Texas Clampdown on Gas Flaring Falls Short of Total Prohibition

Texas Clampdown on Gas Flaring Falls Short of Total Prohibition

Texas’s oil regulator took action to reduce routine natural gas flaring but its efforts fall short of more aggressive measures requested by some investors and major producers.

The Railroad Commission of Texas changed the application form for producers wanting to burn off excess gas, it said in a statement. Producers will have to provide more detailed reasons on why they want to flare as well as more data and show efforts to reduce emissions.

The new application process will reduce flaring times by 50% to 80% in some circumstances, the commission said, without providing specifics. The measures do not change the state’s flaring rule and do not include any targets.

In a public comment period, European majors BP Plc and Royal Dutch Shell Plc called on the regulator to beef up its proposed changes and end routine flaring. Investors AllianceBernstein, California State Teachers’ Retirement System and Legal & General Investment Management argued this should happen by 2025.

“This form change is a big and important step towards minimizing routine flaring in Texas,” Commissioner Wayne Christian said in the statement. It will allow “our agency to collect the information it needs to better determine who is following the rules when it comes to flaring and who is not.”

The boom in shale production over the past decade has led to a massive excess of natural gas, which is a by-product of oil in some basins such as the Permian. Prices for gas are sometimes so low that it’s cheaper for operators to burn it, releasing carbon dioxide and sometimes methane, rather than pay for pipelines to take it to market.

Flaring has dropped significantly this year alongside production but remains a major issue for an industry that’s out of favor will Wall Street. Last year, Permian Basin producers flared enough gas to supply 5 million U.S. households.

©2020 Bloomberg L.P.