Capstone Report-Final

Technology and Policy Solutions to
Reduce Harmful Natural Gas Flaring
Columbia University School of International and Public Affairs
graduate capstone report in consultation with
Environmental Defense Fund
Authors:
Ludwig van Bedolla
Weiduo (Victoria) Cai
Zoë Martin
Fan Yu
Columbia University Faculty Advisor:

Robert Kleinberg
Environmental Defense Fund Contacts:

Dan Grossman
Colin Leyden
1
Abstract 3
Executive Summary 4
Introduction and Context 8

Associated Gas - Flaring, Venting, Capturing 9
Effects of Gas Flaring - Climate Change to Public Health 10
Geography and History 11
Drivers that maintain the status quo 12
Comprehensive Assessment of the Extent of the Problem 14

Measurement Tools and Practices 15
US Federal and State Reporting 17
Infrastructure, Operational, and Safety Factors 21
Independent, Non-profit, and International Efforts 24
Oil and Natural Gas Market Dynamics 28

Crude Oil Supply and Demand in the US 28
Natural Gas Supply and Demand 32
Breakeven Prices for Oil and Gas Companies 34
Costs of Gas Flaring Solutions 35
The Rise of ESG Integration as a Potential Strategy 36
Technology Solutions 40
Methane Measurement Technologies 40
Flaring Efficiency Technologies 45
Gas Utilization Technologies 47
Natural Gas Flaring and Venting Regulation 51

Current state of Federal and Local Regulations 51
Emissions Abatement Goals 55
The Ideal Regulation 58
Definition of Waste 64
Recommendation 71
Questions raised and further research 77
Acknowledgements 79
Bibliography 81
2
Abstract
Technology and Policy Solutions to Reduce Harmful Natural Gas Flaring

Client: Environmental Defense Fund
Advisor: Robert Kleinberg
Semester: Spring 2020
Gas flaring is the intentional burning of natural gas that is produced as a byproduct of oil
production. The harmful emissions associated with gas flaring around the world are staggering -
an estimated 145 bcm of gas is flared each year. The capstone team conducted a comprehensive
research analysis of the regulatory, economic, and technological factors involved in natural gas
flaring. The team found that gas flaring is inefficiently and/or ineffectively regulated, leading to
significant under reporting and inaccurate monitoring. New data streams, such as satellite
observations, provide a more comprehensive overview of the problem, but many gaps in
knowledge remain.
The team recommends a combination of technology and policy solutions, with measurement and
reporting accuracy as a high priority. Gas is a valuable commodity that can be used at or near its
source to power oilfield equipment or computing centers. Flaring can be made more efficient to
reduce methane emissions, which are even more harmful than flaring. Government regulations
should combine the best practices that have been devised by individual states. Operating
companies can be incentivized to be more efficient through the use of environment, social, and
governance (ESG) ratings, on which the financial community is increasingly relying to grade its
investments. Nonprofits and independent researchers should continue working to bridge the gap
between satellite and reported data, working with both industry and governments to understand
the full extent of the problem.
3
Executive Summary
Overview
This report contains a comprehensive research analysis of the regulatory, economic, and
technological factors involved in the harmful flaring of associated gas and related emissions,
followed by a discussion of technology and policy solutions. The primary purpose of this report
is to support the advocacy goals of the Environmental Defense Fund (EDF) in their fight to
reduce wasted energy and pollution through stronger flaring regulations and better industry
practices for the long term protection of the environment. The research and analysis was
conducted by Masters students at Columbia University’s School of International and Public
Affairs (SIPA) as a semester-long graduate capstone consultancy, under the guidance of a faculty
advisor from the Center for Global Energy Policy (CGEP) at Columbia. Although the focus of
this report is the oil and gas industry and regulation in the United States, EDF and CGEP aim to
collaborate to apply policy and technology solutions to gas flaring around the world.
Background and Context
Gas flaring is the intentional burning of associated gas, which is the natural gas that is produced
as a byproduct of oil production. Associated gas can also be captured and used for energy
production or released into the atmosphere directly through venting or lost through leaking
(called “fugitive emissions”), but a significant amount is burned through routine gas flaring
practices. Routine flaring is essentially a waste disposal system for associated gas, akin to a
chemical manufacturer using a nearby body of water to dispose of chemical waste. However
instead of chemicals in a lake, the waste from oil and gas production consists of potent
greenhouse gases that are deposited into the atmosphere - contributing to global climate change.
The harmful emissions associated with gas flaring around the world are staggering. According to
the World Bank, approximately 145 bcm of gas is flared each year, which is equivalent to about
400 million tons of CO2 in emissions.1 In order to offset this amount of carbon in the
atmosphere, we would have to plant 6.6 trillion trees2 - more than double the number of trees
currently on Earth.3 These emissions are estimates of flaring amounts based on available
satellite data, and do not account for the methane gas released directly into the atmosphere
through venting and fugitive emissions. This is an important distinction, as the global warming
effect of methane is over 25 times more powerful than carbon dioxide. 4
Gas flaring is practiced worldwide and is increasing overall - up 3% in 2018 from the previous
year, largely due to a 48% increase in flaring in the United States (US). 5 In the US, the increase
in flaring is driven by booming oil production in three states - Texas, North Dakota, and New
1 https://www.worldbank.org/en/programs/zero-routine-flaring-by-2030#7
2 Epa emissions comparison calculator tool
3 Nature tree density
4 https://www.epa.gov/ghgemissions/overview-greenhouse-gases#CH4-reference
5 Increased Shale Oil Production and Political Conflict Contribute to Increase in Global Gas Flaring
4
Mexico. These three states are home to the largest oil plays in the US, the Permian (Texas and
New Mexico) and the Bakken (North Dakota) basins. The US oil boom, particularly in the
Permian basin, is one of the main drivers that help maintain the status quo of flaring regulation
and technology. The introduction of fracking has allowed production to far outpace infrastructure
development, and many producers cite increased flaring due to lack of access to natural gas
pipelines and processing capacity. Even where gas capture technology and infrastructure is
available, it often costs oil producers more capital to capture, process, and transport associated
gas than they would make from selling it. 6
Other important factors that limit the success of flaring interventions include economically
motivated policies and political maneuvering. A booming oil industry boosts local economies
and provides significant tax revenue for states such as New Mexico, where oil and gas revenue
accounts for over one-fourth of the state’s yearly revenue. 7 As a result, many lawmakers are
hesitant to enforce flaring and venting regulations that may reduce production and lower
revenue. For example, the Chairman of the Texas Railroad commission has argued that increased
flaring is “just what happens in a boom.” She asserted that flaring may be a shame and a waste of
natural resources, but it’s not an urgent enough reason for a regulatory crackdown.8 There are
also some driving factors, such as political conflict, that are far outside the influence of local
policy or technology solutions to gas flaring. 9 This means the areas we can address - such as
accurate reporting, regulations, and technology innovation - are vital to long-term success.
Comprehensive Assessment of the Extent of the Problem
For this report, EDF also asked us to conduct a comprehensive assessment of the extent of the
problem of gas flaring - including analyzing local and federal legislation, the accuracy of data
from independent reporting and new data streams, and the influence of infrastructure,
operational, and safety factors. Our most important finding is that while gas flaring is widely
discussed and debated, there is limited agreement on either the extent or urgency of the problem
across the industry, government, and nonprofit sectors. As a result, we shifted our focus to
include an analysis of the many factors preventing an accurate and comprehensive assessment of
the extent of the problem. With an understanding of these factors and how they interact, we can
better provide policy and technology options to lay the foundation for a successful solution.
These factors include:

● Inaccurate Measurement: Regulations require that all flared and vented gas be either
measured or estimated, but provide few guidelines for methodology, accuracy, or
enforcement. Each measurement tool has strengths and limitations, and they are not all used
systematically. Operators and regulators rely on on-site metering or estimations, but it is
currently impossible to determine from the reported data which measurement methods
operators use. Researchers and reporters frequently cite satellite data, which cannot currently
differentiate between individual operators. The current challenge for policy and technology is
6 https://www.rrc.texas.gov/media/53466/01-0308609-pfd-exco.pdf
7 State of New Mexico FY20 Budget in Brief
8 Report: Permian Basin oil producers flaring more natural gas than they told the state
5
to bridge the gap between what is measured in real time and then self-reported by operators
and what is measured on large scales by satellites.
● Inconsistent and Unenforced Reporting: There is no systematic reporting of flared or vented

gas. All data are self-monitored and self-reported by operators to various state agencies. Each
state has different regulations for how associated gas must be measured, plus different
methods for reporting. State-level data is then provided to federal agencies, which then
analyze it and publish it online after a nine-month delay. The current forms of reported data
make it impossible to differentiate between flaring, venting, and fugitive emissions, or
between what is necessary for safety or waste disposal.
● Infrastructure, Operation, and Safety: The extent of gas flaring is also influenced by
infrastructure, such as pipeline and storage access and capacity, all of which are costly to
build and maintain. Ideally, new wells should be built to have direct access to pipelines,
while new pipeline infrastructure is built to keep up with demand. However, pipeline
availability is not a sufficient condition to reduce flaring or venting and many factors
influence where they can be built. On the operational side, fugitive emissions from leaks in
equipment and pipes are an unreported and often unmeasured component of vented
associated gas. These can be addressed through enhanced leak detection technologies and
equipment maintenance. Gas flaring is sometimes necessary to ensure the safety of operating
personnel and surrounding communities, such as during drilling, testing, well completion,
maintenance, and to release pressure in an emergency such as equipment failure or a power
outage. Flaring may also be necessary if the associated gas contains significant amounts of
hydrogen sulfide (sour gas), which is extremely toxic to humans and animals and is prevalent
in the Permian basin.
● International Initiatives: In addition to state and federal regulations, there are a number of
international and non-profit efforts to measure and reduce methane emissions and gas flaring.
Many oil and gas companies are members of these initiatives and pledge to reduce their
routine flaring practices, but actual compliance is voluntary and difficult to assess. Policy
solutions and voluntary initiatives need to include requirements for transparency in both
reporting and practices, as well as secondary verification and enforcement mechanisms.
Economics
The flaring of associated gas is a byproduct of increased oil and gas production, and as such is
partially driven by market dynamics and prices. Oil prices influenced by supply and demand
worldwide play a prominent role globally, whereas the economics of natural gas has a more
regional focus. These dynamics will not only impact the current status of gas flaring, but also
provide implications for future trends of flaring emissions. Additionally, the price and demand
for natural gas play a large role in flaring amounts, as low prices can make gas capture and
processing uneconomical for many companies. Regulations and incentives are required where
the costs of solutions create an unnecessary burden. One interesting incentive has been through
increased incorporation of Environmental and Social Governance (ESG) ratings by financial
investors.
6
It is important to note that this project began and was researched during the very early stages of
the COVID-19 epidemic, which has caused an unprecedented drop in crude oil demand, slowing
both production and flaring. The long term effects of the epidemic are as impossible to predict as
the virus itself, as we still do not know how long the economic shutdown will last or what will
happen to the highly volatile oil market when or if normal activity resumes.
Technologies
The technology solutions we researched to monitor and reduce gas flaring fall into five main
categories:
● Accurate and direct volume measurement: Increase the use of flow meters on each flare
to accurately measure the volume of gas being flared at each well. This will help gain a
more detailed picture of how much gas is flared and how much is released through
venting and fugitive emissions.
● Improved combustion efficiency of flares: These technologies increase the amount of gas
successfully burned to reduce the percentage methane vented from a flare. This is an
important environmental concern to reduce the greenhouse effect of the gases released
into the atmosphere.
● Gas utilization: Conversion of associated gas to liquid natural gas enables companies to
more easily transport the gas in the absence of pipelines. Associated gas can also be
burned on-site for power generation or transfered to power nearby facilities, such as
newly built block chain and data mining centers.
● Keeping the gas at the reservoir: Associated gas can be stored underground at the
reservoir using gas reinjection technologies.
● Timely infrastructure development: Prioritize the development of pipeline capacity and
gas processing facilities to keep pace with the boom in production.
Regulations
Under the US Federal system, each state has the jurisdiction and authority to implement its own
regulation, or to set specific goals, milestones, and objectives to reduce natural gas flaring.
Legislation has approached the problem in two ways: First, the air quality regulation which aims
to control air pollution, including greenhouse gases, and to protect human health in the short and
long terms. Second, the permits and operation framework which establishes the administrative
procedures that the oil and gas industry must follow to operate. Through analysis of how
regulations differ in each state, we identified several best practices in place and pieces of
legislation that could improve reduction of gas flaring and venting in the local environment. The
following six characteristics are what we consider would be the Ideal Regulation to measure,
monitor, and reduce natural gas flaring and venting in the US:
1. Mandatory Measurement and Reporting: The local regulation must explicitly ask for the
owners/operators to measure the volume of associated gas produced, separated, vented
7
and flared throughout the production chain. In the best case the report should be
submitted to the authority on a monthly or quarterly basis.
2. Flaring and Venting Differentiation: The regulation must mandate a clear distinction
between these two processes. This is crucial for environmental and air quality control
since each one has different global warming potentials and impact on the environment.
3. Clear Definition of Safety and Unnecessary Flaring: The regulation must distinguish
between unnecessary and necessary (for safety or maintenance purposes) flaring and
venting. The distinction is important because it gives the operators the necessary margin
to operate a well. However, the regulation must establish a maximum period after which
flaring or venting cannot be considered for safety.
4. Flaring Threshold: The regulation must set a specific volume threshold to distinguish
what constitutes safety or acceptable flaring from unnecessary waste.
5. Waste Definition: The regulation must contain a cohesive and concise definition of what
constitutes waste in the oil and gas industry. This is imperative to avoid owners or
operators using this classification to dispose of natural gas that would otherwise be
consumed or commercialized. Today each state legislation has its own legal definition
creating an intricate system independent from other regulations, which makes it very
difficult to coordinate or integrate them in a way that will properly address the problem.
6. Third Party Monitoring: The local laws should incorporate the use of new technologies
to measure natural gas flaring and venting from above to validate the operator’s and
owner’s data.
Recommendation
There is no quick fix for the problem of gas flaring due to its global prevalence, unknown extent,
and widespread implications. Based on our analysis we believe the best path forward is a
combination of technology and policy solutions, with measurement and reporting accuracy as the
first priority. Governments should increase and enforce their requirements for complete, accurate
reporting that is differentiated by flaring, venting, fugitive leaks, and safety. Industry should
invest in on-site technology solutions to make measurement easier and more accurate. Nonprofits
and independent researchers should continue working to bridge the gap between satellite and
reported data, working with both industry and governments to understand the full extent of the
problem.
1. Introduction and Context
1.1 Associated Gas - Flaring, Venting, Capturing 9

