Earlier this month Sen Markey (D,MA) introduced
S 2818,
the Fuel Loss Abatement and Royalty Enhancement (FLARE) Act. The bill would
require the Department of the Interior to establish regulations to control the
venting and flaring of gas “in oil and gas production operations on Federal
land”.
The Regulations
Section 2 of the bill requires the DOI to issue regulations
within 180 days “to ban the venting and flaring of gas in oil and gas
production operations on Federal land onshore and offshore in the United States”
{§2(a)(1)}. Exceptions would be required for:
• De minimis venting and flaring;
and
• Venting and flaring that the
Secretary determines is required for safety.
As a carrot to support the ban the regulations would also be
designed to “promote the capture and beneficial use or reinjection of gas in
the operations” {§2(a)(2)}. And as an additional ‘incentive’ the regulations
would be required to “include provisions that treat gas that is flared or
vented in operations under a lease under this Act as production for which royalty
is required to be paid to the United States” {§2(b)}.
The bill would also require those regulations to include
definitions (to be determined by DOI) for the terms:
• Vent;
• Venting;
• Flare; and
• Flaring
Report to Congress
The bill would also require the Government Accounting Office
to “assess the venting and flaring of gas in oil and gas production operations
on Federal land onshore and offshore in the United States” {§3(1)}. A report to
Congress on that assessment would include “an estimate of the volume of gas
that is vented or flared in such operations each year” {§3(2)}.
Moving Forward
Markey is not a member of the Senate Energy and Natural
Resources Committee to which this bill was assigned for consideration. This
means that it is unlikely that he has enough influence in that Committee to see
the Bill considered. If the bill were considered, I would expect to see
significant opposition from Republican members of the Committee because of the
increased regulations that this bill would require.
Commentary
Presumably Markey is trying to address the climate effects
caused by the release of methane gas, a large portion of most of the gas emissions
from oil and gas production facilities. Methane is a ‘stronger’ greenhouse gas
than CO2 and for most of the history of oil production in the United States it
has been routinely vented to the atmosphere as a waste product as the economies
of collecting the gas for processing and sale were poor at best. That has
changed in recent years as more and more oil field production has been focused
on collecting and selling natural gas.
Still, methane venting/flaring is still rather common,
especially in older production areas where the gas production volume is lower
and the costs of collection and transportation are still high.
Markey has taken an interesting approach to the issue with
providing minimal guidance on the required regulations. While requiring a ban
he does allow for the Secretary to determine what venting/flaring is required
for safety. This is a major concern.
Most oil field collection tanks are ‘atmospheric tanks’.
That means that they are not designed as pressure vessels. As liquid is fed
into those tanks the displaced air in the tanks and any gasses in the liquid
stream are automatically vented to the atmosphere to avoid rupturing the tank
due to increased pressure as the gasses are compressed in the headspace of the tank.
When flammable gasses are expected to be included in that venting in
significant quantities an ignition device is include at the outlet of the vent
to burn off the flammable gasses so that they cannot collect in the area around
the tank and form a flammable vapor cloud; a very dangerous potential circumstance.
In fields where high concentrations of natural gas exist,
the effort is made to collect that gas in pressurized tanks. Those tanks still
have venting requirements to prevent over-pressuring the tank. Unfortunately,
the installation, maintenance and collection of gas from those tanks is costly
and is financially justified only when there is a commercial amount of natural
gas being produced.
If Markey is, in fact, trying to prevent the release of a
potent greenhouse gas this bill should be trying to reduce venting not flaring.
Flaring converts the flammable gases to CO2 and water, but that CO2 would be
produced if the gas were collected for commercial use. This means that flaring
does not have any significant effect on CO2 production.
Markey’s inclusion of royalties’ provision in the bill would
seem to be reasonable at first-glance. The gasses being flared are being ‘removed’
from federal lands after all. On closer examination, what this provision will do
is to raise the price of oil extraction, especially from older fields, as gas
flow measurement instruments are added to vent/flare lines. That would also
require a data collection system that would also increase the cost associated with
this requirement.
It is hard to tell exactly what Markey’s intentions are with
this bill. On one hand it looks like he is trying to increase the costs of oil
and gas extraction as ‘green’ effort to reduce that extraction. On the other
hand, the total freedom given to DOI in crafting the regulation, including the
ability to define all of the key terms, could mean that this is an honest
effort to increase the safety and reduce he environmental footprint of this key
energy production effort.
Well, we will probably never get to know; this bill is
unlikely to go anywhere.