pipelines. Major producers, like Shell and BP for example, support the World Bank’s Zero Flaring by 2030 Initiative and have supported regulatory changes to reduce flaring.1 On the environmental side, the Environmental Defense Fund has taken a leading role in identifying environmental issues associated with flaring, including a significant contribution to carbon dioxide emissions, methane emissions (from gas that is vented directly without being burned, whether intentionally or from malfunctioning flares), and nitrogen oxide emissions (which contribute to smog and other local air quality issues).2 The Texas Railroad Commission (“Railroad Commission”) regulates flaring under Statewide Rule 32, which requires operators to apply for an exception to be able to release gas not otherwise allowed by the rule. The operator must n unlikely coalition of royshow “the necessity for the release.”3 alty owners, pipeline comThe rule explicitly considers “the unpanies, major producers, availability of a gas pipeline or other and environmentalists came marketing facility, or other purposes and together in 2020 to promote uses authorized by law” restrictions in to constitute “necessity” Texas on the flaring of casfor casinghead gas.4 inghead gas, a common byOpponents of flaring product of shale oil wells. For royalty owners have noted that, in the Operators often flare gas when the well does not have and pipeline com- last several years, the Railroad Commission a connection to a pipeline panies, the issue is has approved all or alor other method for collectfinancial: depend- most all applications for ing and transporting the ing on lease terms, exceptions.5 As a result gas. As a result of the shale boom and new shale wells royalty owners may of the increased exceptions and the increased outpacing the infrastructure not receive royalties amount of flaring overall, for transporting gas, flaring on flared gas.” the Railroad Commission in the Permian Basin and faced pressure in 2020 to the Eagle Ford has increased address this issue. In November 2020, over recent years. Estimates of the after public hearings and a comment amount of flared gas vary, but sources period, the Railroad Commission voted agree that the amount of gas flared annuto change the form required for an exally exceeds the residential consumption ception application. Currently, operators of natural gas in Texas. may use either the old or new form; the For royalty owners and pipeline comnew form will likely become mandatory panies, the issue is financial: depending in spring 2021 as part of a shift to an onon lease terms, royalty owners may not line submission system. According to the receive royalties on flared gas. Pipeline Railroad Commission, the changes to companies lose out on revenue when gas the form will reduce flaring by (1) reducis flared rather than transported in their By Carly Milner
Flare Today, Gone Tomorrow:
Update on Texas Flaring Regulations
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