1.2 Effects of Gas Flaring - Climate Change to Public Health 10
1.3 Geography and History 11
8
1.4 Drivers that maintain the status quo 12
Environmental Defense Fund (EDF) and Center for Global Energy Policy (CGEP) at Columbia
University seek to collaborate on furthering policy and technology solutions leading to the
reduction of overall gas flaring volumes and better operational performance when gas flaring is
necessary. While many companies are flaring excessive amounts of natural gas, some
companies have demonstrated that routine flaring is unnecessary and that the copious amounts
of wasted energy and pollution from flaring can be significantly reduced with better planning and
improved oilfield operations. There is growing agreement from multiple stakeholders –
environmental advocates, investors, and some oil and gas companies – of the benefit and need
for policies to reduce flaring, such as gas capture requirements that would set firm limits on the
percentage of gas that companies are allowed to flare, extending the gas production tax to
include flared gas, displaying up-to-date flaring data online, and ensuring that innovation and
new data streams, such as satellite data, are utilized to identify problems and hold operators
accountable. The ultimate goal of such efforts is to align policies with a growing industry and
investor consensus that operators must move quickly toward a near-zero upstream emission
profile.
For this report, graduate students at Columbia University’s School of International and Public
Affairs were asked to research technology and policy solutions to inform the advocacy goals of
EDF and CGEP. Additionally, EDF asked us to conduct a comprehensive assessment of the
extent of the problem of gas flaring - including analyzing local and federal legislation, the
economic effect of oil and gas markets, and the accuracy of data from independent reporting and
new data streams.
1.1. Associated Gas - Flaring, Venting, Capturing
Associated gas is natural gas that is produced as a byproduct of oil production. Its primary
component is methane, but other gases (hydrocarbons) and pollutants are often present in varying
amounts.10 In a long term low-gas price scenario, natural gas that is produced during upstream
oil production is all too often considered waste - a resource that is much less valuable, harder to
get to market, and depending on the regulatory context, cheaper and easier to dispose of through
flaring. Although associated natural gas can be - and often is - captured to be used and sold, there
are many economic and operational obstacles that limit this from happening. Associated gas that
is not captured is often referred to as “lost gas,” 11 and is either released into the atmosphere
through venting, burned in gas flaring, or lost through leaking.
10 Greenhouse Gas Footprint of Oilfield Flares Accounting for Realistic Flare Gas Composition and
Distribution of Flare Efficiencies
11 "Lost oil or lost gas means produced oil or gas that escapes containment, either intentionally or
unintentionally, or is flared before being removed from the lease, unit, or communitized area, and cannot
be recovered." Bureau of Land Management definition https://www.regulations.gov/document?D=BLM-
2018-0001-223600
9
Gas flaring is the intentional burning of associated gas. Occasionally gas flaring is required for
safety purposes or operational upsets, but the majority of associated gas flaring occurs through
routine flaring. Routine flaring is a method of disposing of associated natural gas that operators
fail to capture and place in gathering infrastructure to be transported, processed and sold. Routine
flaring is an operational method that is an alternative to other management options such as
insertion into gathering pipelines, on-site electrification or other beneficial use. Routine flaring
can be thought of as a waste disposal system for associated gas, akin to a chemical manufacturer
using a nearby body of water to dispose of chemical waste. However instead of chemicals in a
lake, the waste from oil and gas production consists of potent greenhouse gases and other air
pollutants that are deposited into the atmosphere - contributing to global climate change and
local air pollution.
1.2. Effects of Gas Flaring - Climate Change to Public Health
From an environmental standpoint, there are important differences between associated gas that is
directly released (vented) into the atmosphere and gas that is flared. Associated gas is mostly
made up of methane, or CH4, which is an extremely powerful greenhouse gas. When it is burned
in a flare, most of the methane combusts with oxygen to form carbon dioxide (CO 2). When
vented or leaked directly into the atmosphere, methane becomes a powerful climate pollutant.
Over a 100-year timeframe, the global warming potential (GWP) of methane is 25 times more
powerful than that of carbon dioxide. 12 But methane is an even more powerful heat-trapping
agent over the short term. Using a 20-year timeframe, methane is 84 to 86 times more powerful
than CO2. So while both methane and carbon dioxide are harmful, CO 2 is the “lesser of the two
evils” which means that efficient gas flaring is preferable to venting or leaking.
Despite these differences, gas flaring and venting are often reported together as one amount,
which may or may not include data from leaks. Even where regulations require operators to
differentiate between the flaring and venting, compliance is often loosely followed or enforced.
For example, at the end of 2015 the Oil Conservation Division of New Mexico updated their
reporting guidelines to require operators specify all lost gas as either vented or flared. Over a
year later, only 51 out of 603 active operators were reporting their vented and flared volumes
correctly.13 Without the ability to determine the ratio of flared to vented gas, the actual
greenhouse gas effect of reported data is nearly impossible to estimate.
Even taking reporting inconsistencies into account, the harmful emissions associated with gas
flaring are staggering. According to the World Bank, approximately 145 bcm of gas is flared
each year, which is about 400 million tons of CO2 equivalent in emissions.14 For comparison,
this is approximately equal to the gas consumption of all of Central and South America, or the
carbon emissions from 926 million barrels of oil. 15 In order to offset this amount of carbon, we
would have to plant 6.6 trillion trees - more than double the number of trees currently on Earth. 16
12 https://www.epa.gov/ghgemissions/overview-greenhouse-gases#CH4-reference
13 March 8 notice to operators
15 Epa emissions comparison calculator tool
16 Nature tree density
10
Gas flaring and venting is also a public health concern for both surrounding communities and
global populations. Studies have shown that areas with more pollution have significantly higher
fatality rates from COVID-1917 and other respiratory outbreaks.18 Hydrogen sulfide is a
naturally occuring gas that is much rarer than methane but is extremely toxic to humans and
animals. In areas where there are high concentrations of hydrogen sulfide or “sour gas,” the
associated gas absolutely must be burned through flaring or incineration - it is far too toxic to
vent or store.19 Flaring of sour gas results in sulfur dioxide emissions, which is a less toxic gas
but it is a known cause of acid rain. Acid rain is devastating to natural environments and
ecosystems, and can occur thousands of miles from where the gas was emitted. 20 Finally, carbon
emissions are the direct cause of global climate change and the devastating effects it already has
around the world.
1.3. Geography and History
Routine gas flaring practices are seen world wide, almost anywhere there is significant oil
production. As stated above, the World Bank estimate of gas flaring is approximately 145 bcm
(5,118.5 bcf) worldwide in 2018. This was an increase of 3% from the previous year, largely due
to the 48% increase in flaring in the United States. 21 Analysis of satellite data for gas flares
indicates that Russia flares more gas than any other country, but the United States has a much
higher number of individual flare sites (2,399 compared to Russia’s 1,053 and Canada’s 302 as
of 2012 data).22
In the United States, the increase in flaring is driven by oil production in three states - Texas,
North Dakota, and New Mexico. These three states are home to the largest oil plays in the US,
the Permian (Texas and New Mexico) and the Bakken (North Dakota) basins, which have been
experiencing significant booms in production the last few years. Texas alone flared enough
associated gas in 2018 to power every household in the state that year.23
The flaring and venting of associated gas is not a new phenomenon, and neither is its regulation.
In the 1930s, an estimated one billion cubic feet of associated gas was flared daily - more than
the amount flared in Texas in 2018. The flares reportedly illuminated surrounding areas of the
state so much that cars could drive at night without their headlights, and people could read
newspapers by the light of the flares even from miles away.24 This led to a lively, 15-year battle
between regulators and producers over the excessive waste of one of the state’s natural
17 Air pollution linked to far higher Covid-19 death rates, study finds
18 Air pollution and case fatality of SARS in the People's Republic of China: an ecologic study
19 https://www.capp.ca/explore/flaring-and-venting/
20 https://www.epa.gov/acidrain/what-acid-rain
22 Elvidge 2016
23 Permian Basin Is Flaring More Gas Than Texas Residents Use Daily
24 Prindle, David F. "The Texas Railroad Commission and the Elimination of the Flaring of Natural Gas,
1930-1949." The Southwestern Historical Quarterly 84, no. 3 (1981): 293-308. Accessed April 20, 2020.
www.jstor.org/stable/30238689.
11
resources. Although natural gas use was still in its early stages and had significantly less value
than oil, the Texas Railroad Commission eventually succeeded in shutting down production in 17
oil fields for excessive flaring. 25 These regulations were upheld by the Texas Supreme court in
1949, notably ruling that “the preservation and conservation of natural resources of the state are
public rights and duties,” and “private enterprise would not need the compulsion of law to
conserve these resources if the practice were financially profitable.” 26 Conservation of natural
gas is a public right, regardless of how unprofitable it may be. This ruling seems largely
overlooked by Texas producers and regulators today, but still serves as an important precedent
and reminder for future policy makers and industry.
1.4. Drivers that maintain the status quo
Despite the numerous harmful effects of gas flaring, the practice continues to increase year after
year. While there are many initiatives and regulations aimed at reducing flaring and venting, the
various forces maintaining the status quo are currently more powerful. These range from
technology and infrastructure challenges, to economically motivated policies and political
maneuvering - all of which we will discuss in more detail in this report.
The increase in flaring in the United States in recent years is directly correlated to increased oil
production in the Permian and Bakken basins. The introduction of fracking to these regions has
caused a dramatic oil production boom, with which gas take-away infrastructure has been unable
to keep up. Many producers cite increased flaring due to lack of access to natural gas pipelines or
lack of processing and storage capacity. As was true in Texas in the 1930s, the market value of
natural gas is significantly less than oil. Even where gas capture technology and infrastructure
exists, it often costs oil producers more to capture, process, and transport associated gas than
they would make from selling it. Companies also have limited incentive to build more
infrastructure for the same reasons.
The low price of gas is contrasted by the high price of oil, the sale of which creates significant
revenue for states and boosts local economies. New Mexico receives approximately $2.3 billion
from the oil and gas industry each year, 27 making up over one fourth of the state’s total
revenue.28 This revenue is vital to education and social programs in New Mexico, which are
consistently ranked last in the nation. 29 Similarly, Texas is the biggest oil and gas producer in the
country and its economy is closely tied to oil prices. 30 These factors imply that lawmakers are
hesitant to enforce flaring and venting regulations that may reduce production and lower
revenue.
25Ibid.
26 Railroad Commission v. Flour Bluff Oil Co., 219 S.W.2d 506 (Tex. Civ. App. 1949) error ref'd p. 508.
27 NM Finance fast facts FINANCE
28 State of New Mexico FY20 Budget in Brief
29 NM the worst place in America to be a kid, again
30 Texas economy still rises and falls with oil
12
For example, New Mexico has received praise for their ambitious carbon-neutral energy plans,
but the emissions targets do not directly affect oil and gas exports and associated emissions. 31 In
Texas, the former Chairman of the Texas Railroad Commission, Christi Craddick argued that
increased flaring is “just what happens in a boom.” She said flaring may be a shame and a waste
of natural resources, but it’s not an urgent enough reason for a regulatory crackdown.32 Another
Railroad Commissioner recently authored a report stating that any flaring regulations that slow
oil production in Texas will result in increased flaring worldwide as other countries ramp up
production and flaring to cover demand.33 This may be a compelling argument, but it is
impossible to verify based on the currently available data.
Additionally, inconsistent and unenforced reporting requirements also help maintain the status
quo. Operators and oil companies can get away with wasting more gas, whether by intentionally
under reporting or carelessly measuring amounts, and governments have either no or limited
resources to verify data. Additionally, regulations surrounding amounts that companies are
allowed to flare vary widely with apparently limited compliance.
Outside of the United States, research shows that severe political conflict is associated with an
increase in gas flaring. In Venezuela over the last two years gas flaring has increased sharply
while oil production has declined. This trend was also observed amidst previous conflicts in
Syria and Yemen.34 There are some driving factors that are far outside the influence of local
policy and technology solutions to gas flaring, which means the areas we can address - such as
accurate reporting, regulations, and technology innovation - are vital to long-term success.
31 New Mexico Aims To Be Fossil-Fuel Free By 2045, Despite Oil Boom

33 Sitton Q1 Executive Summary
13
2. Comprehensive Assessment of the Extent of the Problem
2.1 Measurement Tools and Practices 15

2.2 US Federal and State Reporting 17
2.3 Infrastructure, Operational, and Safety Factors 21
2.4 Independent, Non-profit, and International Efforts 24
The most important step to finding a successful, long-term solution to any problem is to develop
a comprehensive understanding of it. We used several avenues of research to analyze the extent
of gas flaring around the world, focusing primarily on the United States. Our most important
finding is that while gas flaring is widely discussed and debated, there is limited agreement on
either the extent or urgency of the problem across the industry, government, and nonprofit
sectors.
Despite the many important research and policy initiatives, in many instances the information
needed to design a solution is simply not there. For example, most reporting combines venting
and flaring emissions as the amount of gas lost overall, although there are important
environmental distinctions. Many technology and policy solutions focus on interventions for
either venting or flaring practices, so the actual policy effect is difficult to predict. Further, the
close relationship and interchangeability of flaring and venting practices implies that
interventions to reduce one may effectively increase the other. For example, all gas flaring could
be outlawed tomorrow, but all associated gas would simply be vented instead. A more likely
scenario is the implementation of a technology to prevent fugitive emissions through leaks
means that more gas must be processed, and may result in increased flaring. This would be an
improvement for the environment, but would also result in a significant increase in reported
flaring amounts.
For these reasons, we include an analysis of the many factors preventing an accurate and
comprehensive assessment of the extent of the problem. With an understanding of these factors
and how they interact, we can better provide policy and technology options to lay the foundation
for a successful solution.
Note on Data Availability
One of the difficulties in determining the extent of the problem is the limited public availability
of research and data. In most areas of research and consulting, raw data is often proprietary or
confidential. To the extent that raw data is available, it often requires specific resources and
skills to process and analyze, such as with the Visible Infrared Imaging Radiometer Suite
(VIIRS) satellite data. For this project, we chose not to employ raw data analysis and focused
instead on published reporting. However, there are several independent researchers and
14
institutions that are working to collect data and estimate many important aspects of the flaring
and venting problem, and new information is published often.
Finally, it is important to remember that all the data are wrong. At this point in time, there is no
definitive information for the extent of gas flaring, either in the United States or worldwide.
Every measurement tool and reporting method available has varying degrees of limitations and
margins of error, many of which are not fully understood.
2.1. Measurement Tools and Practices
One of the major obstacles to determining the extent of flaring is that there are no systematic or
timely measurement tools and practices. Gas flaring and venting amounts can be measured in
many ways, all with varying degrees of accuracy. Each measurement tool has strengths and
limitations, and specific types of measurement data collection are used by different stakeholders.
Operators and regulations use on on-site metering or estimations, which is then relied on by
government regulators. Nonprofit and academic researchers more often employ satellite data
analysis and air quality monitoring to measure overall emissions on larger scales.
Operator Measurement Requirements
Most regulations require that all flared and vented gas be either measured or estimated, but
provide few guidelines for methodology, accuracy, or enforcement. Additionally, company and
operator level data are self-reported to various agencies, enabling the likelihood of human error
and under-reporting. Outside of regulatory requirements or voluntary climate initiatives,
operators have little incentive to accurately and consistently measure how much gas they are
flaring or venting.
Operators may use a variety of on-site metering or estimation tools, but it is currently impossible
to determine from the reported data which measurement methods operators use. For example,
Texas regulation requires that oil and gas be measured by any “device or technology that
conforms to standards established, as of the time of installation...for measuring oil or gas.”35
There are no specifications for accuracy or efficiency, and the likelihood of outdated technology
is high considering wells can produce for decades and equipment is often reused. Common
devices used on-site to measure gas are various types of flow meters, including coriolis, turbine,
thermal, and volumetric flow meters. Overall, the accuracy of flow meters for reporting flared
and vented amounts depends on their type and location in processing equipment. For example, a
flow meter on a pipe leading to a flare stack will measure how much gas is flared, but not
fugitive emissions or gas intentionally vented at another stage of processing. The accuracy and
efficiency of different types of flow meters will be discussed further in Section 4.
35 Texas Administrative Code 3.27

15
The Bureau of Land Management (BLM) requires vented and flared gas measurement through
either Gas-to-Oil Ratio (GOR) estimations, measuring the volume of the flared gas (BLM
wording does not include venting), or through a state regulation.36 A GOR estimation is based on
tests that determine the ratio of oil to gas, which is then compared to the volume of oil
production and gas sales from a well to deduce the amount of gas unaccounted for. This method
does not differentiate between flaring, venting, or fugitive emissions, and accuracy can vary. 37
Environmental Protection Agency (EPA) regulations recommend the use of optical gas imaging
(OGI) for leak detection, which has limitations. Controlled research experiments show that
successful leak detection rates are lower than expected, and vary with multiple factors -
including leak size, wind, the training level of the person measuring, and different field
protocols.38 These lower detection rates, combined with the fact that inspections are only
required every six months (plus no BLM leak detection or reporting requirements), means there
are significant emissions from leaks that are undetected and unreported.
Research and Satellite Measurement
The conclusion that methane emissions are underreported by operators is supported by recent
publications studying methane leaks in Pennsylvania gas fields and the Permian Basin.
Researchers analyzed hundreds of thousands of operator reports in Pennsylvania and found that
including unreported fugitive emissions increases overall methane emissions by 15%.39 Further,
researchers from EDF and Harvard recently published an analysis of satellite data that shows
methane leak emissions in the Permian basin from 2018-19 were 60% higher than the national
average, significantly more than previous estimates.40 In fact, for years studies comparing
satellite data to reported data have overwhelmingly found that the satellite data suggests far
greater amounts of flaring and venting than what is reported. 41
It is important to note that satellite data also has limitations. Many satellite studiesflaring use
data collected by the Visible Infrared Imaging Radiometer Suite (VIIRS) on a US National
Oceanic and Air Administration satellite (NOAA). VIIRS collects global flare data every night,
only sampling each flare site for a fraction of a second. This results in undersampling of small
flares and any flares that are intermittent or unlit, which decreases the accuracy of flared gas
estimations.42 Additionally, VIIRS infrared imaging detects heat and light sources, which must
be analyzed to separate flares from other fires and hot sources, and does not include
measurements of methane gas that is not burned. These methane emissions can be analyzed
using data from different satellites, such as GHGSat43 or the Tropospheric Monitoring
36 https://www.regulations.gov/document?D=BLM-2018-0001-223600
37 Proposal - CGA p14
38 https://cfpub.epa.gov/si/si_public_record_report.cfm?Lab=NRMRL&dirEntryId=346342
39 Explore Pennsylvania's oil and gas pollution
40 https://advances.sciencemag.org/content/6/17/eaaz5120/tab-pdf
41 Satellite data confirms Permian gas flaring is double what companies report and
https://platform.mi.spglobal.com/web/client?auth=inherit&sf200858251=1#news/article?id=47199929&cdi
d=A-47199929-12062
42 Elvidge 2015
43 https://www.ghgsat.com/
16
Instrument (TROPOMI) used in the recent Permian methane study. 44 TROPOMI calculates
methane concentrations through monthly atmospheric column measurements in specific areas
with high spatial resolution. These tools are useful for determining overall venting and leaking
emissions in a region over time, but do not measure flared amounts. Despite these limitations and
the fact that one tool measures flaring while the others measure venting, each source of satellite
data separately shows far greater emissions than the combined vented and flared self-reported
amounts.
The challenge for policy makers is to bridge the gap between what is measured in real time and
self-reported by operators and what is measured on large scales by satellites. No form of satellite
measurement can definitively calculate individual operator-level data, although new technologies
are constantly being researched and developed. For example, researchers from Los Alamos
National Laboratory, Aeris Technologies, and Rice University are developing a technology
called ALFa LDS - Autonomous, Low cost, Fast Leak Detection system. 45 ALFa LDS can be
deployed on a drone and used to detect, locate, and quantify methane leaks across entire
networks of gas production and consumption. It is significantly more sensitive, accurate, and
cost-effective than current leak detection technologies, and could likely be implemented quickly
at large scales.
2.2. US Federal and State Reporting
In addition to inconsistencies in measurement practices, there is no systematic reporting

framework for flared gas. Unfortunately, regulations and requirements are often highly
politicized for economic and environmental reasons and are subject to change between different
administrations.46 The following analysis pertains to regulations in effect as of the writing of this
report. Additionally, this regulatory analysis is focused on reporting requirements and issues in
the available data, a more thorough analysis of policies and regulations surrounding gas flaring is
provided in Section 5.
Based on our analysis of reporting and measurement requirements, combined with independent
data and anecdotal evidence, operator under-reporting - whether willful or not - is not a question
of if it’s happening, but by how much. Determining the amount of flaring and venting that goes
unreported involves investigation into several key factors, including on-site measurement and
estimation practices, intentional venting versus fugitive leaks, regulation loopholes and
exceptions, intentional data manipulation, and possible prevailing practices from beliefs that
associated gas is only waste. Further, many aspects of regulation leave room for interpretation,
which leads to wide ranges of data reported from different operators for the same practices. For
example, a recent analysis of self-reported production efficiency in New Mexico found rates of
44 https://advances.sciencemag.org/content/6/17/eaaz5120/tab-pdf
45 https://www.lanl.gov/discover/news-stories-archive/2019/July/0710-alfa-lds-technology.php
46 https://www.sciencedirect.com/science/article/abs/pii/S0301421519300461
and
The Texas Railroad Commission and the Elimination of the Flaring of Natural Gas, 1930-1949
17
methane waste range from zero waste to 100% methane waste.47 While different operators and
wells undoubtedly have some varying degrees of waste, the most logical explanations for this
range are vague regulations and inconsistent reporting.
US Federal Reporting and Regulations
On the federal level in the United States, the Department of the Interior’s Bureau of Land
Management (BLM) oversees gas flaring and venting on federal land through its methane waste
rule entitled “Waste Prevention, Production Subject to Royalties, and Resource Conservation”.48
This rule provides guidelines for when gas may be flared or vented, including the provision that
gas must be flared instead of vented where possible. The allowed exceptions for venting result in
significant emissions that are likely avoidable. As of the 2018 revision of the rule, the BLM has
no requirements for methane leak reporting, detection, or repair. As a result, aside from the EPA
requirements discussed below, there is no direct limitation on gas that is emitted through leaks.
In terms of Federal reporting of the amounts of gas vented or flared, the BLM requires that all
volumes of “lost oil and gas, whether avoidably or unavoidably,” be estimated or measured and
reported to the Office of Natural Resources Revenue (ONRR).49 As described above, the
methods the rule allows for the estimation and measurement of lost gas leave the potential for
holes in accuracy and efficiency.
The United States Energy Information Administration (EIA) publishes the total amounts of
venting and flaring by year and state.50 These data are supplied to the EIA by each state’s own
reporting agency, which summarizes it from the amounts reported by operators within the state.
Therefore accuracy and completeness of the EIA data relies entirely on the self-reported amounts
by operators, who are subject to varying regulations and limited enforcement. This multi-tiered
system also allows for a high possibility of data analysis and transmission errors, and creates a
significant delay from when flaring and venting occur and when data becomes available.
Nonetheless, the data reported by the EIA is widely used as a baseline for researchers, policy
makers, and journalists.
On the air quality protection side, flaring and venting emissions are federally monitored by the
Environmental Protection Agency as part of the Greenhouse Gas Reporting Program. 51 All gas
emissions from venting and flaring must be self-reported each year to the EPA, which then
processes it and uploads it the following October, another significant delay.52 In contrast to the
BLM, the EPA does require that operators monitor for leaks and fugitive emissions twice a year,
and that any identified leaks be fixed within 30 days. 53 Oil wells operate year-round, leaving
ample time for leaks to go undetected between inspections.
47 NM methane draft report 2019, p 112

