Country
Assessment
Following the recommendations of the 2010 GAO report , the BSEE implemented pilot studies with infrared cameras and, jointly with BOEM, conducted a study on the economic viability of further reductions by adopting various technologies. As a result, the agencies decided not to extend capture requirements to lease-use gas sources, pending further studies. The BSEE and BOEM also analyzed data from Gulfwide Offshore Activity Database System. They concluded that “flaring currently vented methane and replacing high-bleed pneumatic controllers with zero- or low-bleed pneumatic controllers would likely provide the greatest opportunities for meaningful and cost-effective emission reductions.” According to NTL No. 2020-N04 , the BSEE does not consider the avoidance of lost revenue as a justification for approving flaring or venting. For example, if gas production or transport infrastructure needs to be repaired and a well must be shut in during repairs, the BSEE will not allow operators to flare or vent gas to avoid shutting in the well and maintain the same pace of oil sales. Violations can result in civil or criminal penalties (see sections 18 and 19 of this case study).
According to NTL-4A , BLM regional supervisors consider the economics of a field-wide plan for oil and gas production for the leasehold. The BLM may approve an application for flaring or venting associated gas from oil wells if either of the documents below could justify the proposed action: A technical and economic report by the operator demonstrating that the expenditures necessary to market or beneficially use gas are not economically justified and conservation of the gas, if required, would lead to the premature abandonment of recoverable oil reserves and ultimately to a greater loss of equivalent energy than would be recovered with flaring or venting of the gas. An action plan from the operator that will eliminate flaring or venting within a year from the date of application. However, a 2016 GAO report found that the BLM’s field offices approved a large percentage of flaring and venting requests without the documentation required in the BLM’s guidance. About half of the approved operations were allowed to flare royalty-free. The GAO also observed that the BLM’s field offices had applied BLM guidance inconsistently and sometimes with significant differences. The rapid increase in drilling activity in tight oil and other unconventional plays since the early 2010s led to a significant increase in the number of applications for various permits to the BLM’s regional offices, overwhelming staff. The proposed rule does not allow case-by-case economic assessment of whether flared oil well gas can be considered royalty free.
According to Order 24665, 2014 , well payouts and economics should not be used to determine the production restrictions imposed on operators that do not comply with gas capture plans. At the same time, the order allows for the maximum efficient rate of oil production in many circumstances. The NDIC tries to distinguish between operators that are connected to gathering systems but flare and those that flare because of midstream bottlenecks. Over the years, the NDIC policy and regulation have shifted toward encouraging investment in midstream infrastructure. Nevertheless, the comparison of the value of oil and the value of associated gas if captured remains central to operators’ decisions to invest in capture infrastructure and the NDIC’s assessment of drilling applications and flaring exemptions.
In late 2020, the RRC updated Statewide Rule 32 Exception Data Sheet (Form R-32), used by operators to apply for flaring exceptions. After collecting comments from stakeholders on a draft, it published a new version, entitled “Application for Exception to Statewide Rule 32.” The new form requires operators to include technical and economic justifications with the goal of reducing the duration of flaring exceptions. This specific information enables the RRC to assess compliance by identifying and tracking the location of flare and vent points. The documentation required includes a cost-benefit analysis, a map showing the nearest pipeline capable of accepting gas, and an estimate of gas reserves. In most cases, the changes are expected to reduce the time an operator may obtain an administrative exception to flare by 50–80 percent.
Article 20 of the Regulation for the Conservation of Hydrocarbons, 1969 , requires operators to take any reasonable measure, if economically justified, to use associated gas for any of the following purposes: maintenance of reservoir pressure in accordance with recognized technical procedures in the oil industry any internal, commercial, or industrial use, including its use as a fuel in the operator’s facilities injection into oil fields or other appropriate strata or underground storage, according to recognized technical procedures. Article 22 states that any associated gas that cannot be utilized in the above ways must be disposed of in a manner that does not cause harm.