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Rystad Energy: Gas flaring at US oil refineries reached highest on record

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Hydrocarbon Engineering,


A Rystad Energy report has shown that natural gas flaring at US non-upstream onshore oil and gas facilities reached an 18-month high in February 2021, at 180.9 million ft3/d. The findings come as frigid weather conditions in Texas forced oil refineries, gas plants and even LNG terminals to initiate the emergency release of gas as most facilities struggled to cope with the extreme weather. Flaring at oil refineries in particular rose to 64 million ft3/d, the highest in the Rystad Energy database, which dates back to January 2018.

Calculating the amount of gas flared at non-upstream onshore oil and gas facilities is a new line of data that Rystad Energy have just started to offer its clients. The flaring figures are calculated by a detailed thermal analysis of near real-time satellite data, using a methodology that the company’s Shale team has developed. The methodology is due to be polished further to improve its granularity and accuracy going forward.

Breaking down the amount of gas flared at non-upstream oil and gas facilities in February 2021, the largest month-to-month rise in percentage terms was at LNG terminals. The amount of gas flared more than doubled, climbing to 29.7 million ft3/d from 11.9 million ft3/d in January. In 2020, gas flaring at LNG terminals has only been higher in October, when it reached 30.9 million ft3/d. Flaring at gas processing plants also rose to a 6-month high, reaching 87.1 million ft3/d, up from January’s 58.9 million ft3/d. Despite the increase in February, flaring at these plants was still far lower than most monthly averages of 2019, when the amount sometimes exceeded 150 million ft3/d. The 64 million ft3/d of gas flared at oil refineries in February, compares to January’s 39.7 million ft3/d.

“The extreme weather conditions that Texas experienced in February forced many facilities to flare gas, as there was no other exit to feed it into and just immediately closing the gas tap is not possible. However, our latest daily data suggests that non-upstream flaring has declined again, back to the moderate levels observed in January 2021,” said Artem Abramov, head of shale research at Rystad Energy.

Separately, flaring estimates, that are using state reporting and that naturally come with a significant lag against real-time satellite data, show that in the major US liquids basins of the Permian, Bakken, Eagle Ford, the DJ and Powder River combined, wellhead gas flaring declined further, to slightly over 450 million ft3/d in December.

This implies a near 70% reduction in associated gas flaring for the US onshore industry from the peak of about 1.47 billion ft3/d touched in June 2019 and a further 10% decline from the low of 480 million ft3/d reached in May 2020 during the peak period of production curtailment that was triggered following the rapid spread of COVID-19.

The two biggest contributors to flaring – the Permian and Bakken – each saw sequential declines through 4Q20. Wellhead flaring fell to around 200 million ft3/d in the Permian, and to 180 million ft3/ in the Bakken shale in the last month of 2020. As gross gas output in each region remained relatively flat through 4Q20, the decline in flaring meant that flaring intensity touched new multi-year lows.

With nearly complete gas production and disposition reporting for December, the latest data indicates that only 1.2% of produced gas was flared in the Permian, and 5.8% in the Bakken. While the Bakken region still lags other major oil basins in terms of its flaring intensity, the relative improvement from around 20% recorded in the 1H19 should be viewed as a structural shift toward more sustainable oil development practices in the play, with the general market downturn of last year accelerating this transition.

Rystad Energy's satellite-based analysis of the daily gas combustion data confirms a gradual slowdown in total flaring through 4Q20 in the Permian and Bakken regions, for both upstream and midstream. The data suggests that we will likely see another month of sequential declines in the reported flared gas volumes when the January 2021 numbers are published.

The picture might, however, look different for February, and potentially for March as well. A material uptick in natural gas combustion is evident in the Permian in the second half of February, shortly after the peak of the winter freeze in Texas.

We have previously addressed some of the environmental challenges resulting from the collapse of the state’s energy infrastructure in mid-February, when the industry was forced to flare some of the gas when it was needed the most to run power plants and heat homes. We have also seen a large backlog of fracked wells awaiting flowback services in the Permian, with most jobs delayed during the week of 17 February.

These wells subsequently started coming online in the last week of February, contributing more to the region’s total flaring. Essentially, gas flaring was artificially low in the Permian in the first half of last month and more volumes were flared toward the end of the month – possible sending the average rate of flaring in the basin temporarily to levels not seen since July 2020.

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/11032021/rystad-energy-gas-flaring-at-us-oil-refineries-reached-highest-on-record/

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Downstream news US refinery news