48 Methane and Waste Prevention Rule
49 https://www.regulations.gov/document?D=BLM-2018-0001-223600
50 https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGV_mmcf_a.htm
51 https://www.epa.gov/ghgreporting
52 https://ghgdata.epa.gov/ghgp/main.do?site_preference=normal#
53 40 CFR 60 Subpart OOOOa
18
It is also important to note that industry stakeholders used the existence of the EPA leak
detection requirements to argue that the BLM rule was redundant and caused unnecessary
burden. However, from the policy and research perspective there are important bureaucratic
separations that make reliance on only rule insufficient. For example, the measurement units
used are different between agencies - EPA data are measured in metric tons of CO2 equivalent,
while the BLM and EIA data are in cubic feet of gas. Converting data from volume-based units
to mass-based units requires assumptions about gas composition and density, which varies
between well location and time. Even if consistently accurate assumptions and conversions are
made, EIA does not cite EPA emissions data as a source and we could not find evidence that EIA
converts and incorporates the EPA leak emissions data into their reports on flaring and venting
amounts.54
State Reporting
Each state in the US sets their own requirements for the reporting of flaring and venting
practices.55 Differences in regulations and reporting requirements between states result in
varying data availability, compatibility, and wide margins of error from the almost unlimited
potential for compounding factors. An important example of regulatory differences between
states is the reporting requirements between Texas and New Mexico. These two neighboring
states share the Permian basin, one of the biggest oil plays in the country, and many operators
and pipelines cross state lines.
Texas
Texas reports the highest amount of flared gas (and oil production) compared to any state in the
US, with over 238 bcf in 2018. 56 Oil and gas production in Texas, including flaring, is regulated
by the Railroad Commission of Texas (RRC), which is made up of three elected commissioners
serving staggered six year terms.57 The fact that these regulators are elected state-wide, and that
the Texas economy is very closely tied to oil is cause for concern. A study published by an
independent non-profit found that 60% of campaign funding for RRC elections was supplied by
the oil and gas industry.58 The RRC regulations on venting and flaring are vague at best.
Rule §3.32 of the Texas Administrative Code requires operators to flare associated gas instead of
venting it, but with several exceptions. 59 Gas may be vented if the release lasts less than 24 hours
and is within ten days of the completion of the well. It may also be vented if a well must be
“unloaded or cleaned up” as long as the release is not longer than 24 hours continusously or
more than 72 hours in one month, but there are notably no volume restrictions. All of the
released gas is required to be measured and reported, but fugitive emissions are always exempt
54 Table Definitions, Sources, and Explanatory Notes

55 DOE report
56 https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGV_mmcf_a.htm
57 https://www.rrc.state.tx.us/about-us/commissioners/
58 RIGGED: How the Texas Oil and Gas Industry Bankrolls its Own Regulators
59 Texas Administrative Code
19
from both. However, operators do not have to specify whether lost gas is vented or flared when
they report it, so it is unclear how these provisions are enforced.
Assuming these regulations are monitored and enforced, the rule also allows operators to apply
for “administrative exceptions” to continue venting or flaring. All exception requests cost $375, 60
and last for 180 days, unless the release is less than 50 mcf per day for each well. Requests for
longer than six months and higher volumes must be through a final order signed by the
commission. The RRC received 27,000 flaring exception requests between 2012 and July 2019,
of which they approved every single one.61 If every permit that the commission receives still gets
approved, there is effectively no regulation on flaring or venting in Texas. It appears unlikely
that the RRC will strengthen regulations or approve fewer permits - the Chairman has said that
“this is just what happens in a boom.”62
New Mexico
The oil and gas industry is not as well established in New Mexico, but the introduction of tight
oil extraction has led to a dramatic increase in production in recent years. Industry activity is
regulated by the Oil Conservation Division (OCD) of the Energy, Minerals, and Natural
Resource Department. 63 In contrast to the Texas RRC, which has regulated gas flaring since the
1930s, New Mexico has only started to address flaring and venting in recent years. In 2019 the
governor issued an executive order for the state to develop a regulatory framework to reduce
methane emissions from oil and gas production, 64 and OCD issued a public Request for
Proposals to draft flaring and venting regulations that is still active as of April 2020.65 Currently,
New Mexico regulation allows operators unlimited venting and flaring within the first 60 days of
well completion. Exceptions for flaring beyond 60 days are granted when a district supervisor
determines flaring is “reasonably necessary to protect correlative rights, prevent waste or prevent
undue hardships on the applicant.”66
In 2015, OCD began studying venting and flaring in New Mexico in order to reduce methane
emissions and develop a gas capture plan. They issued a Notice to Operators to update required
reporting to include separate codes for actual flaring and venting volumes, but no guidelines or
methodology for measurement or reporting were provided to operators. 67This led to a severe lack
of compliance (only 8%) as highlighted in a subsequent Notice, 68 and it is still impossible to tell
from the published data if this is being followed. The lack of guidelines leaves room for
operators to interpret rules in different ways, such as including fugitive emissions and leak data
60 https://www.rrc.state.tx.us/media/8015/swr32datasht.pdf
61 Texas Showdown Flares Up Over Natural-Gas Waste
63 http://www.emnrd.state.nm.us/OCD/
64 https://www.governor.state.nm.us/wp-content/uploads/2019/01/EO_2019-003.pdf
65 http://www.emnrd.state.nm.us/OCD/documents/RFPreNaturalGasVentingandFlaring.pdf
66 19.15.18 NMAC
67 10-19-15 Notice to operators http://www.emnrd.state.nm.us/OCD/documents/201510-
19NoticetoOperators-Flaring_000.pdf
68 03-08-17 Notice to Operators
20
or only reporting intentionally vented amounts. There is also a high likelihood of operator error
as OCD has a limited capacity to independently verify reporting data. Without a regulatory
framework with checks and balances, there is little incentive for operators to ensure complete
and accurate reporting. For these reasons, in a state-commissioned report on methane emissions,
representatives from the oil and gas industry expressed their support for the development of a
reporting system to include detailed guidance and establish consistency across New Mexico. 69
Texas has detailed regulations which are vague and unenforced, while New Mexico has only
limited regulations but is working hard to research and develop them. Operators are required to
submit their data separately for each state, on specific forms that differ in format and
requirements. Additionally, neither state regulates oil and gas industry emissions outside of the
EPA requirements. It’s unsurprising that data is under-reported in these states - it’s almost a
wonder that anything is reported at all.
2.3. Infrastructure, Operational, and Safety Factors
The extent of gas flaring is also influenced by infrastructure access, capacity, and operational
standards. Many policies and interventions to reduce gas flaring are dependent on infrastructure,
which is costly to build and maintain. It is important for policy makers to understand these
limitations and where there is room for growth.
Infrastructure
An effective alternative to the venting and flaring of associated gas is to capture it for use or sale
as a source of energy. There is a growing market for natural gas in the United States (described
in Section 2), but transportation and processing require infrastructure.
Pipelines
Natural gas is costly to transport relative to liquid fuels. Associated natural gas that is not flared
is primarily transported through gas pipelines, although new transportation technologies will be
discussed in Section 4. The US has over 2.6 million miles of pipelines through which flows
trillions of cubic feet of natural gas every year. 70 Ideally, new wells should be built to have direct
access to pipelines, while new pipeline infrastructure is built to keep up with demand.
However, pipeline availability is not a sufficient condition to reduce flaring or venting. Pipeline
infrastructure stretches over millions of miles and is buried deep underground, requiring
complicated maintenance plans and leaving it vulnerable to gas leaks. Processing plants on the
receiving end of a pipeline also vent and leak gas. Further, although Texas has a vast network of
natural gas pipelines, the RRC has approved every one of the flaring permit applications it
received in recent years. In at least one case, an operator was permitted to flare even though a
69 (p 156 of NM methane report)

70 https://www.phmsa.dot.gov/faqs/general-pipeline-faqs#QA_6
21
nearby pipeline was accessible and had available capacity. 71 In North Dakota, pipelines built
during the Bakken production boom in the early 2010s did result in decreased reported flaring
amounts, but production has overtaken pipeline capacity in the last few years.72
It is also important to note that pipeline construction is often opposed and prevented for many
other environmental, social, and even religious reasons. In areas where construction is banned or
too costly, flaring and venting will likely continue.
On-site Processing and Power Generation
Natural gas is a valuable resource for power generation and well sites require a lot of energy to
drill and produce oil, so a logical solution to flaring associated gas is to capture and use it for on-
site power generation. However the pumps, trucks, drilling rigs, and compressors used run on
motors powered by diesel fuel and are incompatible with natural gas. 73 There are efforts to
introduce electric and natural gas powered equipment, and the costs for a new well are estimated
to be similar for new diesel equipment. 74 Unfortunately, for existing wells these upgrades can be
prohibitively costly,75 and there is little incentive when diesel equipment is properly functioning
and there is no gas capture or processing method currently on-site. Aside from reduced flaring,
there are secondary benefits to upgrading from diesel to natural gas equipment that should be
taken into account. Diesel fuel is more expensive than natural gas, and it must be transported to
well sites from refineries. By using locally produced natural gas, operators can eliminate both the
costs and emissions associated with the transportation of diesel fuel.
Ideally natural gas power generation would allow operators to directly transfer gas from wells to
a generator, but there are technical challenges that must be addressed. 76 The quality and
composition of associated gas from tight oil wells varies across different locations and times.
There is a higher composition of natural gas liquids in addition to methane, which are usually
processed and sold separately. Associated gas must either be processed on site, or technologies
must be developed or interchanged to adapt to varying gas compositions.
Operation
As described above, fugitive emissions from leaks in equipment and pipes are an unreported and
often unmeasured component of vented associated gas. Although the term leak often implies an
insignificant amount, Chevron estimates that fugitive emissions account for as much as one-third
of their total methane emissions.77 The EPA found that fugitive emissions are more closely
71 https://www.wsj.com/articles/texas-showdown-flares-up-over-natural-gas-waste-11563361201
72 https://www.eia.gov/todayinenergy/detail.php?id=42195
73 Fuel - Permian Drilling Activity Drives Diesel Demand and Projects to Supply More of It
74 https://rbnenergy.com/shes-electric-are-e-fracs-a-fix-for-permian-gas-constraints-and-giveaway-prices
75 https://rbnenergy.com/you-re-as-cold-as-ice-the-economics-of-switching-from-diesel-to-lng
76 Improving utilization of associated gas in US tight oil fields
77 https://www.chevron.com/sustainability/environment/greenhouse-gas-management
22
correlated with the amount of equipment rather than with production, so it is likely that these
emissions amounts are consistent among small producers and low-production wells.78
The EPA requires operators to check for leaks semi-annually, which means that leaks may
remain undetected for months at a time. There are a number of on-site solutions that operators
can adopt to detect leaks more quickly and accurately, such as using real-time electrochemical
sensors. The Department of Energy’s ARPA-E has created the MONITOR program (Methane
Observation Networks with Innovative Technology to Obtain Reductions) to support innovative
research into comprehensive and timely leak detection systems.79 In addition to safety and
environmental benefits, real-time leak detection can have a significant return on investment by
increasing the amount of gas that can be captured and sold downstream.
Another important operational factor that contributes to high methane emissions is flare
efficiency, including flares that are unlit or go out. A recent EDF survey of over 300 well sites in
the Permian basin found that 1 in 10 flares were unlit or malfunctioning, causing the gas to be
directly released into the atmosphere. 80 The combustion efficiency of a flare is the percentage of
methane successfully converted to carbon dioxide, and is an important indicator for accurate
emissions measurement. Efficiency is generally assumed to be high in the industry (98%), but
research shows that a significant portion of flares are actually very inefficient. 81 Both of these
issues contribute to the underestimation and under-reporting of emissions from flaring. Ensuring
that flares remain lit and highly efficient can be addressed through maintenance and monitoring
requirements, as well as with improved efficiency technologies (discussed further in Section 4).
Safety
In certain circumstances, gas flaring is necessary to ensure the safety of operating personnel and
surrounding communities. For example, gas must be safely diverted and disposed of during
drilling, testing, and well completion, which occurs before pipelines or processing infrastructure
are connected. Although most regulations currently allow unlimited flaring from drilling and
completion, there are efforts to reduce these emissions through reduced emission completions or
“green completions” using portable processing equipment at the well site. 82 Gas must also be
released to relieve pressure during maintenance and in an emergency, such as equipment failure
or a power outage.83The current form of reported data makes it impossible to differentiate how
much flaring is for safety or waste disposal. Improving specialized reporting requirements is
necessary to understand the extent of flaring for safety, as well as for research into enhanced
safety practices.
78 Federal Register/Vol. 81, No. 107/Friday, June 3, 2016/Rules and Regulations

79 https://arpa-e.energy.gov/sites/default/files/documents/files/MONITOR_ProgramOverview.pdf
80 When the flames go out, the Permian’s methane problem worsens
81 Greenhouse Gas Footprint of Oilfield Flares Accounting for Realistic Flare Gas Composition and
Distribution of Flare Efficiencies
82 Reduced Emissions Completions for Hydraulically Fractured Natural Gas Wells
83 Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends, and Impacts
23
Flaring may also be necessary if the associated gas contains significant amounts of hydrogen
sulfide (H2S), which is extremely toxic and can be corrosive to oil field equipment and pipes.
Researchers have found high amounts of H2S in the associated gas in the Permian basin that
appear to be increasing. 84 Due to its toxicity, associated gas with high H2S often cannot be safely
transported, and on-site processing requires specialized equipment. This increases the cost of any
gas capture solutions, and many operators are motivated to flare the gas as the safest and most
economic option. Further, the discovery of high H2S concentrations in areas where drilling
infrastructure was not properly developed to handle it safely may require costly equipment
upgrades and retrofitting. Flaring the gas allows operators to avoid excessive capital costs and
perceived value destruction resulting from their lack of appropriate preparation.85
These factors strongly imply that high H2S concentration is an unattributed reason for increased
flaring in the Permian basin. In addition to the toxicity concerns from sour gas, the burning of
H2S produces sulfur dioxide (SO2). The Clean Air Act strongly regulates SO2 emissions, due to
significant environmental effects that are not traditionally associated with methane flaring, such
as acid rain. Considering the high number of unlit Permian flares and efficiency concerns
mentioned above, there is an urgent need for further investigation and specialized policy and
technology solutions.
2.4. Independent, Non-profit, and International Efforts
In addition to state and federal regulations, there are a number of international and non-profit
efforts to measure and reduce methane emissions and gas flaring. Many oil and gas companies
are members of these initiatives and pledge to reduce their routine flaring practices, but actual
compliance is voluntary and difficult to assess.
European Union
The European Commission has been making strides towards establishing an independent
institution to monitor and improve emissions, as discussed in their March 2020 methane
stakeholder workshop. 86 The goal of the institution is to develop a holistic approach to control
methane emissions throughout the oil and gas supply chain, including venting and flaring
initiatives. The image below represents how the institution will focus on many areas including
monitoring and detection, accurate reporting, verification, and transparency - all or many of
which are lacking from current regulations around the world.
84 Hydrogen Sulfide (H2S) in the Permian Basin, #10950 (2017).

85 Personal communication with expert, May 4, 2020.
86 Workshop: Strategic plan to reduce methane emissions in the energy sector
24
Table 2.1 EMAS from European Commission
EMAS
The European Commission has a voluntary environmental management instrument called the
Eco-Management and Audit Scheme (EMAS).87 EMAS helps companies and organizations
improve their environmental performance by providing support for measurement, reporting, and
best practices. It is used by many different types of organizations and not focused on flaring or
the oil and gas industry, but it is an important example of how an independent agency can help
align environmental regulation with private industry practices. 88
Initiatives and Partnerships
World Bank Initiatives

The World bank has two initiatives that are aimed at reducing gas flaring around the world, the
Global Gas Flaring Reduction Partnership (GGFR) 89 and Zero Routine Flaring by 2030.90 The
latter initiative has been endorsed by many governments and companies around the world,
including the US, but it is not legally binding nor does it include an enforcement mechanism
beyond establishing a public commitment. It is only focused on self-reporting of routine flaring,
which is not clearly defined, and it does not require reduction of fugitive emissions or flaring and
venting for safety and maintenance. The GGFR is a public-private initiative that works to reduce
87 https://ec.europa.eu/environment/emas/index_en.htm
88 GOOD REASONS FOR EMAS
89 https://www.worldbank.org/en/programs/gasflaringreduction
25
flaring by researching best practices and developing technology and country-specific regulatory
solutions. The US is not a member of the GGFR partnership.
Methane Guiding Principles

The Methane Guiding Principles are five principles developed by an international partnership of
industry and non-industry stakeholders that are focused on reducing methane emissions
throughout the natural gas supply chain. 91 The five principles also advocate for reporting
transparency, measurement data accuracy, and sound policy. They are focused on the entire
natural gas supply chain, including flaring, and adoption and participation is voluntary.
Oil & Gas Methane Partnership

The Oil and Gas Methane Partnership is an initiative created in 2015 by the Climate and Clean
Air Coalition in order to help oil and gas companies reduce methane emissions. 92 The
partnership comprises ten oil and gas companies, the Environmental Defense Fund, the United
Nations Environment Programme, and the European Commission. This initiative includes a
reporting framework that enables participating companies to show improvements in methane
emissions, through transparency and progress towards set targets. The initiative’s framework has
been the primary input into proposed European Union regulations.
IPIECA
Originally the International Petroleum Industry Environmental Conservation Association,
IPIECA is a global association of oil and gas companies that is focused on improving
environmental and social performance within the industry.93 It provides the industry’s main
channel of communication with the United Nations. IPIECA work includes promoting
transparency in reporting and emissions management, as well as supporting the Methane Guiding
Principles and the Zero Routine Flaring by 2030 initiative.
The Environmental Partnership

This is a US-based partnership of oil and gas companies led by the American Petroleum Institute
(API) with the goal of producing energy while improving the industry’s environmental
performance.94 This partnership is also more industry driven, focusing on solutions that are
technologically and commercially feasible and will result in the most emissions reductions.
Company participation is voluntary and involves education workshops, collaborations, and
action-oriented programs - including a leak detection and repair program.
Note on Large Operators
91 https://methaneguidingprinciples.org/
92 https://www.ccacoalition.org/en/activity/ccac-oil-gas-methane-partnership
93 https://www.ipieca.org/about-us/
94 https://theenvironmentalpartnership.org/who-we-are/
26
Finally, many of the largest oil producers often make promises to reduce methane emissions and
focus on achieving climate goals, 95 but are accused of failing to follow through - a practice called
“greenwashing.” Major oil companies, such as BP, Exxon Mobil, and Shell are important
supporters of many of the above initiatives, but data suggests some have actually increased
flaring in recent years. According to New York Times96 and Unearthed97 investigative reports
from October 2019, Exxon and BP both significantly increased the amount of gas they vented
and flared in the US - both by as much as 70% since 2017 reports. BP flared significantly more
in recent years by acquiring polluters in the Permian and allowing venting and flaring to
increase. Aside from energy companies, independent petroleum producers that drill specifically
for oil are also flaring at higher percentages, with Marathon Oil flaring more than half the
associated gas produced at their Bakken wells in 2017 and continuing to increase. 98 An important
exception to this trend is Chevron, which reportedly flared or vented less than three percent of
associated gas by following strict internal rules around drilling in areas where gas can be
economically captured.99
These numbers show that more than a voluntary environmental pledge is required for companies
to significantly reform venting and flaring practices. Policy solutions and voluntary initiatives
need to include requirements for transparency in both reporting and practices, as well as
secondary verification and enforcement mechanisms.
95 announces progress towards methane target and new CCUS initiative to scale up actions towards climate goals -
OGCI
96 Despite Their Promises, Giant Energy Companies Burn Away Vast Amounts of Natural Gas
97 Exxon and BP among worst for flaring in US oil fields despite green pledges
98 Ibid
99 Ibid
27
3. Oil and Natural Gas Market Dynamics
3.1 Crude Oil Supply and Demand in the US 28

3.2 Natural Gas Supply and Demand 32
3.3 Breakeven Prices for Oil and Gas Companies 34
3.4 Costs of Gas Flaring Solutions 35
3.5 The Rise of ESG Integration as a Potential Strategy 36
This section delineates the structural economics of associated gas as a byproduct of oil
production. The flaring issue originates with oil production. Oil prices influenced by dynamics of
supply and demand worldwide play a prominent role, whereas the economics of natural gas has a
more regional focus. Those dynamics will not only impact the status quo of gas flaring, but also
provide implication of the future trend on flaring emissions.
3.1. Crude Oil Supply and Demand in the US

