Texas’ methane waste accelerates climate change while squandering state revenue

Environmental groups fault the Railroad Commission for lax oversight, warn of health impacts.

By: - September 6, 2023 4:10 am

Flares operating at gas gathering site on the outskirts of Big Spring, Texas. (Photo by Elliot Woods / Capital & Main)

Texas produces and refines more oil and gas than any other state, and is the country’s biggest emitter of the greenhouse gas carbon dioxide. Oil and gas production, transportation and refining are carbon-intensive by their very nature — but there’s at least one source of pollution from the industry that’s entirely preventable: methane that is wasted through flaring, venting or leaking.

In terms of greenhouse effect, methane is 80 times more potent than CO2 during its first 20 years in the atmosphere. But the harm caused by the unnecessary waste of methane goes beyond climate destruction; it also costs Texas hundreds of millions of dollars in lost tax revenue, makes people sick and deprives the energy market of gas stocks that could power the state’s entire residential grid, with capacity to spare.

Methane from the oil and natural gas sector is the largest single source of methane emissions in the U.S., followed by agriculture and landfills, according to the EPA. Reducing methane waste under the Clean Air Act is a critical component of the Biden administration’s climate plan. Requiring companies to capture and employ methane for beneficial use — to power oilfield equipment, for example — or to transport it to market, via truck or pipeline, to be used in natural gas electrical generation facilities or other applications, would not be a carbon-neutral solution to the methane waste problem. But there’s no question that it would be a step in the right direction.

For decades, federal and state regulators have failed to rein in fugitive methane. In fact, despite efforts spanning several presidential administrations, there are currently no federal methane regulations in effect for sources of methane pollution built before 2016. That’s about to change, with a new methane rule pertaining to older “existing sources” expected to be finalized by the Environmental Protection Agency as soon as this month. The EPA claims the new rule will reduce “methane from covered sources by 87 percent below 2005 levels.”

“Proposed standards would reduce an estimated 36 million tons of methane emissions from 2023 to 2035, the equivalent of 810 million metric tons of carbon dioxide,” the EPA claims in a recent press release. “That’s nearly the same as all greenhouse gases emitted from coal-fired electricity generation in the U.S. in 2020.”

Even so, it will take years for existing sources of methane pollution to come into compliance. Under the EPA’s current proposal, states will have 18 months from the promulgation of the final rule to come up with plans for how to enforce the new methane regulations, and an additional 18 months to begin implementation. That means effective regulation of methane in Texas could still be at least three years off, which is why activists say it’s critical for the EPA to finalize the rule as soon as possible.

“In 2019, there were 564 billion cubic feet of methane wasted in Texas,” said Elizabeth Lieberknecht, an Environmental Defense Fund policy specialist who focuses on strengthening federal and state methane regulations. That’s equivalent to about $1.7 billion in market value and about $128 million in lost revenue to the state and the federal government, according to Lieberknecht — money that could have gone to fund schools, highways and the Texas rainy day fund.

According to an EDF analysis released July 27, methane squandered by Texas producers in 2019 would have been “enough to meet the annual residential needs of the entire state twice over.” The EDF data show that 2019 was an especially bad year for flaring, venting and leaking. The years since have been better, but the total value of the foregone energy and associated revenue is still staggering. Wasted methane in 2021 and 2022 totaled nearly $1 billion and cost the Lone Star State $71 million in lost revenue.

Of more immediate concern to Texans who live in close proximity to oil and gas activity, venting and flaring release chemicals that have been proven to be harmful to human health — including hydrogen sulfide, toluene, xylene and benzene. Not only are these volatile organic compounds, or VOCs, linked to increased rates of asthma, respiratory diseases and cancer, they also come at a steep cost in terms of health care expenditures: an estimated $77 billion in the U.S. in 2016, according to the EDF analysis.

In addition, research in the Eagle Ford Shale region of South Texas has linked maternal proximity to oil and gas activity with a greater than 50% higher incidence of preterm birth, a negative health outcome that disproportionately affects Latina women — likely due to a combination of deeply rooted environmental, economic and political factors that afflict disadvantaged communities.

