Country
Assessment
Statewide Rule 32 allows operators to flare oil-well gas beyond the initial 10 days with an exception to Rule 32 issued by the RRC. Typically, exceptions are not granted for flaring from gas wells. Flaring exceptions are granted for 45 days at a time for up to 180 days. More documentation is required every time an operator applies for an extension. Exceptions beyond 180 days must be approved by an RRC final order after a hearing. An exception may be approved administratively and indefinitely if flaring is less than 50 mcf a day at an oil well and 15 mcf a day at a gas well. According to the RRC, most exceptions are for flaring casinghead gas from oil wells. Flaring could be necessary for extended periods if the well is drilled in new exploration areas without sufficient gas pipeline or processing capacity. Other acceptable reasons include processing plant shutdowns and repairs or maintenance at production or pipeline facilities such as compressors . Separately, operators should apply for standard air permits from the TCEQ if activities (such as flaring) are considered “routine events.” The TCEQ provides guidelines for standard air permits. These permits do not authorize emissions from upsets, emergencies, or malfunctions. They cover volatile organic compounds, particulate matter, and oxides of nitrogen but do not cover methane and carbon dioxide.
No evidence regarding development plans could be found in the sources consulted.
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.
Operators must report volumes of gas flared to the RRC using the monthly production report (Form PR). This report must include metered gas volumes from both gas wells and casinghead gas from oil wells at the lease level . The RRC updated instructions for completing Form PR and instructed operators to report flaring and venting separately and remark on the status of the RRC exception for each flaring or venting event. The RRC also developed an online system for the flare and vent program. This system includes information on flaring and venting applications. Texas SIP Vent Gas Control regulations require the operator of each affected flare or vent gas stream to adhere to reporting and record-keeping requirements, which include the development and implementation of a quality assurance plan for the monitoring requirements, including installation, calibration, operation, and maintenance of continuous emissions monitoring systems. Separately, operators must submit written notification to the regional office of the EPA at least 45 days before conducting any flare and vent gas stream testing, as required by Texas SIP.
Most violations, including the violation of flaring exceptions, are resolved through the RRC’s district offices by means other than administrative penalties. Nevertheless, the RRC has statutory authority to assess administrative penalties for violations related to safety, environmental, and other permits according to Texas Natural Resources Code Subsections 81.0531 through 81.0533. The RRC may assess up to US$10,000 a day per violation and US$1,000 a day for non-safety- or pollution-related violations. Part 1, Section 3.107 of Texas Administrative Code, Title 16 , provides guidelines on penalties for various types of oil and gas violations. The RRC considers the seriousness of the violation, the operator’s history of compliance, and other relevant factors to determine the amount of the penalty.
According to Subsections 91.701–91.707 of Texas Natural Resources Code, Title 3, the RRC may cancel a certificate of compliance after issuing a notice of violation to the operator. Once the certificate is canceled, operations must stop. The RRC can also modify, suspend, or terminate a permit if there is a violation.
The TCEQ provides guidance on how flares must be designed and operated, based on the specifications of Title 40 Code of Federal Regulations (CFR) § 60.18. Among other requirements, it requires flares to be always operated with a flame present or have a constant pilot flame, which should be continuously monitored by a thermocouple, infrared monitor, or ultraviolet monitor. There should be no visible emissions, except during periods not exceeding a total of five minutes during any two consecutive hours.
Part 1, Section 3.103 of Texas Administrative Code, Title 16 , provides for an incentive to market flared or vented gas via an exemption from the state severance tax of 7.5 percent on the marketed gas volume for the life of the well. To qualify, such marketed gas should have previously been vented or flared for 12 months or more. However, this incentive is at least partially negated by Subtitle I, Section 201.053 of Texas Administrative Code, Title 2, which exempts oil-well gas that is lawfully vented or flared from the severance tax.
The TCEQ operates several cap-and-trade programs, but they focus on urban air quality, mostly in Houston’s eastern Gulf Coast region. They do not capture volatile organic compounds from oil and gas operations in most of the state. There is no similar program for GHGs.
The primary reason for flaring in the Permian Basin has been the lack of natural gas pipeline capacity to transport gas to markets. Several natural gas pipelines have been built or are under construction to transport gas to markets, including LNG facilities. In the meantime, because the impact of gas sales on overall well economics has been limited, the RRC appears unlikely to restrict oil production to reduce flaring. For example, in May 2020, the RRC rejected a proposal to cut oil production by 20 percent in a 2 to 1 vote. The split decision was based on the expectation that the issue would resolve itself once the necessary infrastructure was built. However, the RRC’s new requirement of more detailed economic justifications before approving flaring exceptions may change the current situation. As highlighted in the Texas Natural Resources Code, preventing the waste of the state’s natural resources is attracting attention. Some Permian Basin producers, mainly small ones, argue that delaying well completions or reducing oil production rates while waiting for sufficient gas takeaway capacity will lead to an immediate loss in income that far exceeds any future revenue increase from gas sales. Major producers in the Permian Basin treat gas takeaway capacity as a manageable constraint that involves ensuring that adequate takeaway infrastructure is in place before bringing a well online and being willing to shut in a well until takeaway capacity is secure. Ongoing consolidation among operators is reinforcing this trend.