This section describes the oil demand and supply through analyzing market dynamics from the
perspectives of short term shocks and long term forecasts.
Recent Oil Market Black Swan Events
COVID-19
There is an unprecedented decline in crude oil demand as a result of the COVID-19 pandemic.
The United States as the largest crude oil producer in the world, is going to face the demand
shock until the pandemic is terminated. There are several predictions made to speculate the
duration of this pandemic, but no one can guarantee it until the day finally comes. Not only the
impact of the pace of lockdown easing is unclear, but also there is a significant uncertainty amid
a highly volatile market regarding the resumption of economic activities. However, one of the
consequences that can be predicted is an unprecedented drop in global oil demand. As the impact
of COVID-19 spreads around the world, oil demand contraction is expected. The travel ban
imposed in many countries, the lockdown of hundreds of cities and areas, the disruption in the
global supply chain all have a tremendous impact on oil demand. In response to the demand
shock, the supply is likely to fall as limited storage is not a solution to the surplus. The trend of
imbalances between supply and demand has already occurred in the market. Production must be
cut as the oil supply is likely to exceed both demand and the capacity of storage. IHS Markit
estimates that the shut in of world oil production will be 10 MMbpd from April to June 2020. 100
For the United States, the amount shale oil production reacts to a combination of the price
change and demand shock. EIA forecasts the production will average 13 MMbpd in 2020 and
100 IHS Markit sees forced oil production cuts of 10MMbpd ahead
28
drop to 12.7 MMbpd in 2021.101 The Bakken and Eagle Ford regions will contribute to the
production declines as well as the Permian Basin is expected to have a flat growth.
Consequently, the output of associated gas produced as a byproduct of wells drilled for the oil
will likely to decrease along with the production cut. The impact of COVID-19 on the oil and gas
market as well as the prices will be further discussed in the following section.
Saudi-Russia Oil Price War
Oil prices collapsed earlier this year as the forecast of oil demand went down sharply due to a
pause of economic activity and restrictions on travel all over the world. In March, while OPEC+
countries led by Saudi Arabia voted in favor of a production cut of 1.5 MMbpd in response to the
pandemic, Russia held off the decision and wanted to wait to evaluate the impacts of the demand
collapse.102 Unable to reach a consensus, oil prices slipped at an unprecedented rate, to the
lowest prices since 2003. The disintegration of the OPEC+ alliance turns the oil market into free
market mode. Although there were negotiations among major oil producers to cut production
facing the demand crises, the amount they reached in agreement was inadequate to deal with
storage capacity issues. There is a growing scarcity of oil storage space and will create a
challenge for oil producers if they do not curb the production. 103 Even if they reach the
consensus, oil producers will likely continue to extract oil as long as prices are above lifting
costs. Oil surplus already occurs as a result of the supply surge and demand decline. The
disruption brought by COVID-19 shifts the balance even further. Without production cuts, oil
storage is less likely to solve the problem in the long run. The oil business is on track to change
with the pandemic accelerating the pace. The boom of shale business enabled the United States
to capture a larger market share from the OPEC+. The U.S shale business used to be very robust
and competitive on the world stage because oil is still a commodity that is irreplaceable in the
next few decades as it dominates in transportation fuel. However, the problem with oil storage
creates uncertainty in the market as storage is filling up worldwide and American onshore tanks
are nearly reaching their capacity.
On April 12th, Saudi Arabia and Russia finalized the deal by agreeing to make the biggest oil
production cuts on record, 9.7 MMbpd, which is approximately 10% of global output. 104 The cut
will start from May and continues with additional reductions until expiring in April 2022. Behind
the deal was the efforts made by the United States and President Trump in order to stabilize oil
prices and take a further step to influence the market. However, the cut falls far short of the
demand destruction, which leads to an immediate price drop on the same day, $23 a barrel of
West Texas Intermediate. With the plummeting prices, many American companies already have
cut the output. Indeed, they reduced production in response to the demand destruction amid the
COVID-19 pandemic outbreak. As a result, some small and indebted firms may have to suffer
101 Short-Term Energy Outlook - US Energy Information Administration

102 OIL MARKET BLACK SWANS: COVID-19, THE MARKET-SHARE WAR, AND LONG-TERM RISKS OF
OIL VOLATILITY
103 Weekly US and regional crude oil stocks and working storage capacity - US Energy Information Administration
104 Opec secures record global oil cuts deal under US pressure
29
bankruptcies and yet there are merge and acquisition possibilities for bigger players in the energy
industry.105 This will lead to a consolidation of the oil and gas industry in the United States.
Long Term Forecasts
The Future of US Markets
The supply and demand will continue to be imbalanced as well as the impacts of both events will
not disappear when the pandemic is over. Oil supply in the United States is sensitive to oil
prices. The collapse of oil prices will cause a decline in oil production, lessening the output of
associated gas. In the United States, oil suppliers reply on ample amounts of up-front capital
investment. Private equity and private credit are the major players in funding oil companies, who
are also considering broader ESG concerns. Thus, in order to respond to the investors’ sentiment,
oil companies have to carefully create a healthy balance sheet with positive return, meanwhile
taking the flaring issue seriously. The surge of gas is flared as a result of the unrelenting growth
of the extraction of crude oil. It is often cheaper to flare the gas than building pipeline
infrastructure to transport gas to markets. Therefore, companies tend to flare the gas for
economic and technical reasons.
In the United States, the oil and gas industry operates like a cyclical business. After the pandemic
ends, the demand will bounce back to the previous level as the economy recovers. Looking into
the future, it is more likely for the public market to provide capital as needed. Once the initial up-
front capital is invested, costs for operation are relatively low, yet costs for shut in can be
relatively high based on the research done by the Federal Reserve Bank of Dallas (table 3.1) As
the demand recovers after the pandemic is over, the growth of the oil and gas industry will
become more capitalized. The growth of oil production will continue contributing to the flaring
gas issue.
In spite of the recent market turbulence, experts in the industry have a cautiously optimistic
attitude towards the long-run regarding U.S shale oil production. 106 General growth in
consumption for oil and gas is expected due to population growth and increased GDP, which will
encourage energy use in all sectors.107 However, possible commitments to mitigate climate
change, such as renewable energy incentives and emissions regulations, might lead to more
uncertainties in demand for oil.
105 Oil Nations, Prodded by Trump, Reach Deal to Slash Production

106 IEA (2019), World Energy Outlook 2019, OECD Publishing, Paris, https://doi-
org.ezproxy.cul.columbia.edu/10.1787/caf32f3b-en. Figure 3.2
107 See the infographic: A race against the carbon clock
30
Table 3.1 Shut-in Prices for Existing Wells from Federal Reserve Bank of Dallas
Global Oil Prices
Oil is a global commodity so its price depends on world wide supply and demand. The main
factors that affect oil prices are US shale oil production, US crude oil stocks, and OPEC oil
supply. The US Energy Information Administration (EIA) forecasts that by 2025, the average
price of a barrel of Brent crude oil will rise to $81.73/b. This figure is in 2018 dollars, which
does not account for inflation.108 Further, by 2030 world demand will drive oil prices to
$92.98/b, and by 2040, prices are estimated to be $105.16/b, again quoted in 2018 dollars. At this
point in 2040, cheap oil sources will have been exhausted, and it will be more expensive to
extract oil. By 2050, oil prices will be $107.94/b. These projections are lower than EIA’s
previous price estimates from 2017, reflecting the stability of the shale oil market. EIA assumes
that the global demand for petroleum flattens out after its peak in the next one or two decades as
energy utilities in the future will rely more on natural gas and renewable energy.109 From an
economic standpoint, EIA assumes that the economy will grow around 2% per year while energy
consumption will increase by 0.4%, which will drive up the price of oil as demand increases. The
projected increase in oil price will incentivize shale oil producers to drill for more oil, which may
in turn increase flaring emissions. However, in the short run, the crash of U.S. oil prices into
negative territory in April will lead to a decline in oil production in 2020. This will imply a
reduction in flaring emissions this year and next year as oil suppliers plan to curtail production to
offset demand collapse amid COVID-19.
108 https://www.thebalance.com/oil-price-forecast-3306219#citation-35
109 Renewable Energy: Definition, Sources, Benefits, Future
31
Table 3.2 2020 Crude Oil Production Forecast from US Energy Information Administration 110
US Natural Gas Prices
Natural gas is consumed more on a regional level than oil, and its price makes a smaller impact
on the supply and demand because gas is an inelastic product. The low price of coal makes it a
competitor with gas in some countries, but rising environmental concerns hinder the use of coal.
In terms of power generation, gas is less polluting than coal as a resource. The International
Energy Association (IEA) forecasts on natural gas spot prices of the stated policies scenario at
Henry Hub will be $3.3MMBtu in 2030 and rises to $4.4 MMBtu in 2040.111 The increase of
natural price gas may incentivize oil producers to sell the gas instead of flaring it, but the huge
discrepancy between the profits of producing oil and gas will likely continue to hinder flaring
reduction goals. Depressed US gas prices as well as the long distance to reach key markets that
require infrastructure create a huge challenge for oil companies that have to take responsibility to
the investors. Hence, technology and policy solutions are needed to encourage the reduction of
harmful gas flaring.
3.1. Natural Gas Supply and Demand
Due to oversupply, the price of natural gas is not attractive compared to the profitable oil
business. Oil companies have low incentives to sell gas that comes out with oil production due to
the high cost of infrastructure. Thus, the flaring issue becomes more serious as oil production
increases.
110 AEO2020 - Petroleum

111 IEA (2019), World Energy Outlook 2019, OECD Publishing, Paris, https://doi-
org.ezproxy.cul.columbia.edu/10.1787/caf32f3b-en.
32
The oversupply of natural gas market
Natural gas is the biggest source for generating electricity in the United States, accounting for
44%.112 Therefore, power generation determines price elasticity for gas demand. The boom of
power generation from renewable energy sources is due to a more competitive price compared to
natural gas power plants. Furthermore, subsidies from the government become another incentive
for electricity producers to make a transition from natural gas to renewable energy resources. For
example, investment tax credit, production tax credit, and state-level policies all encourage
renewable energies. Along with ESG concerns, sustainable energy will be the key in the future.
The oversupply of natural gas becomes an issue.
While oil price determines its production, it is a totally different situation for gas. Because oil is
more valuable than gas, oil drillers are insensitive to low gas prices, and spontaneously
incentivized to produce oil. Natural gas industry faces an oversupply issue which explains why
the price of gas is so low. The demand for natural gas depends on weather, economy and
petroleum prices. The warm weather leads to a decrease in consumption of gas, causing the price
to be even lower. Demand for both power generation and building consumption in residential
and commercial sectors fall due to a relatively higher temperature compared to the year before
and the economy shows a sign of fatigue amid COVID-19 pandemic. The lower price
discourages producers to drill natural gas.
On the supply side, the EIA forecasts that U.S. natural gas production is expected to decrease by
5% in 2020 by cause of the recent fall in consumption in response to COVID-19.113 Natural gas
production in the United States set records in 2018 and 2019 is mainly attributed to the boom of
shale and tight oil production. Thus, the prices of natural gas dropped and the volume of gas in
storage increased. The production of associated gas from oil wells is expected to decrease
because drilling levels of oil will decline. Producers plan to curtail capital spending and
production as both prices of oil and natural gas decreased In March and April.
Flaring
Oil production and prices play a more pivotal role than the price of gas in terms of solving the
flaring issue. Flaring occurs during upstream production, which dominates with 90.6% of all
flaring.114 The primary reason for the abundance of flaring associated gas is the lack of pipeline
capacity to ship gas to markets. Oil producers seek to mitigate the constraints of gas takeaway
capacity through building more pipeline infrastructure.115 They also have the options to delay the
completion of new wells or slow down production rate to hold up oil-centric operations. Flaring
in the Permian declined to 700 million cubic feet of natural gas per day during the first quarter of
2020, down from a peak of nearly 900 million cubic feet per day in the fourth quarter of 2019. 116
112 National Energy and Petrochemical Map

113 https://www.eia.gov/todayinenergy/detail.php?id=43755
114 https://www.sciencedirect.com/science/article/pii/S2211467X17300962
115 Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends, and Impacts
116 https://texasenergyreport.com/newsclips-2/
33
The reduced output from oil-directed wells under the influence of two black swan events curb
the output of associated gas flaring consequently.
3.2. Breakeven Prices for Oil and Gas Companies
Breakeven price
The breakeven cost of production is the average natural gas price at which a producer would
need to sell its production to neither lose money nor make a profit. 117 The characteristics of
production basins determine the breakeven cost. It is possible to have a negative price depending
on the wells because natural gas is produced as a byproduct of oil drilling. Two notable examples
are Permian Basin and Eagle Ford. There is a difference in the breakeven cost of wet and dry
gas. Wet gas contains a significant amount of natural gas liquids. For example, the breakeven
price for the Marcellus Wet well is $1.77/MMBtu, while a dry well has the price of $2.43. 118
Producers of wet gas have economic advantages when encountering a low gas price compared to
their counterpart of dry gas. Nevertheless, the number of wet gas wells is not enough to meet the
demand for natural gas. Dry wells are the key players to set market price based on the marginal
cost. Low gas prices disincentivize oil producers to bear the costs of building pipelines and sell
the gas they produce when drilling the oil. For them, it is commercially viable to flare gas rather
than collect and sell it.
Breakeven price for oil
The price of oil needed to profitably drill a new well varies depending on the region. The chart
below shows a research done by the Federal Reserve Bank of Dallas to study the different
breakeven prices for drilling new wells. The cost to produce shale oil in the United States is
much more expensive compared to that of OPEC+ countries, which means American oil
producers are more vulnerable to price shocks. On the other hand, OPEC countries, especially
Saudi Arabia have advantages of cost of production, but they have a limited tolerance of low oil
prices as most of their countries' GDP and revenue rely on oil. For individual American oil
producers, they will suffer from low prices and prices have a direct impact on determining future
production. Below is a chart of breakeven prices for new wells according to the survey
conducted by the Federal Reserve Bank of Dallas.119 Oil prices will have to be higher than the
breakeven prices in order for producers to make profits, especially for drilling new wells. The
number of new wells is critical to the amount of increasing flaring emissions because the number
of gas pipelines is not enough for both new wells and existing wells. If new wells continue to
grow at a rate faster than pipeline infrastructure, the flaring rate is likely to increase.
Nevertheless, with the oil price collapse, the shut in of oil production is possible to happen for
smaller companies that are threatened to lower prices and if they are not making profits. Some
companies may leave the business because the low oil price is no longer profitable to them. Yet,
117 Are Natural Gas Prices Below $3 Sustainable?

