastructure, thus reducing the need for flaring, says Bette Grande, CEO of the Rough Rider Policy Center.
“When oil prices dropped in early 2020 because of actions taken by OPEC and because of the COVID pandemic, North Dakota producers, fearing a Biden moratorium on drilling on federal lands, began focusing on drilling new wells on lands where they already had federal permits,” Grande said. “Those parcels are generally well equipped with pipelines and related infrastructure and, as a result, have relatively little flaring.
“There was an incentive to shut in wells that had limited access to infrastructure, such as storage tanks and pipelines, which tended to flare more gas,” said Grande. “As production ramps back up, wells with limited infrastructure are the last to come back online.”
Increased Pipeline Capacity Needed
If the Biden administration blocks oil and gas infrastructure construction, flaring will increase in the Bakken as prices rise and wells lacking sufficient infrastructure come back online, Grande says.
“In North Dakota, gas production is projected to outstrip pipeline and processing capacity by 2022, prompting increased flaring,” said Grande. “Federal and state regulations forcing oil companies to throttle back wells that flare will make operations more difficult.
“North Dakota producers currently capture 92 percent of the gas, and, of the remaining 8 percent, 2 percent is flared because wells lack access to gas gathering pipelines and 6 percent is due inadequate existing infrastructure, because existing pipelines already at capacity,” Grande said. “When drilling activity moves beyond the core producing areas, these infrastructure issues will increase, and flaring will go back up.”
Fracking ‘Created … Abundant, Affordable Energy’
Modglin warned the Biden Administration’s goals to reduce fossil fuel production and use clashes with a growing worldwide demand for oil and gas products, and cutting domestic oil and gas production will harm the economy and the environment.
“There is zero evidence to suggest fossil fuel consumption domestically or globally is falling,” said Modglin. “Absent U.S. production, we will be forced to import more foreign oil from regions with lower environmental and labor standards, making our country more dependent on foreign sources of energy and harming the environment in the process.
“Fracking, pioneered and utilized efficiently in the U.S., has created an abundant, affordable energy source to attract manufacturing and industry back to our shores,” Modglin said. “Returning to costly, unreliable energy harms U.S. jobs and the economy and produces no environmental improvement.”
Duggan Flanakin (dflanakin@gmail.com) writes from Austin, Texas.
