Gas flares in the Eagle Ford Shale burned more than 20 billion cubic feet of natural gas and released tons of pollutants into the air in the first seven months of 2014 — exceeding the total waste and pollution for all of 2012.
New records analyzed by the San Antonio Express-News show flaring in the oil patch has continued to increase in the Eagle Ford, an upward trend first revealed in a yearlong San Antonio Express-News investigation called Up in Flames that was published in August.
The Express-News obtained new flaring data from the Railroad Commission of Texas, which oversees the oil and gas industry. The updated database shows that from January to July, energy companies flared and wasted enough natural gas to fuel CPS Energy’s 800-megawatt Rio Nogales power plant during the same seven-month period.
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The newspaper also found some of the top sources of flaring in 2014 lacked state-mandated permits to flare natural gas.
Railroad Commission spokeswoman Ramona Nye said Friday the agency sent violation notices to three energy companies after the Express-News asked about their permitting status.
The agency said the sites that lacked flaring permits included an oil lease in La Salle County called Brown Trust, a tract of scrub brush and oil tanks near the county seat of Cotulla on Texas 97. Flares at the lease burned more than 250 million cubic feet of gas in 2014, nearly a third of its overall gas production.
The operator of the lease, Carrizo (Eagle Ford) LLC, didn’t return phone messages last week.
“The commission expects all operators to fully comply with all commission rules including our flaring rules,” Nye wrote in an email to the Express-News.
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Violators could be fined or blocked from selling their oil, Nye wrote. She said the agency sent nearly 300 other warning letters in the past five months to bring other companies into compliance.
The newspaper’s analysis focused on casinghead gas, which comes from oil wells. It’s the primary source of flared gas in the Eagle Ford as oil companies race to drill in the shale formation, roughly an hour’s drive south of San Antonio.
Collectively, the flares spewed roughly 14,000 tons of air pollutants through this July, including volatile organic compounds, which can produce ground-level ozone, and a precursor to acid rain known as sulfur dioxide.
That’s more than 10 times the amount of pollution released during all of 2012 by Valero Energy’s oil refinery in Three Rivers.
Experts say the plummeting price of oil probably won’t stifle production in the Eagle Ford anytime soon. That means the volume of gas flared in 2014 could stay on pace to exceed flaring levels in 2013, when oil and gas companies burned 35 billion cubic feet of the irreplaceable fossil fuel.
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“The increase in the amount of flared gas is outrageous but predictable,” said Tom “Smitty” Smith, state director of the consumer watchdog group Public Citizen. “Texas regulators have a long history of promising reductions that don’t materialize because the growth in the number of rigs is outstripping the number of pipelines being built.”
Omar Garcia, president and CEO of the industry’s South Texas Energy & Economic Roundtable, said there were promising signs in the latest batch of flaring figures.
In raw numbers, the volume of flared gas continued to grow in 2014 as production skyrocketed in the Eagle Ford. But the newspaper’s analysis also showed the overall rate of flaring dropped to nearly 6 percent of total production in the first seven months of 2014.
That’s the lowest rate of flaring in the shale since the same seven-month period in 2011, when more than a tenth of the natural gas was lost to flaring in the Eagle Ford.
“We are pleased to see the evidence of our companies’ dedication and investment in decreasing flaring percentages in their Eagle Ford operations,” Garcia said in a written statement. “The use of equipment like vapor recovery units, building more central facilities and building more pipeline infrastructure can be attributed to this percentage decrease.”
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The market value of the lost natural gas was about $100 million, based on monthly averages at the Henry Hub, a southern Louisiana location that’s the benchmark for gas pricing.
Texas doesn’t collect taxes on flared gas, and in most cases mineral-rights owners don’t collect any royalties from it. Tax rates can vary from well to well in Texas because of exemptions, leaving the amount of lost severance taxes unknown.
Oil and gas companies told the Express-News they don’t want to flare the natural resource but have little choice.