118 Ibid Are Natural Gas Prices Below $3 Sustainable?
119 Energy Slideshow - Dallas Fed
34
if OPEC+ countries all agree to reduce the rate of production, the price will likely be driven up
eventually.
Table 3.3 Breakeven Prices for New Wells from Federal Reserve Bank of Dallas
3.3. Costs of Gas Flaring Solutions
In order to solve the gas flaring issue, significant capital investment will be required. Building
more pipelines and reinjecting the gas are two ways that are helpful, but are not necessarily
commercially viable solutions. This section describes the obstacles of the two solutions from an
economic perspective. The following sections will present technology and policy solutions that
are more feasible to reduce harmful gas flaring for industry leaders and policy makers to
consider. The challenges of building more pipeline infrastructure to collect, transport, and sell
gas are mainly economical. Gas reinjection also has bottlenecks when it comes to the returns of
oil production.
Building more pipelines
Building more pipelines will reduce pressure on flaring gas, but it can be costly. In order to
calculate the cost, the distance of the pipeline has to be multiplied by the diameter of the pipe.
Costs per mile increases with the pipe size. Average diameter of an interstate pipeline is
35
between 24 inches and 36 inches, or an average of 30 inches. 120 A large diameter pipeline costs
around 90,000 USD/inch-mile for 30 to 36 inches. Indeed, the infrastructure may take several
months to one year before approval is given and construction finished. 121There are several costs
to be considered for pipeline infrastructure. The construction and operating costs of natural gas
pipelines and the costs of gathering, transmission, and distribution pipelines all contribute to the
balance sheet.122 Also, the cost increases if the pipeline goes through residential areas, roads, or
highways, meaning costs are largely dependent on location, terrain, and population density. 123
For example, the recent Permian Highway Pipeline is projected to cost about $2 billion, but
completion of the project is constrained by considerable uncertainty. The project may be
postponed due to recent developments in the volatile market environment, legal battles with
regulators, and the security of dividend returns. Companies are responding to this market and
investment uncertainty by reducing capital investments and cutting costs. 124 The first big gas
pipeline to enter service in the Permian in recent years was Kinder Morgan's $1.75 billion Gulf
Coast Express in September 2019. This project provided the region with much needed takeaway
capacity to the Gulf Coast. Because Gulf Coast Express was already filled to its 2.0-bcfd
capacity, the market will have to wait until early 2021 for a relief. Consequently, Kinder Morgan
expects to put the 2.1 bcfd Permian Highway gas pipe into service. 125
Reinjection of gas
Shale enhanced oil recovery delivery through gas reinjection technique works well, yet the
industry faces bottlenecks on returns in the short term. By drilling new wells, companies are safe
to get returns in the first year. This gas reinjection technique may take up to two year to make
full returns due to the cost to fill up the depleted wells with gas after the first injection cycle. 126
The scarcity of gas compressors contributes to the reluctance of using this method for
companies. Therefore, in consideration of the long-term vision, oil producers need to redistribute
time and resources to the effort. This explains why the reinjection alternative is not deployed on
scale by many companies from a profitability standpoint.
3.4. The Rise of ESG Integration as a Potential Strategy
The rise of ESG integration can serve as a financial incentive to encourage companies to address
flaring issues. Investors have been incorporating ESG metrics into investment policies for the
past few decades, and they have indeed valued the sustainability impact of an investment in
recent years with a particular focus on climate change. Given the catastrophic consequences
COVID-19 pandemic has caused, investors will have to put greater focus on ESG metrics to
120 What Does Natural Gas Pipeline Construction Cost per Mile
121 Improving utilization of associated gas in US tight oil fields - p9
122 https://docs.house.gov/meetings/IF/IF03/20200205/110468/HHRG-116-IF03-20200205-SD006.pdf p26
123 Natural Gas Value Chain: Pipeline Transportation
124 Phillips 66: Red Oak, Liberty, ACE Pipelines Deferred by Cost Cuts
125 Kinder Morgan Uncertain About Permian Pass Pipeline
126 Shale EOR Delivers, So Why Won’t the Sector Go Big?
36
mitigate risks. Industry itself also seeks green transition with ESG integration responding to the
demand.
Investors’ sentiment
In recent years, the concept of Environmental, Social, and Governance (ESG) has gained
popularity within the energy industry for a variety of reasons. According to the World Bank,
“ESG investing incorporates environmental, social, and governance issues into the analysis,
selection and management of investments”. 127 ESG is yet to be defined by any official regulatory
agencies, and different industries and companies have their own approach to ESG. ESG
framework covers a wide range of issues from environmental, social and governance
perspectives, such as climate change, diversity, and management structure. There is growing
evidence showing these nonfinancial factors have an impact on the business, which can reduce
volatility and have better returns for investors in the long run.128 Although some have made
progress to incorporate more ESG metrics, more need to be done in order to further reduce
flaring.
Evolving needs from investors’ side leads to a green transition in the energy sector for many oil
and gas companies. Those ESG-conscious investors motivate companies to begin making a
change in their business model towards sustainability. For example, Kimmeridge, a private
equity firm with a focus on oil and gas assets, published a report calling for a change of business
model in the exploration and production sector. The whole industry is facing a capital flee with
lower investment rate. Despite the fact that a lower investment rate will cause a lower production
and in turn a lower rate of flaring, this is not a solution for the development of the industry in the
long term. Along with other changes in social and governance, Kimmeridge specifically points
out a change to reach target zero flaring of gas from the environmental perspective. 129 Therefore,
for investors’ in the energy space, there is a trend to make sustainable investment. Under the
demand of investors, this will be a market force to drive transformation for the oil and gas
industry to embrace ESG initiatives.
There is a trend for the investors’ community to invest sustainably and will continue to thrive.
Factors such as carbon pricing, climate-related supply chain disruptions, and shifts in consumer
demand, all of which may change the underlying economics. 130 Companies look for
transformation because the current business model that may seem profitable in the short term, is
not sustainable in the long term. An increasing number of companies addresses environmental
concerns when making investment decisions as they believe ESG will bring positive returns in
the long run. However, the current challenge that the oil and gas industry faces to incorporate
ESG metrics is similar to other industries in terms of information disclosure and setting
standards. More and more industries and companies have begun to consider ESG integration, yet
127http://documents.worldbank.org/curated/en/913961524150628959/pdf/125442-REPL-PUBLIC-Incorporating-
ESG-Factors-into-Fixed-Income-Investment-Final-April26-LowRes.pdf
128https://www.unpri.org/Uploads/g/t/y/ESG-Factors-and-Risk-Adjusted-Performance.-A-New-Quantitative-
Model.pdf
129 Preparing the E&P Sector for the Energy Transition: A New Business Model
130https://energypolicy.columbia.edu/research/commentary/boosting-esg-finance-post-covid-19-world#_ednref11
37
they have their own definitions and rules about ESG metrics each is a little different from others.
In order to encourage ESG reporting, one of the essential tasks is to set industry wide standards
for every participant to follow and agree on. In particular, for the purpose of mitigating flaring,
issues with measurement and reporting discussed in this paper may contribute to the creation of
widely accepted standards and requirements or further regulatory practices.
ESG considerations also gain prominence for rating agencies in assessing issuer credit quality.
There are a number of established rating agencies and index providers focused specifically on
ESG metrics with rigorous research processes to evaluate companies, such as Sustainalytics,
MSCI, Refinitiv, and ISS. They measure corporate performance based on ESG criteria by using
their own research methodology. They provide the information and assessment as a great
reference for investors in the decision making processes. Traditional rating agencies, such as
Moody’s, Standard &Poor’s, and Fitch Ratings also enter the field as investors show enormous
interests in ESG. They start to include ESG related non-financial data in addition to ranking
companies based on financial factors and those data have taken on an increased importance in
credit rating. ESG analysis is not systematically integrated into credit risk assessment yet. One
potential suggestion for policymakers is that they should lay down rules to set an explicit and
systematic industry standard given ESG’s growing importance.
Industry transformation
On the industry side, some efforts have also already been made to reduce flaring. For example,
the CEO of Cimarex energy, an exploration and production company with a base in Texas,
Oklahoma, and New Mexico, announced their 2020 corporate goals to set numerical targets for
the purpose of reducing company emissions and the incidence of flaring. The performance in
regard to those goals will be directly linked to executive team compensation. 131 This is an effort
that can be a paradigm for other people in leadership positions to consider. The impact may not
be as quick and obvious, but the effectiveness of linking compensation is likely to be expected if
decisions are made from c-suite people who actually care about the flaring issue and are
determined to do so.
Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), and Task
Force on Climate-related Financial Disclosures (TCFD) are three non-profit organizations that
publish reports to set standards for industries. They outline a framework for companies to
disclose information regarding sustainability disclosure topics and accounting metrics for
industries like oil and gas. SASB has a focus more on the investors’ side, while GRI and TCFD
provide a reference for the industry. Investors increasingly weigh ESG criteria when evaluating
companies and making investment decisions. Hence, this will likely provide a financial incentive
for oil and gas companies to value and incorporate ESG reporting. The lack of broadly accepted
standards across the industry becomes a problem. Policy makers or leaders in the industry have
to think about the question of how to set an industry-wide standard or even pass a law, so that
everyone can follow the rules without disagreement. Furthermore, as discussed in this report, the
difficulty of measuring flaring emissions makes it an obstacle for policy makers to incorporate it
into ESG metrics. However, once flaring measurement is figured out through creating rules and
131 Colorado oil company ties executive pay to cutting emissions, flaring
38
standards, it should become of the criteria as flaring issue raises more and more concerns among
investors and the industry.
Many big companies in the industry have already started the effort in ESG. Flaring emissions is a
critical part of these companies. For example, Exxon Mobil was committed to reduce flaring by
25 percent globally by 2020.132 BP also upgrades its Permian wells that could eliminate much of
its flaring and it will not start new wells in the area unless they have access to gas pipeline
infrastructure, which will be extremely helpful to flaring reduction. 133 Unfortunately this year,
some smaller shale oil producers may face financial difficulty as a result of the demand shock
and low price. The likelihood of them filing bankruptcy is expected this year and next year.
Some merge and acquisition transactions are also likely to happen for some of those producers.
Large companies tend to have more focus on ESG because they have a variety of income sources
and can devote more resources into ESG. As the industry becomes consolidated with large
companies that remain in the business, the integration of ESG metrics for those companies will
grow. They will continue to make progress on ESG. Incorporating flaring into ESG metrics can
potentially be an effective tool to reduce flaring.
132 Despite Their Promises, Giant Energy Companies Burn Away Vast Amounts of Natural Gas
133 ibid.
39
4. Technology Solutions
Methane Measurement Technologies 40

Introduction of current flow meters
Satellite data
Flaring Efficiency Technologies 45
Flaring efficiency monitoring
Typical designs to improve the flaring efficiency
Gas Utilization Technologies 48
Compressed liquified natural gas (CNG)
Small-scale liquified natural gas
Gas-to-liquids
Blockchain and bitcoin mining
This section presents several of the technological solutions to gas flaring in the market today. We
conducted a research analysis to better understand this industry, its challenges, and its main
components, focusing on the five essential technological practices to reduce flared gas: 134
● Increase direct measurement of flared gas volumes: mass flow meters need to be widely
installed at the flare for measuring flared volumes directly;
● Improve the flaring efficiency: robust flaring monitoring to ensure the flares operate at
the required level is essential, as is deploying technologies that can improve the
combustion efficiency of flare;
● Apply gas utilization technologies: capture methane/gas at the business level and build
more small facilities;
● Keep the gas in the reservoir: apply technologies that can keep the associated gas
underground to avoid further need for flaring/reinjection of gas;
● Develop timely infrastructure: oil/gas companies, governments and investment
communities need to prioritise the development of pipeline capacity and gas processing.
In the previous section, we discussed associated natural gas infrastructure development and
reinjection technologies. We will further discuss methane measurement, flaring efficiency, and
gas utilization technologies in this section.
4.1. Methane Measurement Technologies
134 Flaring emissions – Tracking Fuel Supply – Analysis

40
Flow Meters
Existing industry regulations and standards provide helpful guidelines by defining the acceptable
accuracy limits for flare flow meters, especially in EPA135. However, it is challenging to reveal
the flowmeter inaccuracy and minimize errors in flare flow measurement. There are inherent
challenges to measure and monitor gas including the flow variation, complexity of gas
composition and location accessibility.
Aside from the measurement of the flared gas, it is often necessary to monitor flare flow at
various points within a complex run of pipes including the actual flare stack. Flow meters
provides the user with an understanding of the gas source flowing to the flare, as well as a
relative flow rate. In the current market, there are two kinds of flow meters, mass flow meters
and volumetric flow meters. In volumetric flow meters, the flow rate is calculated by measuring
the volume of a substance through a device over a given period. In mass flow meters, the flow
rate is calculated by measuring the amount of mass of a substance passing through a device for a
given amount of time. 136 Mass flow technology has an inherent advantage over volumetric flow
technology by its very nature since it accounts for absolute measurements, while volumetric air
flow is less reliable than mass flow to account for absolute measurements because changes in
temperature and pressure affect the gas density and thus reduce the accuracy. Direct thermal
mass flow controllers and insertion-type thermal mass flow meters, on the other hand, offer
customers direct gas mass flow measurement without pressure or temperature sensors or flow
computers. Coriolis flow meters are the only other technology that measures mass flow rate
directly with no secondary flow computers.137 To reduce the flared gas, we need to improve the
direct measurement of gas. Therefore, we’ll only discuss mass flow meters in this chapter. Here
is a chart about current mass flow meter technologies:
Name Characteristics Cost
Thermal ● Direct Measurement: Measure gas mass flow Vary by

Flowmeters directly without the need for additional need pressure; types
● The most economical technology for direct
measurement of the flared gas;
● Calibration: Thermal mass flow meters measure heat
transfer and relate heat transfer to mass flow based on
the calibration. Since various gases have different heat
transfer properties, the thermal mass flow meter must
be calibrated with the specified gas to accurately
measure the flow rate.
● One disadvantage of Thermal Flowmeters: By using
thermal ones, engineers need to know the composition
135 Technical Guidance Document: Compliance Assurance Monitoring, Revised Draft:

https://www.epa.gov/sites/production/files/2016-05/documents/cam-tgd.pdf
136 Mass Flow vs. Volumetric Flow Meters
137Volumetric Flow Rate Versus Mass Flow Rate Technology | Sierra Instruments
41
of gas they’re measuring. This can be a problem
measuring stack gas emissions from the main flow
header in refineries and chemical plants where the gas
composition can vary.
● Wide Rangeability: Thermal flow meters can have a
rangeability of 1000:1, still lower than ultrasonic
flowmeters, but allow thermal ones to accommodate
large flow swings and extreme flow conditions.
Sage Thermal ● Special Calibration: The first thermal mass flow meter Approximat
Flowmeter to utilize graphical displays, a hybrid digitally driven ely $5,000
circuit, a hybrid digitally driven circuit and the with the
industry’s first in-situ calibration verification potential of
system;138 the price
● The Sage Metering (SAGE) flow meters are calibrated being
using the actual gas mixture (or a mixture as close as lowered in
possible to the specified composition). 139 This method the future140
of calibration is more accurate than using air with
correction factors for different gases which is another
commonly used calibration practice.
TF Hudgins ● It is the only thermal mass flow meter on the N/A

TFH 1000 market that performs a calibration validation test
Thermal Gas under actual operating conditions, in-pipe and at
Flowmeter normal flow;
● It provides high-precision, direct measurement of gas
flow rate in standard units without the need for
temperature or pressure compensation.The compact,
robust unit also provides accurate measurement of
process gas temperature;141
● It exceeds the accuracy requirements defined by
the EPA rule.
Ultrasonic ● Ultrasonic flowmeters are more widely used for flared Can range
Flowmeter gas from
● It is more accurate than thermal flowmeters (see the $50,000-
chart below) $100,000143
● Reliability: ultrasonic flow meters have no moving per
parts and require less maintenance than some other installation
meters with the
138 Sage Natural Gas Flow Meter and Thermal Mass Flow Meters
139 Flare Gas Measurement Using Sage Thermal Mass Flow Meters
140 Ibid Flare Gas Measurement Using Sage Thermal Mass Flow Meters
141 TFH 1000 Thermal Gas FlowmeterBrochure
143 Sage Natural Gas Flow Meter and Thermal Mass Flow Meter https://sagemetering.com/
42
● Wide rangeability: some meters can have the potential of
rangeability as high as 2000:1 142. Because the flowrate price being
in a gas stack can be very low at times, while lowered in
sometimes can have a high velocity. the future
Coriolis mass ● It relies on the Coriolis effect to measure fluid mass N/A
flowmeter flow rates;
● Not commonly used for flared gas: Coriolis flow
meters are applicable for mass flow measurement in
liquids as well as gases, but are prominently used for
liquids as a high-density fluid is required to maintain
the momentum of oscillation which is critical for
measuring the mass flow rate.
Table 4.1 Current Typical Mass Flowmeters
The table 4.1 illustrates two main flowmeters for flaring gas, thermal flow meters and ultrasonic
ones. Ultrasonic flowmeters are more accurate than thermal flowmeters. Many scientists have
conducted research on these two flow meters for flare applications.
142 Flow Technologies for Measuring Flare Stack Emissions

43
Table 4.2 Errors Related to Use of Fixed Composition for Different Meter and Calculations Type144
From the chart above, the ultrasonic meter (velocity meter) is the optimistic choice for
addressing environmental concerns. However, the current version of ultrasonic flow meters is
ranging from $50,000-$100,000 per installation,which could be expensive for some buyers.
Another more affordable and common technology is the Sage Thermal Flow Meters (Sage),
which is approximately $5,000 with the potential of the price being lowered in the future. Sage
technology is calibrated using the actual gas mixture (or a mixture as close as possible to the
specified composition). Sage is able to predict the variations in performance based on the
different gas compositions. This method of calibration is more accurate than using air with
correction factors for different gases which is another commonly used calibration practice.
The flow meter technology including both the ultrasonic and the thermal flow meters are
developing. There are new technologies coming up in the market. A self-verification system is
introduced to flow meters and can help avoid calibration costs. Usually, in the oil/gas industry,
flowmeters must be calibrated periodically and removed to comply with governmental
regulations. Performing self-verification on a flowmeter can extend calibration cycles by a factor
of 10 or higher. In some cases, it may even be possible to replace wet calibrations completely
with self-verification. Another improvement is wireless capabilities and the real-time data.
Today’s flowmeters can already have wireless, Bluetooth and web server capabilities, which
means flowmeters can be accessed, probed, configured and diagnosed over smartphones, tablets
and handheld devices.
The main challenge of flow meter technologies doesn’t come from the technology itself, but
from the target customers. Challenges result from inadequate regulatory incentives and financial
concerns. In the future, these are the two main factors that market players need to face. Real-
world problems like inaccuracies and high costs of the flaring measurement are still hard to be
solved without flow meter technology being applied to the whole value chain.
Satellite Data
A set of methods are presented for the global survey of natural gas flaring using data collected by
the National Aeronautics and Space Administration/National Oceanic and Atmospheric
Administration NASA/NOAA Visible Infrared Imaging Radiometer Suite (VIIRS). The accuracy
of the flared gas volume estimates is rated at ±9.5%.145 Because of the lack of systematic
reporting from flare operators and the remote nature of many flare locations, satellite sensors are
an attractive option for global monitoring of gas flares. However, in the past, none of the existing
sensors have been designed specifically for the detection and monitoring of gas flares. While
recently, a technology company called Kayrros, a Paris-based tech start-up company has released
their recent findings about the “methane emissions inventory database” or “methane tracker”. It
144 “Manual of Petroleum Measurement Standards, Chapter 14 - Natural gas Fluids Measurement, Section 10 -
Measurement of Flow to Flares”, Table 5, API, MPMS, 14.10, June, 2012
145 “Methods for Global Survey of Natural Gas Flaring from Visible Infrared Imaging Radiometer Suite Data”,
Christopher D. Elvidge 1,*,Mikhail Zhizhin 2,3,Kimberly Baugh 2,Feng-Chi Hsu 2 andTilottama Ghosh, MDPI,
2016
44
was a breakthrough announcement because it created a system focusing on the detection and
monitoring of methane and gas flares. Methane emissions can now be detected on a global scale,
which represents a major step-change in the ability to work towards the reduction of man-made
emissions.146 The data shows that there are around 100 high volume-emitting events at any one
time around the world. Together, in the course of one year, they are releasing 20 megatons of
methane which is equivalent to 1.8 gigatons of CO2 in the first twenty years. Though there are
still skeptical concerns about the accuracy of satellite data, it is still one of the most accurate and
objective technologies for methane monitoring and measurement. One challenge for those
companies doing satellite technology on flared gas is how to incorporate the methane tracking
system into investment like ESG, company’s portfolio or even emission trading system.
Companies like Kayrros are building their business models by quantifying ESG rating standards
and offering environmental supervision and real-time data for buyers, which is very promising
for those satellite data companies.
4.2. Flaring Efficiency Technologies
It is difficult to accurately gauge the extent of emissions coming from flare stacks. Although it is
widely assumed that they operate with 98% efficiency, there is widespread concern that this
number is not entirely accurate. 147 This will lead to considerable underreporting of the
emissions.148 The flaring efficiency depends primarily on three key parameters: the CH4 fraction
in the waste gas, the flare jet velocity, and the wind speed. Based on this, I listed two kinds of
technology to address the flaring efficiency issues. One is the flaring monitoring technology and
another one is to increase the efficiency in flare gas and air mixing.
Flare Efficiency Monitoring
In 2014, Providence Photonics Technology 149 developed an innovative technology to remotely

measure the combustion efficiency of an industrial flare, which gained funding and grant support
from the EPA. The Providence Photonics flare monitor utilizes a specially designed, multi-
spectral high speed Infrared (IR) imager to measure relative concentrations of unburned fuel and
combustion products in every region of the flare flame. These measurements are then used to
determine real-time flare combustion efficiency and provide metrics to measure the presence of
smoke and the level of steam assistance. With these process parameters, operating conditions can
be adjusted to keep the process flare combustion optimized without excessive use of secondary
resources, such as auxiliary fuel gas and steam. Additionally, the flare monitor can be installed
several hundred feet away from the flare further reducing the complexity of installation and
146 Kayrros and Copernicus Images Allow Quantification of Global Methane Leaks Equivalent to 1.8 Gigatons of
CO² Emissions
147 “Methane, Black Carbon, and Ethane Emissions from Natural Gas Flares in the Bakken Shale, North Dakota”,
Alexander Gvakharia, Eric A. Kort, Adam Brandt, Jeff Peischl, Thomas B. Ryerson,Joshua P. Schwarz,Mackenzie
L. Smith, Colm Sweeney, Environmental Science & Technology, 2017
148 Kleinberg, Robert. “Greenhouse Gas Footprint of Oilfield Flares Accounting for Realistic Flare Gas
Composition and Distribution of Flare Efficiencies.” Preprint. Earth and Space Science Open Archive, December
16, 2019. https://doi.org/10.1002/essoar.10501340.1.
149 https://www.providencephotonics.com/flare-monitoring
45
maintenance costs. At that time, there are not many technologies applied to the measurement and
monitoring of flare efficiency. But recently, many companies like Siemens, Honeywell, Zeeco
are also developing similar kinds of technologies.
Recently, big companies are taking an active part in the flaring monitoring market. For instance,
Providence Photonics, recently partnered with Lockheed Martin and Surface Optics to
manufacture Mantis, a video imaging spectral radiometry, or VISR, flare monitor. The product is
used by BP businesses to manage methane emissions at oil and gas production facilities. It’s the
first readily deployable monitoring solution that directly measures methane emissions entering
the environment. However, like the report that Texas Railroad Commission published in
February, the “flaring intensity” is becoming significant, which means the mid-size and small-
size companies can also contribute a lot to the flared gas amount. How to ensure those
companies enter into the flaring monitoring and efficiency market is the key question in the near
future.
The Callidus Hemisflare
Conventionally, the flare gas exiting from the cylindrical pipe of the flare head expands as a free
jet into the atmosphere and sucks in the air necessary for combustion. 150 To improve the flaring
efficiency, the new Callidus Hemisflare utilizes a patent pending Coanda bowl 151design to
inspirate more air. When flare gases can be presented in a thin sheet, more of the gases come in
contact with the air, increasing the likelihood of complete combustion. This is achieved using the
Coanda Effect.
The new bowl design uses raised vertical ridges around the outside of the bowl, significantly
increasing the surface area of the bowl. Increased surface area improves the gas/air mixing,
which improves the flare’s smokeless capacity. The bowl profile has also been enhanced through
computational fluid dynamics modeling, and physical testing, to optimize the bowl shape and
dimensions for the best combustion characteristics. In this way, the Callidus design adds
additional surface area, expands the contact between air and flare gas, and increases the mixing
efficiency.
150 REF # 2 Degree Of Conversion Of Flare Gas In Refinery High Flares

