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Increase in Natural Gas "Flaring" Tied to Pipeline Shortages

With oil production on the rise in Texas, drilling companies are increasingly burning off the natural gas that surfaces with the oil, because they can't get pipelines in place fast enough to transport it.

Gas flare in La Porte, Tx, March 15th, 2012

With oil production on the rise in Texas, drilling companies are increasingly burning off the natural gas that surfaces with the oil because they can't get pipelines in place fast enough to transport it.

“There’s just more demand for pipelines than they can currently keep up with,” said James Mann, a lawyer who represents pipeline companies.

But the process — called "flaring" — is raising concerns among environmentalists, who say it releases nitrogen oxide, sulfur oxide and other emissions with public health risks into the atmosphere.

“There is clearly a cause for concern with the sheer magnitude of flaring that is taking place due to the potential air quality and climate impacts," Ramon Alvarez, a scientist at the Environmental Defense Fund, wrote in an e-mail to the Tribune. 

The number of flaring permits approved by the Texas Railroad Commission has increased sharply in recent years, from 107 in fiscal year 2008 to 651 in fiscal 2011, according to Ramona Nye, an agency spokeswoman. This corresponds with a dramatic increase in demand for drilling permits. 

The Railroad Commission issued 9,347 drilling permits in the long-active Permian Basin last year, up from 3,369 in 2009. The West Texas region, which is 250 miles wide and 300 miles long, has generated at least 260 million barrels of oil in each of the last three years. 

The gushing flow from the Eagle Ford Shale, an oil field 50 miles wide that stretches 400 miles along southeast Texas, is more recent, made possible by a drilling technique known as hydraulic fracturing. Oil production from the Eagle Ford Shale has spiked from 130,802 barrels in 2004 to more than 30 million barrels last year. Drilling permits issued for the shale area have also risen dramatically in recent years, from 26 in 2008 to 2,826 in 2011.

Pipeline companies have struggled to keep pace, the result of infrastructure needs like processing plants to remove contaminants and compression systems to pump natural gas. Even before construction of a pipeline can begin, there are legal issues to take care of, Mann said, such as acquiring the rights to private land and obtaining the various government permits. Materials, equipment and workers must also be available.

One indication of how much capacity is needed in the Eagle Ford Shale is the amount of money that pipeline companies plan to invest there. The Texas Pipeline Association’s 39 member companies have so far announced $6 billion in investments for the oil-rich shale field, said Thure Cannon, the association’s executive director.

Oil companies could pause or reduce oil production in order to capture more of the natural gas byproduct. Unlike oil, gas is difficult to transport using trucks. But their preferred option — especially with oil prices so high — is not to lower production; it's to flare the gas while building a gas pipeline.

“When crude oil is $100” a barrel, Mann said, “nobody wants to shut in their oil wells to wait for a gas gathering line to take away their gas.”

Railroad Commission rules allow operators in Texas to flare gas while they’re drilling, and up to 10 days after completion of the well, which means getting the well ready for production. The commission issues permits for 45 days at a time, with up to three extensions for a maximum limit of 180 days. To obtain an extension, Nye said, companies must show progress toward “establishing the necessary infrastructure to produce gas rather than flaring it” — i.e., pipelines.

Some say flaring is a giant waste of Texas’ natural resources. Tom "Smitty" Smith, the Texas director of Public Citizen, a nonprofit advocacy group, pointed out that the state would raise more revenue if companies captured and sold the gas instead of flaring it. “This can and should become an issue for Railroad Commission,” he said.

For Jeff Sibley, a rancher in Tilden in South Texas, flaring is a health issue that affects the air he breathes every day.

“I am concerned because I have to work around these sites,” he said. “I don’t want to be in hospital sick from it.”

Sibley and his family leased part of their 6,000-acre land above the Eagle Ford Shale to Chesapeake Energy three years ago. He and his neighbors allow oil companies to drill on their land because “there’s no money in agriculture these days.”

“Anything that can keep you going is important, so the money is important,” Sibley said. “But we’re trying to figure out what we have to do to keep healthy.”

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