Zero routine flaring by 2025 and the Texas policy needed to get there

By Colin Leyden

Routine flaring at oil and gas production sites in Texas has been a chronic issue for years, as the rampant process burns off viable fuel product while emitting carbon dioxide, methane and toxic pollutant emissions into the atmosphere. Yet momentum for eliminating the practice is building among investors, operators and landowners, pushing the state’s regulatory body, the Texas Railroad Commission, to consider new flaring policy.
Several major operators, such as Chevron and Pioneer, have already significantly reduced flaring rates to less than 1%. In a recent blog touting Exxon Mobil’s greatly improved Permian flaring performance, the operator stated their experience, “demonstrates that zero routine flaring is within everyone’s reach.”
But as J.P. Morgan Asset Management stated in a recent flaring report , “voluntary operator actions to reduce routine flaring, while necessary, have proven insufficient to deliver on the industry’s full potential,” while reiterating “zero routine flaring by 2025 represents an important and achievable goal.” In order to achieve this goal, policymakers must step in to ensure widespread adoption and outline actionable goals.

Flaring policy blueprint
Any oil and gas company serving the needs of public or private investors understands operational goals are imperative to delivering financial returns and performance updates. Without a concrete target, it can be difficult to stay on track. Flaring performance is no different — flaring goals must be established if the industry wants to eliminate this problem. In addition to clear-cut goals, policymakers should consider several other recommendations for new flaring policy.
Targets: The commission should set interim targets leading up to 2025 to measure success and progress. As other states have done, the targets should include gas capture targets that each company must meet. For example, in 2014 North Dakota set yearly gas capture targets for individual companies that get stricter over time, and New Mexico is also looking at the concept as a part of its comprehensive methane and flaring rules. Concrete targets and goals create accountability, and without them, both industry and regulators have nothing to measure progress against.
A new permit regime and hard stops: Currently, the RRC is allowing operators to flare for 180 days under an “administrative exception.” After 180 days, companies can then apply for a “hearing exception” for additional time to flare — sometimes up to two years and even more. The commission should immediately shorten the amount of time a company is allowed to simply burn away gas under an “administrative exception,” and commit to ending the widespread granting of exceptions obtained through the hearing process. A clear signal needs to be sent that the days of flaring for extended periods of time is over.
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