151 Callidus Hemisflare - Offshore and Onshore Production Flare
46
152
Table 4.3 The Callidus Hemisflare Coanda Bowl
The Callidus Hemisflare tip design is a breakthrough in modern flare technology.The

incorporation of the Coanda design with enhanced ridges has increased the flare gas and air
mixing while enabling longer tip lifespan. With this new tip design, the flare steam consumption
has been reduced, the steam control system has been simplified, and the smokeless efficiency is
improved. In general, the Callidus Hemisflare tip is a vast improvement over current steam
technologies.
There is no public data about the costs of those efficiency technologies. However, we learned
from our interview with Dr. Eric Kort from University of Michigan, that this kind of burner tip
has a low cost, which can be affordable for the industry.
153
The 2019’s Flare Monitoring Market Report154 claims that the flaring monitoring industry is
anticipated to register significant revenue over the estimated time period, between 2019 and
2035. Especially when more technology providers, service providers, research organizations, PE
and VC firms are joining, this can be achieved. However, a key challenging factor for the growth
of the said market is the technological challenges resulting from the adherence to regulatory
norms while bringing down the overall cost of systems.To make technologies commercialized,
regulatory and policy incentives are essential for end users.
4.3. Gas Utilization Technologies
Compressed Natural Gas: GE’s CNG in a box
152 Ibid Callidus Hemisflare - Offshore and Onshore Production Flare

153 Our group had an interview with Dr. Eric Kort on March 26th, 2020
154https://www.marketwatch.com/press-release/flare-monitoring-market-2019-recent-industry-trendstop-
manufacturers-market-growthshare-historical-background-and-future-forecast-2019-08-29
47
GE’s “CNG in a Box” system was launched in 2012. 155 It can solve the inaccessibility of well
sites and help reduce the flared gas. Specifically, it allows E&P companies to use and monetize
more of their produced gas, even at wells in inaccessible off-grid locations. The first stage of the
development of the CNG In A Box system was directed to natural gas vehicle (NGV) refueling,
but with a few simple improvements, it turned out to be well suited to “virtual pipeline”
applications. “Virtual pipeline” refers to a moveable gas solution rather than a traditional
pipeline system. GE offers their clients a modular “plug-and-play” CNG solution when
combined with trucks to move gas. The same technology can be used to flare gas, enable onsite
power generation and be suited for on-road transportation fueling of NGVs because of the
modularity and flexibility of the design.
According to HartEnergy 156, this particular technology can reduce natural gas flaring in North
Dakota by 1.6 MMcm/d (60 MMcf/d), or 20%, and has the potential to play a critical role in flare
gas reduction in wells beyond the Bakken, including expanding gas processing capability and
powering production.
Mini Facilities: Small-scale LNG
There is a growing number of companies doing small-scale LNG projects now. The Cryobox
Mobile LNG station by Galileo Technologies 157is one of them. It can provide LNG fuel for
remote industrial facilities, mining operations, or distant communities, even further than 250
miles away, and transform the polluting gas-flaring into value-added liquid fuel. This kind of
technology is also called “virtual pipeline.” It has some advantages compared to traditional LNG
plants:
● Low Energy Consumption: With an energy consumption of 300 kW at the gas

conditioning stage and 400kW at the liquefaction stage.158 This process offers one of the
lowest energy consumption levels in the market: 0.7 kilowatt-hours per LNG kilogram
(kWh/kg);
● Quick peak time: Peak production is reached in 10 minutes. (for traditional LNG plants
are about 18 hours);
● Less processing and commissioning time: The rig can be moved between wells and can
be up and running within an hour of arriving on site.The transfer of LNG to storage tanks
can be completed without the use of pumps. Through the priority panel, LNG can be sent
from those tanks to distribution trailers, to industrial vehicles or to equipment for
immediate consumption;
● Much less capital costs than mega/normal LNG projects;
● Multiple fuels for flexible needs: Besides producing LNG, the Cryobox offers
Compressed Natural Gas (CNG) or Compressed Biomethane (Bio-CNG) on demand.
After reaching the required BTUs scheduled in a regular LNG production plan, the
Cryobox is also able to produce up to 80,000 standard cubic feet/hour 159 of CNG for
155 https://www.hartenergy.com/exclusives/thinking-inside-box-176379
156 https://www.hartenergy.com/exclusives/thinking-inside-box-176379
157 https://www.galileoar.com/us/small-scale-distributed-lng-production/
158 Ibid Distributed LNG Production
159 https://www.verdek.com/nano-lng-station.htm
48
fleets or for retail fueling, allowing for maximum uptime and additional revenue. Another
advantage is there is no additional installation of CNG compression components under
Galileo’s dual-mode capability.
The challenge of small-scale LNG projects is from the demand. There are three major end uses
for small-scale LNG: marine fuel (bunkering), fuel for heavy road transport, and power
generation in off-grid locations. In the US's northeastern region, small-scale LNG facilities have
been operating for years, chiefly providing a source of fuel for electric power plants in the winter
months, when fuel demand is high. The market structure of small-scale LNG in the Gulf Coast
region is different. Small-scale LNG serves the overseas market, especially in Latin America and
for the bunkering market. For instance, with the IMO 2020, NuBlu Energy’s Port Allen
Liquefaction facility, a 30,000 gal/d project situated along the Mississippi River near Baton
Rouge, Louisiana, about 140 miles north of the Gulf of Mexico is looking at the overseas
market.160
Compared to conventional LNG plants, small-scale LNG is more flexible. But at the same time,
it suffers from more volatilities. Small-scale LNG is developing with short-term LNG contracts,
which are not linked to the oil price. Short-term LNG contracts usually use spot prices, which are
more risky for LNG suppliers. The demand market needs to be guaranteed in LNG contracts.
This is why the current small-scale LNG is growing fast in high-demand countries like China.
Operational challenges in the small-scale LNG market refer to companies’ integrated operational
abilities across the whole value chain. It would be difficult for a supplier to maintain their
business if they only have small-scale LNG without other integrated business. According to
PWC’s report in 2017,161 the winning players in small-scale LNG industry need to be active
across all segments of the industry, from the supply of gas, to transportation and distribution,
right down to the point of direct commercial relationships with end-users (where sizable).
Players should focus on the core activities, while outsourcing the low-value-added activities that
require specific local presence and knowledge of national regulations, such as bunkering, “last-
mile” transportation, and scouting of smaller off-grid potential users. Equally, companies should
leverage their key competencies in commodity hedging to reduce the price risk for end users in
the initial market development phase. Leading companies in the small-scale LNG market like
Gazprom, Shell, Equinor and BP reflect the importance of operational abilities.
Overall, small-scale LNG technology can be a practical way to solve the flared gas in North
Dakota and Texas, while the key step is to find the customers of applying this technology and
where does the LNG demand lie in: Mexico, Northeastern US or other markets.
Gas to Liquids
In industry, methane is typically used in the syngas process, which converts steam and methane
to a mixture of carbon monoxide and hydrogen, known as synthesis gas, at ~900°C. The
synthesis gas can then be reacted over a catalyst in a second step, also at high pressures and
temperatures, to produce methanol. Methanol can then be used directly as a fuel or as a precursor
for high-value chemicals. The syngas route is energy-intensive as it requires high temperatures
160 Small-scale LNG projects make market inroads in US - Platts Insight

161 https://www.strategyand.pwc.com/fr/fr/media/small-going-big.pdf
49
and pressures. In addition to operating at lower temperatures and pressures than existing
technologies, OxE Gas to methanol technology162 process has demonstrated tolerance to sulfur
impurities common in natural gas, which will reduce the cost of purification prior to the reaction.
OxE’s initial studies demonstrated that methane could be efficiently oxidised to a methanol
derivative using inexpensive salts in a process termed oxyesterification (OxE) with minimal
(<2%) production of CO2. With this, 40% yield was reported with more than 97% selectivity for
the desired product.163 Further investigation into the process indicated that the partial oxidation is
efficient because the product is protected from unwanted over-oxidation. This cutting-edge
process provides a potential route to use natural gas more productively than the traditional GTL
technology.
OxE technology can reduce costs through the purification process. In addition to operating at
lower temperatures and pressures than existing technologies, the OxE process has demonstrated
tolerance to sulfur impurities common in natural gas, which will reduce the cost of purification
prior to the reaction. Another strength of this technology is no gas pipelines are required, which
can lower costs: facilities for the OxE process are projected to be less costly than current
technologies, enabling natural gas conversion at the wellhead rather than requiring pipeline
construction to bring the natural gas to large chemical plants.
Same as the gas to methanol technology, GTL is also expensive. The GasTechno Technologies
has invented a Portable Mini-GTL system that converts methane to methanol in one step. It is
designed to monetize small scale sources of stranded gas from 50 thousand standard cubic feet
per day (mscfd) to 30 million standard cubic feet per day (mmscfd); a market representing 80%
of the global stranded and flared gas market. 164
Blockchain, Bitcoin Mining, and Data Centers
Crusoe Energy Systems, as a pioneer, announced that it would install data centers at shale sites,
generating electricity from the surplus gas to mine Bitcoin. The company has eight operations
across the US, with plans for an additional 30 in the first half of 2020, and now it wants to use
the electricity generated from these centers to power data centers to mine Bitcoin. 165 Steady
electricity output and high tech improvement: Crusoe said it plans to use the computing
capability generated from those centers to develop an artificial intelligence cloud-computing
service. The report said that Crusoe plans to set up 70 units in 2020, each with a maximum
electric output of 1 MW, which the company said would keep approximately 10 MMcf/D of gas
from being flared.
Blue Marble Gas, a midstream gas gatherer and blockchain technology company will place a
power-generation and Bitcoin-mining system next to a gas pipeline. The business plan is simple:
use pipeline gas to generate electricity and sell that electricity to the owner of the Bitcoin-mining
162 https://energypost.eu/new-gas-to-methanol-technology-oxe-could-end-oil-well-flaring/
163 https://energypost.eu/new-gas-to-methanol-technology-oxe-could-end-oil-well-flaring/
164 GasTechno® GTL Gas-to-Liquids
165 Data Science and Digital Engineering: Company Bets Bitcoin Mining Can Ease Flaring
50
operation. In this case, Blue Marble gets paid for the energy conversion while its private equity
backer holds onto the Bitcoin wallet. 166 Blue Marble estimates that a single unit of gas used to
make one Bitcoin, which today is valued at around $9,000, would bring a return of $8 to $15 at
current commodity prices. 167The first installation taking shape this year is estimated to convert
30 MMscf/D into nearly $270,000. This will require at least 100 MW of power, generated by
four GE-built trailer-mounted gas turbines.
5. Natural Gas Flaring and Venting Regulation

Current state of Federal and Local Regulations 52
Emissions Abatement Goals 56
The Ideal Regulation 59
Definition of Waste 65
5.1. Current state of Federal and Local Regulations
The following chapter presents an outlook on the state and local regulations to address natural
gas flaring and venting that exist in the U.S. and a brief analysis of best practices and failed
programs that exist today. Under the U.S. Federal system, each State has the jurisdiction and
authority to implement its own regulation, or to set specific goals, milestones, and objectives to
reduce natural gas flaring. There is no Federal framework the states must follow to address, but
the Environmental Protection Agency (EPA) oversees the implementation of the Clean Air Act
(CAA) which regulates all air emissions, controls hazardous pollutants, including greenhouse
gases, and sets general standards to protect the public health and welfare.168 This chapter
166 Wikipedia: Bitcoin Wallet, which is also called the Cryptocurrency wallet, is a device, physical medium,
program or a service which stores the public and/or private keys and can be used to track ownership, receive or
spend cryptocurrency.
167 Innovators Seek To Transform Flaring Into Money and Power
168 Supreme Court of the United States of America, “Massachusetts v. EPA, 549 U.S. 497 (2007),” Justia Law,
accessed May 7, 2020, https://supreme.justia.com/cases/federal/us/549/497/.
51
separates the U.S. states into two groups, the major oil and gas producers and the rest of the
states as an entity using the EIA considerations. The state producers are: Alaska, Arkansas,
California, Colorado, Idaho, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio,
Oklahoma, Pennsylvania, Texas, Utah, West Virginia, and Wyoming.
In the U.S. the regulation acknowledges the importance of flaring for safety measures and during
the first stages of the oil production. In this sense, it is unlikely that flaring or venting will ever
disappear, or that 100% of associated natural gas could be efficiently captured and channeled to
target markets.169 The U.S. the legislation has approached the problem twofold. First, the air
quality regulation which aims to maintain air pollution, including greenhouse gases, below
hazardous thresholds and to protect human health in the short and long terms. Second, the
permits and operation framework which establishes the administrative procedures that the oil and
gas industry must follow to operate its business in the U.S. Such regulation establishes the
minimum requirement to operate an oil well, how to dispose of waste, in some states it contains
specific thresholds and goals for natural gas flared.
Diagram 5.1 Regulatory Approaches to Gas Flaring and Venting
As a consequence of this dual approach, the legislatures in North Dakota, New Mexico,
Louisiana, Pennsylvania, West Virginia, Arkansas, Montana, and Ohio have divided the roles
monitoring and reporting of gas flaring related issues between two government agencies: one
that overlooks air quality issues and other that deals with operators, safety, permits and ground
169 U.S. Energy Department, “Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends,
and Impacts” (Office of Oil and Natural Gas, June 2019),
https://www.energy.gov/sites/prod/files/2019/08/f65/Natural%20Gas%20Flaring%20and%20Venting%20Report.pd
f.
52
activities.170 The rest of the oil producing states have put these responsibilities on a single entity
that deals with the entire problem. In this situation, the government entity tends to follow the
“ground” approach to the gas flaring and regulates the owners and operators of the oil wells.
It is important to recognize that Federal and State legislations evolve at a different rhythm than
the oil and gas industry, causing a lag in between these two. In the past, oil and natural gas prices
pushed for major capture efficiency and productivity in this industry, natural gas was a scarce
resource with a higher value than it has today. The boom of unconventional shale gas and tight
oil has changed the paradigm creating an oversupply of natural gas and the consequent waste of
associated gas in the new oil wells. 171 As mentioned in Chapter 3, there are multiple factors
maintaining natural gas prices in low ranges in the U.S. and discouraging the capital investments
required to to capture associated gas and to use it efficiently.
Natural gas flaring and venting increased since 2005 as a result of tight oil production. Graph 5.2
shows that natural gas flaring and venting was constant between 2000 and 2004, and increased
right after. Natural gas flaring and venting increased 413% according to the U.S. Energy
Information Administration (EIA) data between 2000 and 2018, a dramatic increase for a
developed country.172 The legislation has been lagging behind the industry in terms of production
trends, requirements, and available technology, but some states have addressed the problem more
170 Office of Oil & Natural Gas U.S. Energy Department, “Arkansas Natural Gas Flaring and Venting Regulations,”
May 2019, https://www.energy.gov/sites/prod/files/2019/08/f66/Arkansas.pdf; Office of Oil & Natural Gas U.S.
Energy Department, “Louisiana Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Louisiana.pdf; Office of Oil & Natural Gas U.S. Energy
Department, “Montana Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Montana.pdf; U.S. Energy Department, “Natural Gas Flaring
and Venting: State and Federal Regulatory Overview, Trends, and Impacts” (Office of Oil and Natural Gas, June
2019),
f; Office of Oil & Natural Gas U.S. Energy Department, “New Mexico Natural Gas Flaring and Venting
Regulations,” May 2019, https://www.energy.gov/sites/prod/files/2019/08/f66/New%20Mexico.pdf; Office of Oil &
Natural Gas U.S. Energy Department, “North Dakota Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/North%20Dakota.pdf; Office of Oil & Natural Gas U.S.
Energy Department, “Ohio Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Ohio.pdf; Office of Oil & Natural Gas U.S. Energy
Department, “Pennsylvania Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Pennsylvania.pdf.
171 Marianne Kah et al., “Columbia Global Energy Dialogue: Natural Gas Flaring Workshop Summary,” April
2020, https://energypolicy.columbia.edu/research/global-energy-dialogue/columbia-global-energy-dialogue-natural-
gas-flaring-workshop-summary; Hiroko Tabuchi, “Despite Their Promises, Giant Energy Companies Burn Away
Vast Amounts of Natural Gas,” The New York Times, October 16, 2019, sec. Climate,
https://www.nytimes.com/2019/10/16/climate/natural-gas-flaring-exxon-bp.html; International Energy Agency,
“Flaring Emissions,” IEA, accessed April 25, 2020, https://www.iea.org/reports/tracking-fuel-supply-2019/flaring-
emissions; Lori Edwards, “LMOP Workshop: Financial Considerations and Incentives Discussion,” n.d., 15.; U.S.
Energy Department, “Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends, and
Impacts” (Office of Oil and Natural Gas, June 2019),
f; Rystad Energy, “Permian Gas Flaring Hits All-Time Highs,” accessed May 7, 2020,
https://www.rystadenergy.com/newsevents/news/press-releases/Permian-flaring-record/.
172 International Energy Agency, “Flaring Emissions”; U.S. Energy Information Administration, “Natural Gas
Vented and Flared.”
53
effectively than others. The following lines will compare these regulations and their impact on
the industry over the past ten years.
Graph 5.2 Natural Gas Vented and Flared Data from EIA
The data shows that Texas, North Dakota, and New Mexico contribute largely to the flaring
problem in the U.S. The rest of the country presents low volumes of natural gas flared or vented.
In addition to time evolution, state Regulations tend to differ in their definitions, treatments,
extent, and complexity, states with intensive O&G industry developed a more flexible regulation
to accommodate different kinds of activities and practices and to foster new technologies. 173
However, these regulations tend to be soft on flaring and venting procedures for the same
reasons, they want to encourage the industry by reducing bureaucracy and monitoring procedures
that might frighten investments.
Some experts have shown their frustration over the lack of concrete actions to address this issue
seriously in the U.S. and they have called for more energetic actions from the regulators and
from the industry too.174 In addition, state legislators have tried to address venting and flaring
without reducing tight oil production in the country. An investigation on the Texan case showed
that the local regulator has approved all flaring permits submitted by the operators. The report
points out the agent-principal situation in which the Texas Railroad Commissioners' campaigns
are heavily funded by the oil and gas industry, creating opposing incentives for the
173 U.S. Energy Information Administration, “Natural Gas Vented and Flared.”: Kah et al., “Columbia Global
Energy Dialogue: Natural Gas Flaring Workshop Summary.”
174 Kah et al., “Columbia Global Energy Dialogue: Natural Gas Flaring Workshop Summary.”
54
Commissioners to apply the state legislation on flaring.175 This approach is common in other
parts of the country and creates a complicated system that has diffuse incentives to reduce
harmful natural gas flaring and venting while trying to protect the O&G industry.
Following the twofold regulatory approach described before, current regulations have separated
the efforts to address natural gas flaring. On one side, states placed the responsibility of
monitoring air quality on specific Departments of Environmental or Air Quality Divisions, eight
out of 17 state producers have created such government offices to monitor and enforce air quality
regulation. On the other side, all of these seventeen producer states have created a regulatory
framework around operational permits and their corresponding government office to oversee and
enforce such regulation or explicit restrictions on the unnecessary or excessive waste of natural
gas.176 Even between these policies, some are stricter than others, for example, Kansas,
Louisiana, Montana, New Mexico, Utah, Oklahoma, and Texas and have specific thresholds to
determine if a company has to report the amount of gas flared or vented and whether they need
additional permits to do so.177 In other states where the oil production is high, the regulation only
bans the uneconomic waste of this hydrocarbon, but there is no detailed information on what that
means, what are the thresholds for flaring and venting, or what qualify as unnecessary waste.
5.2. Emissions Abatement Goals
The urgency to control natural gas flaring and venting has increased as climate change risk rises
and reducing all kinds of greenhouse gas (GHG) emissions has gained popularity among some
government stakeholders. In states like Colorado, North Dakota and New Mexico, the governors
have issued executive orders or regulations to address and reduce GHG) emissions, including
those emitted by the O&G industry. 178 Such measures have reinforced the role of governors and
175 Deon Daugherty, “Unrestrained Permian Gas Flaring,” August 2019,