At the “Burns Ranch A” lease in La Salle and Frio counties near the town of Dilley, Goodrich Petroleum flared more than 430 million cubic feet of gas — about a fourth of its production, making it one of the top sources of flaring so far in 2014.
Company spokesman Daniel Jenkins didn’t respond to emails. But he said in a past interview that gas pipelines at the ranch can’t handle all the production.
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“We have no desire to flare gas,” Jenkins said. “But unfortunately, we are constrained by circumstances in the midstream infrastructure that’s in place — or not in place.”
Up in flames
The goal of flaring is to burn off impurities. But flares also generate air pollution and carbon dioxide, a greenhouse gas that scientists say contributes to climate change.
Sometimes, raw gas is vented, unburned, straight into the Texas sky. Most of that is methane, a greenhouse gas that traps 20 times as much heat in the earth's atmosphere as does carbon dioxide.
The flaring figures come from a database of monthly production reports compiled by the Railroad Commission. The database shows how much oil and gas is being produced in Texas — and what happens to it.
Last year, the Express-News obtained and analyzed a database from the Railroad Commission to find out how much gas is going to waste in the Eagle Ford. The newspaper’s investigation revealed no other region in Texas flared and vented as much gas as the Eagle Ford.
The total volume of wasted gas in the shale from 2009 to 2012 was almost 39 billion cubic feet — enough to meet the annual heating and cooking needs for all 335,700 residential customers who relied on gas last year in CPS Energy's service area, which includes San Antonio.
After the publication of Up in Flames, Lee Tillman, president and CEO of Marathon Oil Corp., said the industry needs to address key “legitimate issues” including air quality, water management and roads — with a sense of urgency.
“We must be responsible corporate neighbors and never lose sight of the fact that we're guests in these communities and will be judged by our individual and collective actions,” Tillman said in September. “We as an industry must earn our license to operate each and every day.”
Bexar County Judge Nelson Wolff cited the newspaper reports in letters he wrote to the Railroad Commission and the Texas Commission on Environmental Quality to raise concerns about the proliferation of gas flares and the potential risk to San Antonio’s air quality.
“I still think they need to do more to try to control it,” Wolff said last week. “I don’t think that flaring is having a big impact on us right now. But it sure has an impact down there.”
Since 2009, scores of Eagle Ford residents have complained to TCEQ about air pollution from oil and gas sites in the shale. One resident told TCEQ investigators in December 2011 that plumes of black smoke from a flare site in Karnes County filled the horizon.
TCEQ spokesman Terry Clawson emphasized that the thousands of flares polluting the air in the Eagle Ford are spread across a 20,000 square-mile area, roughly the size of West Virginia.
“Emissions don’t necessarily result in air-quality problems,” Clawson wrote in an email. The agency hasn’t found “any significant regional air-quality issues” in the Eagle Ford Shale, he wrote.
More flaring?
Gas flaring keeps increasing even though Texas has the most extensive pipeline network in the country — nearly 426,000 miles as of August — and even as the industry has built billions in new infrastructure.
A recent report from the Texas Pipeline Association noted that the Texas Gulf Coast Basin, which includes the Eagle Ford, has more than enough pipeline takeaway capacity to carry the gas to market — what’s lacking are the gathering lines to get natural gas off a ranch.
“Additional gathering infrastructure may be required,” the report said.
The Eagle Ford is widely considered the most profitable U.S. shale field. In January, the U.S. Energy Information Administration expects it will produce around 1.69 million barrels of oil and other liquids daily, up about 30,000 daily barrels from December.
An increase in production could mean an increase in flaring, if current trends continue. But the price of oil has dropped from more than $100 this summer to nearly $58 on Friday.
Cody Rice, analyst with the research firm Wood Mackenzie, said operators on the less profitable fringe of the Eagle Ford are likely to be under financial pressure.
“As they feel the pinch of lower prices, flaring from operators in the fringes of the play could be reduced,” Rice said.
But much of the flaring is happening in the core of the field, such as Karnes and La Salle counties, where the profits are greatest. Energy firms will still be able to profit in the core shale plays by selling cheaper oil and flaring all of their natural gas. So Rice said that flaring in those best-of-the-best areas is likely to continue at high levels.