While there are no federal or state regulations for methane as a greenhouse gas in Texas, the Railroad Commission — the state’s oil and gas regulator — does have regulations for when flaring is permissible and when it isn’t. But non-permitted flaring occurs at hundreds of locations across the state, with few consequences for the producers. According to a 2021 report by Earthworks based on comparisons of RRC flaring permitting data and more than 200 active flares observed during flyovers of the Permian Basin in Texas, some 69%-84% of flares in the sample likely occurred at well sites operating without a permit. The sample included well sites operated by small independent producers and oil and gas majors, including ExxonMobil and Shell.

Flaring is regulated under statewide Rule 32, which affords a 10-day window to flare without a special permit around a new well’s drilling and completion phase. The rule also allows producers to apply for Rule 32 exception permits, for 45 days at a time and up to a maximum of 180 days, during emergency events and under other exceptional circumstances. Under the rule, these flaring events must be self-reported to the RRC and permitted. The RRC also regularly grants exceptions to Rule 32, allowing producers to flare beyond emergency circumstances and initial drilling and casing operations.

In a response to a request for comment from Capital & Main, an RRC spokesperson criticized “flaws” in the Earthworks report and claimed that the researchers may have listed some permitted flaring incidents in their sample as non-permitted.

While the regulation of methane and other gases is a problem in every state where the fracking industry has grown over the last decade — including North Dakota, Montana, Pennsylvania, California, Oklahoma, Colorado and New Mexico — Texas leads the nation in flaring. According to the U.S. Department of Energy, the Lone Star State’s flaring and venting in 2020 accounted for 63% of the national total and 92% in the two-state Permian Basin.

A 2020 Reuters analysis based on data from more than 50 of the largest operators in the border-straddling Permian Basin found that in Texas, companies “burned off gas at more than twice the rate as in neighboring New Mexico.” Reuters cites “loose regulation” by the RRC as a contributing factor behind the discrepancy. “Some drillers burned natural gas at up to six times the rate in Texas as they did over the state line.”

Why would the fossil fuel industry throw away such a valuable resource, especially when many of the same companies operate gas wells that sell methane to natural gas-fired power generators? The answer is simple: Oil producers are after oil, not methane, and burning off nontarget gases is cheaper than gathering them and putting them into storage tanks, trucks and pipelines to carry them to market.

As Reuters explained, variable market conditions can make gas produced as a byproduct of oil production “worthless,” or worse — producers might even have to pay someone to take it, a situation known as “negative pricing.” Absent regulations that require companies to capture and utilize nontarget gases, companies have no incentive to do it. EDF policy advocate Colin Leyden told Reuters that the regulatory environment in Texas encourages flaring and venting: “In Texas you essentially have a blank check right now.”

All of this explains why the EDF’s Lieberknecht and other advocates are urging the federal government to step in to address the environmental, economic and public health consequences of methane waste. “The EPA should require onsite beneficial use or that producers truck or pipe gas to market,” she said. “They should have to capture it and utilize it.”

There are nearly 300,000 active oil and gas wells in Texas, scattered across swathes of the Permian Basin in West Texas, the Barnett Shale near the Oklahoma border, the Eagle Ford Shale in South Texas and other, smaller formations throughout the state. Flaring towers, pumpjacks, storage tank batteries, gas wellheads and other potentially leaky components of fossil fuel infrastructure are visible from the roadside in producing regions, but it’s hard to grasp the scale of the industry’s footprint from the ground.

On July 27, aviation-based environmental nonprofit EcoFlight teamed up with the Environmental Defense Fund and Commission Shift — a Laredo-based group focused on improving transparency accountability at the RRC — to organize an overflight of the Eagle Ford Shale. The goal was to take reporters above the scrubline to see the endless sprawl of well pads in Wilson and Atascosa Counties, southeast of San Antonio, one of many areas that have been hit hard by the fracking boom.

During a pre-flight briefing, Lieberknecht and Commission Shift Executive Director Virginia Palacios, who lives in the southern portion of the Eagle Ford, showed a large map of the overflight area riddled with hundreds of little dots. Green dots marked currently producing wells, and orange dots indicated flares that have been documented so far in 2023. Around Karnes City — a small town at the crossroads of several rural highways — the orange flare dots were piled on top of each other in such dense clusters that the map looked like a target at a turkey shoot.