http://www.energyintel.com/pages/worldopinionarticle.aspx?DocID=1044758.
176 U.S. Energy Department, “Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends,
and Impacts.”k
177 Office of Oil & Natural Gas U.S. Energy Department, “Kansas Natural Gas Flaring and Venting Regulations,”
May 2019, https://www.energy.gov/sites/prod/files/2019/08/f66/Kansas.pdf; Office of Oil & Natural Gas U.S.
Energy Department, “Louisiana Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Louisiana.pdf; Office of Oil & Natural Gas U.S. Energy
Department, “Montana Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Montana.pdf; Office of Oil & Natural Gas U.S. Energy
Department, “New Mexico Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/New%20Mexico.pdf; Office of Oil & Natural Gas U.S. Energy
Department, “Oklahoma Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Oklahoma_0.pdf; Utah State Legislation, “R469. Natural
Resources; Oil, Gas and Mining: Oil and Gas.,” Pub. L. No. R649 (2018),
https://oilgas.ogm.utah.gov/pub/Rules/Rules_R649_All.pdf; Office of Oil & Natural Gas U.S. Energy Department,
“Texas Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Texas.pdf.
178 Michelle Lujan Grishman, “Executive Order on Addressing Climate Change and Energy Waste Prevention.,”
Pub. L. No. Executive Order 2019-003 (2019), https://www.governor.state.nm.us/wp-
content/uploads/2019/01/EO_2019-003.pdf; Becker et al., “House Bill 19-1261,” Pub. L. No. 1261 (2019); North
Dakota Industrial Commission, “Order 24665,” Pub. L. No. Order 24665 (2018),
55
state agencies in the process of controlling natural gas flaring. However, these measures do not
directly address associated gas flaring or venting, but the overall GHG emissions so there are
multiple other solutions that could be implemented to reach such targets that will not reduce gas
flaring or venting, bur rather attack carbon dioxide, nitrous oxide , hydrofluorocarbons,
perfluorocarbons, nitrogen trifluoride, and sulfur. From the oil and gas producer states North
Dakota, New Mexico, Colorado, and Pennsylvania set specific targets to cut back greenhouse gas
emissions, but only North Dakota created a schedule to increase natural gas capture in the
state.179
State Goals
North Dakota Gas capture goals established by the N.D. industrial Commission:
- 74% October 1, 2014 through December 31, 2014
- 77% January 1, 2015 through March 31, 2016
- 80% April 1, 2016 through October 31, 2016
- 85% November 1, 2016 through October 31, 2018
- 88% November 1, 2018 through October 31, 2020
- 91% beginning November 1, 2020
New Mexico Reduce GHG emissions at least 45% by 2030 compared to 2005 levels.
Colorado Reduce GHG emissions 26% by 2025, 50% by 2030, and 90% by 2050, relative to 2005
levels.
Pennsylvania Reduce GHG emissions 26% by 2025 and 80% by 2050, relative to 2005 levels.
Table 5.3 Greenhouse Gas Emission Reduction Goals per Oil & Gas Producer State
A particular problem with the current regulations is that only Louisiana, Montana and Wyoming
mandates companies to differentiate between natural gas flaring or venting on their reports, the
rest of the major state producers do not require such distinction, even when the industry and the
regulation understand the different impacts each of these processes have on the environment. 180
The New Mexico Oil Conservation Division also requires the distinction between these two
https://www.dmr.nd.gov/oilgas/GuidancePolicyNorthDakotaIndustrialCommissionorder24665.pdf.; U.S. Energy

Department, “Natural Gas Flaring and Venting: State and Federal Regulatory Overview, Trends, and Impacts.”
179 North Dakota Industrial Commission, Order 24665; U.S. Energy Department, “New Mexico Natural Gas Flaring
and Venting Regulations”; Lujan Grishman, Executive Order on Addressing Climate Change and Energy Waste
Prevention.; Pennsylvania Department of Environmental Protection, “Methane Reduction Strategy,” Department of
Environmental Protection, December 17, 2019, https://www.dep.pa.gov:443/Business/Air/Pages/Methane-
Reduction-Strategy.aspx.
180 U.S. Energy Information Administration, “Natural Gas Vented and Flared”; U.S. Energy Department, “Alaska
Natural Gas Flaring and Venting Regulations”; U.S. Energy Department, “Louisiana Natural Gas Flaring and
Venting Regulations”; U.S. Energy Department, “Montana Natural Gas Flaring and Venting Regulations”; Office of
Oil & Natural Gas U.S. Energy Department, “Wyoming Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Wyoming.pdf.
56
processes, but the rule is not strictly enforced. This situation creates a larger problem because the
public data collected and published by different organizations rarely differentiate gas flaring
from venting. Under these circumstances, tackling a specific process becomes very difficult and
companies tend to operate as if both processes have the same warming potential in the
atmosphere, when in fact they do not.
Until recent years, the regulators relied only on the operator’s or owner’s data, but the
appearance of new monitoring technologies such as satellite measurements and ground sensors
that can estimate natural gas flaring and venting will change policy enforcement and evaluation
in future years.181 Satellite data can be an effective complement to the operator’s data to
reconcile the information reported by the operators. However, no regulation has included these
technological advancements, nor considered their potential effects for future monitoring and
enforcement. These solutions can be cost-effective alternatives for the monitoring process since
they provide reliable estimates on the real size of the problem, but the legislation should take
them into consideration and evaluate potential ways to use them in the future. The technological
alternatives for surveillance and monitoring GHG emissions will increase the pressure on
companies to correctly disclose their emissions and their procedures to reduce harmful waste of
resources.
In the past, stakeholders have pointed out the importance of assessing the real impact of flaring
and venting, arguing that there is no way to completely abate gas flaring or venting and this
problem can only be managed and eventually reduced. According to some stakeholders,” flaring
intensity” (quantity of gas flared per barrel of oil produced) is a better measurement since
associated gas is proportional to oil production, so the phenomenon increases as total oil
production rises. In 2020, Ryan Sitton, Commissioner of the Texas Railroad Commission (RRC)
published an article pushing for the use of flaring intensity as the appropriate index to measure
unnecessary gas flaring. This indicator presents the associated gas flared as a percentage of the
oil production obtained so it could be used as a performance benchmark between oil producers in
the U.S. and other countries. 182 Beyond the debate on which is the best indicator for natural gas
flaring, it is important that state legislations are based on a common measurement if the industry
aims to tackle this problem effectively.
Sitton’s approach would discourage research and development to address this problem. It is true
that associated gas is intrinsically linked to oil production, but there are multiple operational
practices that could reduce this problem in the short and long terms. Adopting the
Commissioner's perspective would give the industry permission to flare or vent natural gas as a
percentage or their production, creating mixed signals from a regulatory standpoint. The current
regulation has assumed a vision, at least in paper, of zero tolerance of flaring above certain
thresholds and for other reasons beside safety measures. We consider that this approach has
better chance to effectively address the problem and to incentive real solutions to use the
associated natural gas
181 Christopher D. Elvidge et al., “Methods for Global Survey of Natural Gas Flaring from Visible Infrared Imaging
Radiometer Suite Data,” Energies 9, no. 1 (January 2016): 14, https://doi.org/10.3390/en9010014.
182 Ryan Sitton, “2020 Texas Flaring Report Q1” (Texas Railroad Commission, February 2020),
https://www.rrc.state.tx.us/media/56420/sitton-texas-flaring-report-q1-2020.pdf.
57
5.3. The Ideal Regulation
Considering the current state of the regulation, this research identified the best practices in place
and the pieces of legislation that could improve the overall reduction for gas flaring and venting
in the local environment. These characteristics are based on what we consider the Ideal
Regulation to measure, monitor, and reduce natural gas flaring and venting in the U.S. Such
Ideal Regulation would be difficult to approve as a whole in any state considering the current
state of these legislations, but it is a useful exercise to see where these regulations are today and
what could be improved to address this problem. There are three major components of an
effective regulation: routing flaring prohibition, accurate and mandatory measurement
differentiating necessary from unnecessary flaring and venting, and third party monitoring.
These elements can be the basis of model legislation, with the goal of modernizing and
harmonizing state laws to effectively address natural gas flaring and venting.
Diagram 5.4 Components of the Ideal Natural Gas Flaring Regulation
The Ideal Regulation exercise is useful to discriminate the current state regulations on natural gas
flaring and venting and to determine which states are closer to the desired scenario (Best
Practice) and which still have room for improvement (Undesired Practice). The criteria to
categorize these regulatory frameworks as Best Practices are how comprehensive, detailed and
concise the laws are written and how close the wording of the laws is to the desired regulation.
For example, a state regulation might mandate the operators to measure and report their volumes
58
of natural gas flared or vented, but the wording of the regulation must be clear on the
requirements and the periodicity of the report to be considered a Best Practice.
This exercise also discriminates the wording that synthesized better the needs of each category
and compared it to the rest of the state legislations that regulate such categories too, considering
that concise regulations leave less room for legal interpretation that the operator can use in their
favor to infringe the law. Using the same methodology, it is possible to come up with a
categorization that identifies Undesired Practices in the state legislations. The discerning criteria
is the following:
1. Routine Flaring Prohibition: The ideal regulation must prohibit routine flaring and
carefully circumscribe exceptions to that prohibition, such as emergencies, upset
conditions, well maintenance activities, testing, liquids unloading, among others.
2. Mandatory Measurement and Reporting: The local regulation must explicitly ask for the
owners/operators to measure the volume of associated gas produced, separated, vented
and flared throughout the production chain. In the best case the report should be
submitted to the authority on a monthly or quarterly basis.
3. Flaring and Venting Differentiation: The regulation must mandate a clear distinction
between these two processes. This is crucial for environmental and air quality control
since each one has different global warming potentials and impact on the environment.
Where failure to capture is allowed, flaring must be allowed before venting and venting
should be allowed only when absolutely necessary for safety purposes.
4. Clear Definition of Safety and Unnecessary Flaring: The regulation must distinguish
between unnecessary and necessary (for safety or maintenance purposes) flaring and
venting. The distinction is important because it gives the operators the necessary margin
to operate a well. However, the regulation must establish a maximum period after which
flaring or venting cannot be considered for safety.
5. Flaring threshold. The regulation must set a specific volume threshold to distinguish what
constitutes safety or acceptable flaring from unnecessary waste.
6. Waste Definition: The regulation must contain a cohesive and concise definition of what
constitutes waste in the oil and gas industry. This is imperative to avoid owners or
operators using this classification to dispose of natural gas that would otherwise be
consumed or commercialized. Today each state legislation has its own legal definition
creating an intricate system independent from other regulations, which makes it very
difficult to coordinate or integrate them in a way that will properly address the problem.
7. Third Party Monitoring: The local laws should incorporate the use of new technologies to
measure natural gas flaring and venting from above to validate the operator’s and
owner’s data.
The Ideal Regulation would theoretically close any backdoor for the operators to keep
unnecessary gas flaring and venting. Some of the major states producers have already included
these Best Practices in their regulatory framework , but no state has included them all. Table 5.5
presents the outstanding states in each category, and in bold caption the one that we identified
having the Best Practice of them, along with a brief description of the regulation and its qualities.
59
Category States Best Practice
Routine Flaring California No state has an explicit prohibition, they strictly ban the waste of natural gas
Prohibition Colorado instead and give no room for waste.
Idaho
New Mexico
Ohio
Texas
West Virginia
Mandatory Arkansas Wyoming Oil and Gas Conservation Commission. Chapter 3. Sec. 39.
Measurement and Colorado Authorization for Flaring and Venting of Gas.
Reporting North Dakota
Texas The regulation encourages the use of practical technologies to minimize venting
Utah and flaring of natural gas and requires monthly reports of this processes including:
Wyoming (i) Duration and total estimated volume of gas;
(ii) Circumstances that resulted in flared or vented gas;
(iii) Identification of whether gas was vented or flared;
(iv) Identification of whether the gas volume is based on metered flow, Gas/Oil
Ratio (GOR)
(v) Owners/Operators with wells venting or flaring shall submit a compositional
analysis of the gas.
Flaring and Venting Louisiana Louisiana Administrative Code. Title 33: III, Environmental Quality: Air
Differentiation Montana
Wyoming This state regulation includes a subchapter K that limits volatile organic
compounds and not only it differentiates between venting and flaring, but the
different types of flaring and their admissible thresholds.
Safety and Alaska Wyoming Oil and Gas Conservation Commission. Chapter 3. Sec. 39.
Unnecessary Flaring Colorado Authorization for Flaring and Venting of Gas.
Differentiation Idaho
Kansas The regulation includes the report of natural gas flared for safety measures and it
Ohio also requires for the operator to disclose the circumstances that resulted in the
Pennsylvania flaring procedure.
Texas
Utah
Wyoming
Flaring Threshold Louisiana Oil and Gas Conservation Act. Laws of Pennsylvania.
Montana
Idaho The regulation uses the parameters defined in the Code of Federal Regulations
Kansas Title 40. Protection of Environment to determine the threshold to define a safety
Louisiana flaring process from unnecessary or excessive flaring.
Montana
Oklahoma
Pennsylvania
Texas
Utah
60
Waste Definition Alaska Oklahoma Administrative Code. Title 165: Corporation Commission. Chapter 10:
Arkansas Oil and Gas Conservation
Colorado
Kansas This regulation defines waste in a comprehensive way, including economic waste
Montana and it recognizes specifically the associated gas produced from common sources
New Mexico and the vented gas as well. It also considers waste the flaring of tail gasoline,
Oklahoma pressure maintenance and recycling plants where markets are available. A
distinction that separates these procedures from unnecessary waste of natural gas.
Third Party No State

Monitoring considers it
Table 5.5 Best Practices in the Producer States’ Regulation
This analysis showed that only Louisiana, Montana and Wyoming legislations require the
differentiation of flaring and venting. 183 On the contrary, most of the producing states have
included in their regulatory framework some requirements on measurement and reporting,
differentiation between safety and unnecessary flaring, some kind of flaring threshold, and a
waste definition. This means that a first step to harmonize state legislation would be pushing for
them to include a clear distinction on the natural gas that is flared versus the volumes that are
being vented. The other components of the Ideal Regulation are present in most of the regulatory
frameworks, but they could also be upgraded towards the Best Practice.
Wyoming has the only state regulation that includes two Best Practices, one is its requirement on
“Mandatory Measurement and Reporting” and the other on “Safety and Unnecessary Flaring
Differentiation”. The Wyoming Oil and Gas Conservation Commission has established specific
requirements for the operators to measure natural gas flaring and venting and report these
volumes to the Commission including an explanation on the circumstances that led to these
practices. The legislation also requires the operators to separate natural gas flaring and venting
for safety measures from the unnecessary disposal of this hydrocarbon. 184 The wording of these
regulations is concise and clear leaving no room for interpretation that can lead to the
infringement of these laws.
The analysis throws an interesting case, Texas has a clear and detailed regulation on gas flaring,
it also concentrates the authority on this problem in a single regulatory agency, the Railroad
Commission. The state legislation clearly defines what constitutes safety flaring and what does
183 Wyoming Oil and Gas Conservation Commission, “Chapter 3. Operational Rules, Drilling Rules”
(2016),
https://docs.google.com/a/wyo.gov/viewer?a=v&pid=sites&srcid=d3lvLmdvdnxvaWwtYW5kLWdhc3Rlc3R
8Z3g6NzE2ZjM3ODg3NmU5ZWQzYg; Louisiana State Legislation, “Louisiana Administrative Code. Title
43. Natural Resources.” (2020), https://www.doa.la.gov/Pages/osr/lac/LAC-43.aspx; Office of Oil &
Natural Gas U.S. Energy Department, “Montana Natural Gas Flaring and Venting Regulations,” May
2019, https://www.energy.gov/sites/prod/files/2019/08/f66/Montana.pdf; Office of Oil & Natural Gas U.S.
Energy Department, “Wyoming Natural Gas Flaring and Venting Regulations,” May 2019,
184 Wyoming Oil and Gas Conservation Commission, Chapter 3. Operational Rules, Drilling Rules; U.S.
Energy Department, “Wyoming Natural Gas Flaring and Venting Regulations.”
61
not and it has specific thresholds to differentiate between these processes. 185 These
characteristics place the state regulation among the outstanding cases, but the volumes of natural
gas flared and vented grew 644% between 2000 and 2018.186 This case is proof that regulation
should consider multiple factors to properly address this problem. This document recognizes that
regulation interacts with market forces, technological changes, and political agendas, so it is only
logical to analyze these three factors together to understand the circumstances behind natural gas
flaring and venting. It is Interesting that the best practices do not come from states with high
flaring rates such as Texas, New Mexico and North Dakota, but from states that contribute less to
the problem such as Wyoming, Pennsylvania or Louisiana.
Using the same methodology this research has identified undesirable regulations that create room
for improvements. This exercise analyzed the state legislations to identify the more obscure,
ambiguous or simply inexistent regulations in terms of natural gas flaring and venting and
organized undesirable traits that could be significantly improved using the Best Practices from
other state legislations as an example, Table 5.6 shows the result from that analysis.
Topic States Undesirable Practice
Routine Flaring Alaska No state has an explicit prohibition. The states in bold are those that prohibit
Prohibition Arkansas some kind of waste but they give the operators a space to flare or vent for
Kansas different reasons, as long as they stay below a certain threshold.
Louisiana
Montana
NorthDakota
Oklahoma
Pennsylvania
Utah
Wyoming
Mandatory California New Mexico Administrative Code. Title 19, Chapter 15. Subsection 18
Measurement and New Mexico Production Operating Practices. Metered Cashing Head
Reporting Oklahoma
Pennsylvania The owner of the lease is not required to measure the exact amount of
casinghead gas the owner produces and uses for fuel purposes in the lease’s
development and normal operation. The owner of the lease shall meter and
report casinghead gas produced and sold or transported away from a lease,
except small amounts of flare gas, in cubic feet monthly to the division.
185 Katherine Ann Willyard and Gunnar W. Schade, “Flaring in Two Texas Shale Areas: Comparison of
Bottom-up with Top-down Volume Estimates for 2012 to 2015,” Science of The Total Environment 691
(November 15, 2019): 243–51, https://doi.org/10.1016/j.scitotenv.2019.06.465; Office of Oil & Natural Gas
U.S. Energy Department, “Texas Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/Texas.pdf; Railroad Commission of Texas, “Texas
RRC - Flaring Regulation,” accessed April 15, 2020, https://www.rrc.state.tx.us/about-us/resource-
center/faqs/oil-gas-faqs/faq-flaring-regulation/.
186 U.S. Energy Information Administration, “Natural Gas Vented and Flared.”
62
Flaring and Venting California New Mexico Administrative Code. Title 19, Chapter 15. Subsection 18
Differentiation New Mexico Production Operating Practices. Metered Cashing Head
Utah
West Virginia The owner of the lease is not required to measure the exact amount of
casinghead gas the owner produces and uses for fuel purposes in the lease’s
development and normal operation. The owner of the lease shall meter and
report casinghead gas produced and sold or transported away from a lease,
except small amounts of flare gas, in cubic feet monthly to the division.
Safety and New Mexico Pennsylvania Law. Oil and Gas Conservation Law
Unnecessary Flaring Oklahoma
Differentiation Pennsylvania The Oil and Gas Conservation Commissions from the Department of Mines and
Mineral Industries have the authority to execute investigations and Inspections
of owners or producers records, including the unnecessary or excessive surface
loss or destruction or oil and gas. However, there is no clear distinction on what
constitutes “unnecessary destruction” in the regulation.
Flaring Threshold Arkansas Pennsylvania Law. Oil and Gas Conservation Law
California
North Dakota The law forbids any kind of waste of oil and gas in the state, and waste is
Ohio described as “The unnecessary or excessive surface loss or destruction of oil and
Oklahoma gas”. There is no clear and effective threshold to separate safety measures from
Pennsylvania unnecessary flaring or venting.
Waste Definition California North Dakota Administrative Code. Title 43.

