Innovators Seek To Transform Flaring Into Money and Power

Abstract

The rising levels of routine flaring in the US have caught the eye of many, especially innovators who see a big opportunity to marry environmental action with good business sense. All these technology developers are united around the idea that routine flaring equates to burning billions of dollars a year. But most shale producers, faced with low prices and chronic takeaway constraints, have had little incentive to invest in capturing associated gas. However, the broad reach of North American shale developments has made the flaring of associated gas one of the sector’s most visible public relations problems, drawing ire from environmentalists and increased scrutiny from the media, regulators, and investors. There are now concerns that the “clean” reputation of natural gas may be lost if too much of it is burned up at the wellsite, or worse, vented straight into the atmosphere. In an earnings calls last year, executives at Pioneer Natural Resources—the largest pure-play operator in the Permian Basin—told investors that the company flares the second-smallest percentage of associated gas among large explorers. Pioneer shared a chart showing that it burned less than 2% of its associated gas compared with a basin peer group average of 5%. Including this measurable in its earnings report was a first for Pioneer and suggests that flaring may be a differentiator going forward. This development was followed by Occidental Petroleum, another large Permian operator, which said in February that it would commit to zero routine flaring by 2030—becoming the first US-based producer to make such a commitment. One way operators are cutting flaring is simply by not outstripping their takeaway capacity. Sometimes this means slowing well development or shutting in wells. The goal also can be reached by investing in technologies that put associated gas to a productive use, while allowing crude to flow from wellheads unabated. The list of ideas includes mini-facility solutions such as small-scale gas-to-liquids (GTL), compressed natural gas (CNG) in a box, and portable LNG units, all of which make small quantities of associated gas able to be transported by truck. Another idea is using associated gas as feedstock for mini-power plants. “I’ve been to the sites with black, smoky flares,” said Audrey Mascarenhas. “I would look at people pulling power off the grid and using fuel gas while wasting their own energy in a flare stack—that just didn’t make any sense to me.” So what did make sense? Incinerators. Mascarenhas is an industry veteran and petroleum engineer who retired from Gulf Oil in 1999 only to immediately re-enter the industry as the chief executive officer of Questor Technology. She spent the next 20 years at the helm of the Calgary-based company trying to help oil companies kick the habit with a line of advanced incinerators called “clean combustion thermal oxidizers.” In addition to removing volatile organic compounds (VOCs), methane, and other pollutants from associated gas, thus delivering cleaner emissions, the heat generated from the incineration can generate power to run a wellsite or even help evaporate produced water into a cheaper-to-dispose-of slurry.