“Oil prices will not likely change the cost-benefit analysis for flaring in the core of the play in the near term — so it’s unlikely that flaring in the core will change dramatically based on oil prices,” Rice said.
Allen Gilmer, co-founder, CEO and chairman of Drillinginfo, a firm that analyzes well performance around the world, said flaring probably won’t diminish immediately.
Even when oil was $100, many companies said they couldn’t afford to connect with pipelines.
“If it makes economic sense to delay building gathering infrastructure at $100, it won't be better at $50,” Gilmer said.
More permits
Texas’ environmental agency in November started issuing greenhouse gas permits — a move that’s expected to help speed the build-out of needed pipelines in the oil field.
The permits stem from federal rules added in 2011 that require polluters to obtain greenhouse gas permits in an effort to tackle climate change. The rules don’t apply to pipelines. But they do apply to the infrastructure that connects to pipelines — things such as compressor stations and processing plants that are an integral part of moving products from the field to the market.
TCEQ initially refused to issue the permits, with Gov. Rick Perry and Gov.-elect Greg Abbott saying the new requirements would be disastrous for the industry. The state sued the EPA.
But both industry and environmental groups criticized the move. Industry attorneys said it was taking eight to 18 months to get a greenhouse gas permit through the EPA, and that the process would have moved faster through the TCEQ. Environmental groups said the delays were leading to flaring and waste.
The Texas Pipeline Association estimated the delays placed more than 48,000 jobs at risk in the Eagle Ford in South Texas and Barnett Shale in North Texas.
The Texas Legislature passed a law in 2013 authorizing the TCEQ to regulate greenhouse gas emissions, and the EPA turned over permitting responsibility to the TCEQ on Nov. 10.
“I do expect the TCEQ process to be quicker and smoother,” Austin-based pipeline attorney James Mann said.
Inefficiency
Flaring in the Eagle Ford came up repeatedly at an oil and gas policy briefing Dec. 10 in Austin, an event organized by the Eagle Ford Shale Legislative Caucus and the House Energy Caucus.
Ben Vaughan III, an Austin attorney with a ranch in La Salle County, said he was baffled by the amount of flaring. In many cases, at the same time a well’s natural gas stream burns away, trucks are delivering propane to run pumpjacks that draw hydrocarbons from the ground.
“They’re buying propane to run the generator to run the pump,” Vaughan said. “That to me seems to be an inefficiency somewhere.”
He added, “It’s tragic to look out there and watch that 1,500 btu gas go up in flares.”
George King, distinguished engineering adviser at Apache Corp., who spoke on a panel on oil patch innovation, told Vaughan: “This is one of my pet peeves as well. I don’t like to see gas flared, period.”
King said the company has experimented with scavenging liquid gases and compressing methane for running fleet trucks.
“They weren’t economic at all in some cases. But there are efforts under way to do that,” King said.
In places where pipeline-quality gas is available, Apache is looking at natural-gas powered engines for drilling rigs and hydraulic fracturing fleets.
Dimmit County rancher Hugh Fitzsimons, the head of the Wintergarden Groundwater Conservation District and a speaker at the briefing, called for more regulation to clamp down on flaring.
“My position is that it should absolutely not be allowed except for emergency situations,” Fitzsimons said.
Two years ago, he said, his ranch foreman was blinded for about an hour and some of the foreman’s family members also experienced headaches and asthma symptoms for days.
“What happened was we had raw methane being vented from the wells. We also had smoking flares,” Fitzsimons said.
Fitzsimons, a Democratic candidate for agriculture commissioner who lost in this year’s primary, said something needs to change.
“I remember my father telling me when he migrated from Louisiana in 1931 that on the first trip he didn’t need headlights because there were so many flares burning in East Texas. And on the second trip, the Railroad Commission said no more and they shut it down.” Fitzsimons continued, “So I think we need to borrow a chapter from the past.”
jtedesco@express-news.net