As the name suggests, Rule 32 exceptions are supposed to apply to emergency and exceptional flaring events. But the Earthworks analysis from 2021 shows that the RRC acts like a rubber stamp. According to the Earthworks investigation, the RRC had not denied a single Rule 32 exception since 2012, at the dawn of the fracking boom. A separate blog post from EDF claimed that the RRC had issued 35,000 exceptions since 2013 without a denial. From 2012 through the end of 2022, the RRC issued 48,607 Rule 32 exceptions, according to data on its site. An RRC spokesperson told Capital & Main that “exceptions have been denied,” but did not provide specific examples before press time.

“The commitment of the RRC and the oil and gas industry to reduce flaring is evident in a downward trend that has been happening for almost four years,” an RRC spokesperson wrote in response to a request for the most current Rule 32 exception data. “The flaring rate in Texas, which is the percentage of the amount of gas flared compared to the amount of gas produced, has dropped by 66% since June 2019. In May 2023, the most recent month for which data is available, the flaring rate was 0.77%, meaning more than 99% of gas produced in Texas was being beneficially used.”

The RRC’s data comes from monthly production reports submitted by operators, which are required to report flared gas based on metered volumes, not estimates. But the agency’s flaring numbers have been called into question by academic researchers, activists and market analysts. In 2019, Texas A&M researchers compared the RRC’s flaring data with observed flaring volumes based on infrared satellite imagery from the National Oceanic and Atmospheric Administration; the NOAA data suggested flaring volumes about double the RRC’s estimates from 2012-2015. “This suggests that self-reported volumes significantly underestimate the volume of gas being vented or flared,” the authors concluded.

Commission Shift’s Palacios says it’s not clear that the RRC is routinely enforcing its own standards, regardless of whether a given activity is permitted. “We’re calling for stronger federal regulations and enforcement because the states are not doing their job,” Palacios said.

The three elected commissioners who govern the RRC — Christi Craddick, Wayne Christian and Jim Wright — have made their opposition to the EPA’s proposed methane regulations clear. In a February statement, the RRC claimed the new rule “would place an unjustifiable burden on states and the energy industry for little real benefit to the global climate.” Craddick accused the Biden administration of attempting to “shut down the oil and gas industry in Texas” with “overreaching methane rules.” Christian threatened legal action to block implementation of the new rule. “If the EPA moves forward,” he said, “it’s imperative that Texas and other states challenge them in the court and those rules get thrown out.”

The view from the air was more disturbing than the map in the briefing room. Large square well pads carved out of the dry, water-starved brushlands were strung out one after the other along rural farm-to-market roads, each with one or more pumpjacks. Within sight of the San Antonio River, flowback ponds with shredded and sagging black plastic liners glared in the midday sun. They were filled with toxic, green produced water (a brackish byproduct of oil and gas production) and sludge from frack jobs.

In the most intensively developed areas near Karnes City, numerous active flares could be spotted from the aircraft windows at the same time, bright orange balls of flame on the parched, hazy landscape. At least 16 active flares were documented during the roughly 25 minutes that the pilot spent over the producing zone. One flare could be seen flickering on and off repeatedly for several minutes.

“Flares are polluting even when they’re working properly,” Palacios explained over the radio, “but they go out all the time, from wind or mechanical failures.” They also don’t always burn properly, due to excessive amounts of oxygen in the gas flow, contaminants or mechanical issues, Palacios said. Improperly burning and extinguished flares pump enormous quantities of methane and VOCs directly into the atmosphere. “Flares are supposed to have automatic reignition mechanisms, but they don’t always work,” Palacios said, “and who’s enforcing it anyway?”

The work of Commission Shift, EDF, Earthworks and other advocacy organizations in Texas — based on original investigations and data analysis — is pressuring the EPA and the RRC to change the status quo from one in which wasting methane is a common business practice to one in which companies are required to eliminate methane waste and are held responsible when they fail to do so.

“Reducing methane,” Palacios said, “is one of the fastest and most effective ways to combat climate change right now.” But in the absence of regulations, she said, “There’s nobody out there.”

This article was produced by Capital & Main. It is co-published here with permission. Copyright 2023 Capital & Main

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