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    Rystad sees reduced US associated gas flaring

Summary

Minding their ESG profile, public-traded producers are leading the reduction.

by: Dale Lunan

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Rystad sees reduced US associated gas flaring

Norwegian consultancy Rystad Energy said April 9 it is seeing reduced flaring of associated gas from US shale basins sequentially in January from December 2020.

“We have seen structural declines in gas flaring since early the fourth quarter of 2020, despite a significant recovery in frac activity,” it said in a research note. “This trend emphasises the industry’s commitment to gradually eliminate routine flaring and develop tight oil resources in an environmentally responsible manner.”

In January, it said, Bakken producers flared about 5.7% of their associated gas production, while flaring intensity in the Permian fell to just 1%, in line with intensities estimated for the Eagle Ford.

Flaring in the Permian is likely to increase in February, Rystad noted, referring to satellite data that showed a clear spike in flaring emissions during the mid-month weather event in the southern US, especially in Texas. However, the same data showed a decline the following month, and flaring intensity for March will likely be similar to January levels.

Through the first quarter – and despite the temporary February increase – Rystad estimates that total Permian flaring, from both the upstream and the midstream, averaged about 270mn ft3/day, down from 300mn ft3/day in Q4 2020 and the lowest since 2017.

All Permian sub-basins on the Texas side are showing sequential reductions in flaring, although flaring in the Delaware sub-basin in New Mexico increased modestly in Q1 2021, to 45mn ft3/day from 43mn ft3/day, reflecting “robust” activity and production levels.

And publicly-traded producers, with a keen eye to environmental, social and governance (ESG) metrics, appear to be leading the way in reducing methane flaring. Private operators, perhaps without as much attention to ESG, accounted for about 55% of Permian flaring in the second half of 2020, despite accounting for just 25% of gross gas production in the basin over that period.

“As public producers have gradually switched to more disciplined capital programs and introduced structural changes to their gas flaring policies, they have reduced their contribution to basin-wide gas flaring from 70% in early 2018 to 45% in the second part of 2020, while their share of basin-wide gross gas production was relatively unchanged,” Rystad said.