North Dakota Chapter 3. Oil and GAs Conservation
Texas
Wyoming Waste is clearly prohibited to all producers, contractors, owners, drillers,
carriers, gas distributors, service companies, pipe pulling and
salvaging contractors. However, there is no definition of Waste in the regulation,
leaving this prohibition to interpretation.
Third Party No State

Monitoring considers it
Table 5.6 Opportunity Areas in the Producer States’ Regulation
The Best versus Undesired practices exercise throws an interesting result, while California has a
very ambiguous legislation for natural gas flaring and venting their emissions represented only
2.3% of the total gas flared or vented in 2011, the last year this state reported their volumes to
the EIA.187 On the contrary, Texas has a very clear and specific regulation around natural gas
flaring and venting, but their emissions have risen significantly since the shale revolution started
in that state.188 As mentioned before, the legislations evolved at a different, usually slower, pace
than the industry, that is one possible answer to this paradox. Other hypotheses suggest that the
geology in these states is very different causing the oil wells in California to present less
associated gas compared to the plays in Texas. Finally, another explanation is the political one,
which suggests that when the Legislator does not trust the political will of the enforcing
187U.S. Energy Information Administration, “Natural Gas Vented and Flared.”

188Sitton, “2020 Texas Flaring Report Q1”; U.S. Energy Department, “Texas Natural Gas Flaring and Venting
Regulations”; Railroad Commission of Texas, “Texas RRC - Flaring Regulation.”
63
regulatory agencies it tends to write a more extensive, detailed and specific law to limit the
agencies actions.
It is difficult to determine which hypothesis explains both atypical cases as California and Texas,
but given the available information, these two cases reinforce the idea that the regulation
interacts with many other factors that determine the volumes of natural gas flared or vented in
the U.S. However, it is important to have a solid regulatory framework that encourages operators
to cut their emissions and to have a more efficient waste disposal process. Having a loose
regulation can allow higher flaring and venting volumes.
5.4. Definition of Waste
The definition of waste is particularly relevant in the fight to reduce natural gas flaring and
venting since it can open a backdoor for operators to catalogue part of their associated gas as
waste and dispose of it without reporting this volume as flaring or venting. Having a common
definition of waste could be a solution to distinguish whether natural gas can be categorized as
waste or not, and what would be the policy to dispose of it safely. Today states’ legislations have
their own waste definition and specific rules to treat and dispose of it according to environmental
and safety standards. However, states like North Dakota, Texas and Wyoming do not properly
define waste in their oil and gas regulation opening the door for legal interpretation or confusion,
at least.189 In 2020, Commissioner Ryan Sitton from the Texas Railroad Commission asked
around his colleges their definition on waste but he could not find a consensus, even when they
all agreed that having the term defined is an important issue to address natural gas flaring.
Besides the states mentioned before, the rest of the oil producing states have a definition on
waste, but the wording varies significantly creating different approaches to this issue.
Some state regulations categorically prohibit the waste of oil and natural gas in their territory
which increases the urgency of having an appropriate definition to give the operators legal
certainty on what they can and cannot do with their associated gas. As mentioned before, the
main reason why natural gas is not captured is that it is uneconomical to sequester it, process it
and place it on the market, particularly as the price of this hydrocarbon remains low. This is
relevant because some legislations also prohibit economic waste, meaning the inefficient use of
this hydrocarbon in the operation of the well or its placement in a target market. Kansas
legislation defined as:
General Rules and Regulations for the Conservation of Crude Oil and Natural Gas
189 Wyoming Oil and Gas Conservation Commission, “Chapter 3. Operational Rules, Drilling Rules” (2016),
https://docs.google.com/a/wyo.gov/viewer?a=v&pid=sites&srcid=d3lvLmdvdnxvaWwtYW5kLWdhc3Rlc3R8Z3g6
NzE2ZjM3ODg3NmU5ZWQzYg; North Dakota Mineral Resources, “North Dakota Mineral Resources,” January
2020, https://www.dmr.nd.gov/oilgas/DMR_Fact_Sheets.pdf; Office of Oil & Natural Gas U.S. Energy Department,
“North Dakota Natural Gas Flaring and Venting Regulations,” May 2019,
https://www.energy.gov/sites/prod/files/2019/08/f66/North%20Dakota.pdf; Stephen Rassenfoss, “Texas Railroad
Commission, Executives Hold Hearing To Explore Production Quotas,” April 16, 2020,
https://pubs.spe.org/en/jpt/jpt-article-detail/?art=6895; Railroad Commission of Texas, “Texas RRC - Flaring
Regulation,” accessed April 15, 2020, https://www.rrc.state.tx.us/about-us/resource-center/faqs/oil-gas-faqs/faq-
flaring-regulation/.
64
Article 7. Production and Conservation of Natural Gas
57 - 702 Definitions
(...) Economic waste shall mean the use of natural gas in any manner or process except for efficient light, fuel,
carbon black manufacturing and repressuring, or for chemical or other processes by which such gas is
efficiently converted into a solid or a liquid substance.
The definition of economic waste is still defined by operational standards rather than market
drivers, which excludes the main reason natural gas is flared or vented today. A better definition
of waste to reduce natural gas flaring should include the prohibition to dispose of this
hydrocarbon to obtain one of higher value such as oil. Following this logic, some experts have
proposed introducing a tax on flaring to address this issue and to put a price on the
environmental damage caused by this activity. Jason Bordoff, has proposed to use a tax large
enough to encourage capital investment on infrastructure to transport gas to the markets and
reduce the flaring ratios in the U.S.190 However, it is still unclear what would be an acceptable
range for such a tax and how it could impact the production of oil in the medium and long terms.
As in 2020, there are seven state regulations that share a common basis of their waste definition:
Alaska, Arkansas, Kansas, Montana, Ohio, Oklahoma, and West Virginia. These regulations
separate oil and natural gas wastes and define depending on its location in the production chain.
The previous analysis recognized Oklahoma’s waste definition as the Best Practice because it
clearly separates what constitutes waste along the production chain and differentiates oil from
natural gas. This regulation can guide the harmonization of other state regulations, in particular
in the states that share the same basis, mentioned before.
Title 165: Corporation Commission. Ch 10. Oil and Gas Conservation.
Definitions
"Waste" means:
(A) As applied to the production of oil, in addition to its ordinary meaning, "shall include economic waste,
underground waste, including water encroachment in the oil or gas bearing strata; the use of reservoir energy
for oil producing purposes by means or methods that unreasonably interfere with obtaining from the common
source of supply the largest ultimate recovery of oil; surface waste and waste incident to the production of oil
in excess of transportation or marketing facilities or reasonable market demands." [52 O.S.A., 86.2]
(B) As applied to gas, in addition to its ordinary meaning, shall include economic waste; "the inefficient or
wasteful utilization of gas in the operation of oil wells drilled to and producing from a common source of
supply; the inefficient or wasteful utilization of gas in the operation of gas wells drilled to and producing from
a common source of supply; the production of gas in such quantities or in such manner as unreasonably to
reduce reservoir pressure or unreasonably to diminish the quantity of oil or gas that might be recovered from a
common source of supply; the escape, directly or indirectly, of gas from oil wells producing from a common
source of supply into the open air in excess of the amount necessary in the efficient drilling, completion or
operation thereof; waste incident to the production of natural gas in excess of transportation and marketing
facilities or reasonable market demand; the escape, blowing, or releasing, directly or indirectly, into the open
air, of gas from well productive of gas only, drilled into any common source of supply, save only such as is
necessary in the efficient drilling and completion thereof; and the unnecessary depletion or inefficient
utilization of gas energy contained in a common source of supply." [52 O.S.A. §86.3]
(C) The use of gas for the manufacture of carbon black or similar products predominantly carbon, except as
specifically authorized by the Commission, shall constitute waste.
190 Jason Bordoff, “A Flaring Tax Can End This Wasteful and Damaging Practice,” March 3, 2020,
https://www.ft.com/content/beae788e-5c9d-11ea-ac5e-df00963c20e6.
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(D) The flaring of tail gas at gasoline, pressure maintenance, or recycling plants where a market is available.191
The Oklahoma regulation covers most of the backdoors that could lead to legal interpretation
favouring excessive gas flaring and venting. This definition can also improve by including a
more comprehensive approach to the term “economic waste”, as it is currently defined, it refers
to the inefficient utilization of natural gas in the operation of oil wells rather than its potential to
create economic value itself. Nevertheless, this is an excellent starting point to redefine other
regulations or to use a basis for a federal definition of waste that compels the local legislation to
observe a broader definition of what constitutes economic waste. Having a shared definition on
waste is relevant to maintain the flaring and venting standards in the industry, today’s situation
opens the window for legal interpretation and offers a back door for operators to classify excess
gas as waste and burn it or vent it.
Having a more strict and specific definition on waste would require adjusting the waste
prohibition in some states, because it could create an inoperable situation in which oil and gas
companies would not have a margin to conduct their work. The requirements on flaring and
venting for safety measures would have to be adjusted so they give the operators the required
range to conduct their business without breaking the law. This would require the waste definition
to include a range or a specific threshold so the operators can distinguish between safety
procedures and waste management.
5.5. Future Regulations for Natural Gas Flaring and Venting
The recent development of measurement technologies puts pressure on the operators to check
their measurement procedures and sensors. The discrepancies between satellite data and the
operators' reports raised concerns about what measures are more accurate and what should be
taken into consideration to understand and address this problem. Using data form the National
Oceanic and Atmospheric Administration (NOAA) Earth Observation Group satellite data, EDF
compared this measurement with the operator’s report in the U.S. and discovered that only in
2017 the burned gas detected by the satellite doubled the operators’ report in the Permian
basin.192 Standard and Poor’s (S&P) arrived at the same conclusion after they compared the
information collected by state agencies with the satellite data from NOAA and discovered that
operator’s data might be under-reporting volumes of natural gas flared and vented. S&P
highlighted some of the benefits for satellite data over the ground reports saying that the former
is a more sophisticated, accurate and timely assessment of the phenomenon than the later.
Additionally, satellites are non-invasive technologies that reduce the time and resources needed
to measure the problem. Additionally, the date process algorithm developed by NOAA has
191 Oklahoma Legislature, “Oklahoma Administrative Code | Chapter 10 - Oil and Gas Conservation | Casetext,” §
Chapter 10. Oil and Gas Conservation (2019), https://casetext.com/regulation/oklahoma-administrative-code/title-
165-corporation-commission/chapter-10-oil-and-gas-conservation.
192 Colin Leyden, “Satellite Data Confirms Permian Gas Flaring Is Double What Companies Report,” Energy
Exchange, January 24, 2019, http://blogs.edf.org/energyexchange/2019/01/24/satellite-data-confirms-permian-gas-
flaring-is-double-what-companies-report/.
66
proved to be very accurate with a +/- 9.5% standard error.193 Both organizations consider that
having this technology monitoring natural gas flaring and venting could help closing the gap
between the available data and having a better measurement of the real problem.
S&P used NOAA data to calculate the natural gas flared as a percentage of the total production
of this hydrocarbon. This index can be useful to understand what are acceptable flaring ratios,
but it is also relevant to identify the plays and the operator that are struggling with this
problem.194 Having something close to real-time data is a tool that regulators can use to enforce
the law, while service companies can use it to provide specific solutions for the operators to
tackle this problem. In terms of the regulation, what matters is the capability of the law to
capture the variations and standard errors of satellite data into consideration. Nevertheless, the
regulation should contemplate that gas flares share specific characteristics that give them away:
1. Gas flares tend to form circular light features in the sky with bright centers and wide arms;
2. Many gas flares present color in blue, green, and red images;
3. These flares tend to be isolated or far from urban areas, which makes them more visible
at night.195
These characteristics have been identified by the experts in this topic so the regulation could use
them to define what constitutes a gas flare not only in technical terms, but from the regulatory
standpoint. It is also important that the regulation delineates the basic principles to include new
measurement as references to enforce the law, while it creates spaces for innovation and the
development of new measurement techniques.
Including new real-time data measurement in the regulation requires an adjustment of the legal
framework itself: the mandatory distinction of flaring and venting, defining what constitutes
flaring for safety, what is the threshold to consider unnecessary flaring, and defining what
constitutes waste and how it can be treated. The legal framework should be prepared for satellite
estimations that could challenge the operators’ data and it should find a way to reconcile them
soon or it will have to deal with a third party questioning the data reported.
An effective regulation should open windows for technological innovations and legal procedures
to incorporate them in the legal framework. However, forecasting where innovation will come
from is very difficult, so a better approach could be to create a mechanism to force the legislation
to periodically review the new technologies available in the market and their potential impact on
the oil and gas industry. In the past, several experts have pointed out the unintended barriers for
innovations created in the regulation and their adverse effects on the development and
improvement of the industry. In 2017, Robert Kleinberg pointed out that the Emission Standards
for New, Reconstructed, adn Modified Sources Reconsiderations of the EPA discouraged
technological innovation in methane leak detection because it limited the approved methods for
193 Brian Collins, “Are Some Shale Producers Under-Reporting Gas Flaring to Keep Oil Flowing?,”
October 24, 2018,
https://platform.mi.spglobal.com/web/client?auth=inherit&sf200858251=1#news/article?id=47199929&cdi
d=A-47199929-12062.
194 Collins, “Are Some Shale Producers Under-Reporting Gas Flaring to Keep Oil Flowing?”
195 Christopher D. Elvidge et al., “A Fifteen Year Record of Global Natural Gas Flaring Derived from
Satellite Data,” Energies 2, no. 3 (September 2009): 595–622, https://doi.org/10.3390/en20300595.
67
methane leak detections to specific technologies, leaving the rest of the options out of the
discussion.196 Future regulation should be open to new technologies and it should be flexible
with technological improvements in the oil and gas industry.
5.6. Lessons from Mexico
Mexico does not have a reputation for enforcing environmental laws, but over the past decade
the government developed a strategy to reduce gas flaring and improve the performance of the
major oil and gas operator, Pemex. In 2009, the Ministry of Energy (SENER) and the National
Hydrocarbons Commission (CNH) developed a strategy with Pemex to reduce associated gas
flaring in Mexico, that year the official estimations showed that the oil and gas company was
losing $3.1 billion dollars due to this activity. The strategy set milestones for Pemex to reduce its
flaring and monitor its progress over the years. The plan included a detailed investment Calendar
and operational improvements that Pemex should implement to achieve the goal. 197 This
approach worked out in Mexico and the natural gas flaring contracted after the regulation
started.198 Over the years, the regulator worked closely with Pemex to address this problem using
the “shaming approach” rather than penalizing the company.
One of the experts interviewed for this investigation mentioned that CNH’s first regulations had
no penalties for the Pemex if it did not cut gas flaring. However, the Commission began
publishing the volumes of associated gas flared by Pemex on a monthly basis creating a
reputation risk for the company, in particular in a context where the public opinion not only saw
the volumes flared, but also the market value of such waste. Another interviewee corroborated
the effectiveness of such strategy and the source also mentioned that the CNH continuous
monitoring and random audits to the production sites have contributed to the effectiveness of the
project. Table 5.7 shows the plays that flared below their year goal and how it took them to go
back in the abatement track.199
196 Robert Kleinberg, “Regulations.Gov - Comment,” accessed May 12, 2020,

https://www.regulations.gov/document?D=EPA-HQ-OAR-2017-0483-0760.
197 Reuters, “Mexico Orders Pemex to Reduce Natgas Flaring,” Reuters, November 26, 2009,
https://www.reuters.com/article/mexico-energy-idUSN2537400520091126.
198 SENER, “Regulación de La CNH a La Quema y El Venteo de Gas,” accessed May 15, 2020,
http://sie.energia.gob.mx/bdiController.do?action=cuadro&subAction=applyOptions.
199 SENER, “Regulación de La CNH a La Quema y El Venteo de Gas,” accessed May 15, 2020,
http://sie.energia.gob.mx/bdiController.do?action=cuadro&subAction=applyOptions.
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Play 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Abkatun-Pol-Chuc OK OK OK OK OK OK OK OK OK OK
Bellota-Jujo OK OK OK Fail OK OK OK Fail Fail OK
Cantarell Fail OK OK Fail OK OK OK Fail Fail OK
Cinco Presidentes OK OK Fail OK OK OK OK Fail Fail OK
Ku-Maloob-Zaap OK OK OK Fail Fail OK OK OK OK OK
Litoral de Tabasco OK Fail Fail OK Fail OK OK OK OK OK
Macuspana-Muspac OK OK Fail OK OK OK OK Fail Fail OK
Poza Rica-Altamira OK Fail OK OK Fail OK OK Fail Fail OK
Samaria-Luna Fail OK OK Fail OK OK OK Fail Fail OK
Aceite Terciario del Golfo Fail OK OK OK OK OK OK Fail OK OK
Veracruz Fail Fail Fail Fail OK OK OK Fail Fail OK
Table 5.7 Regulatory Compliance per Play
In 2015 and 2016, the goals regulator was flexible with the goals to reduce flaring as a
consequence of the fall in the price of crude oil that happened at the end of 2014, the same
arrangement occurred in 2019 as a government response to the negative financial results of
Pemex. The regulation allowed the CNH to set goals per year so it can adjust the target when it is
needed. One of the interviewees mentioned that this strategy has been effective reducing natural
gas flaring, but its strength has decreased since 2017 due to the pressure on Pemex investment
capital. The source pointed out that upstream activities have been postponed as a result and the
program to abate gas flaring has taken the hardest hit over the past years.
According to both experts, the case-to-case approach has worked in Mexico because the federal
government has the authority to impose a general regulation, sanction the player when they do
not reach the goals, but also because the legislation is flexible enough for the regulator to adjust
69
the strategy when is needed and to collaborate with the operators when they are struggling
following the plan. This case-to-case approach could be an alternative for state regulators in the
U.S. to adapt their abatement goals and strict legislation on flaring with the regulatory flexibility
required to adjust the strategy when the circumstances change. However, for this approach to
work properly, said one of the interviewees, it is important that the regulator is independent
enough from the industry to act as a mediator and a law enforcement organization.
70
6. Recommendation
There is no quick fix for the problem of gas flaring due to its global prevalence, unknown extent,
and widespread implications. Based on our analysis we believe the best path forward is a
combination of technology and policy solutions, with measurement and reporting accuracy as the
first priority. Governments should increase and enforce their requirements for complete, accurate
reporting that is differentiated by flaring, venting, fugitive leaks, and safety. Industry should
invest in on-site technology solutions to make measurement easier and more accurate. Nonprofits
and independent researchers should continue working to bridge the gap between satellite and
reported data, working with both industry and governments to understand the full extent of the
problem.
Solutions will result from combinations of
● Policy -
○ accurate reporting, enforcement, economic incentives
● Industry Actions -
○ infrastructure, operational, technology application
● Environmental NGO Actions -
○ research, compliance, enforcement, measurement support, education
● Research and Development -
○ Technology innovation,
1. Expanding our understanding of the problem
● Prioritize accurate measurements

○ Independent flaring/venting coalition to implement measurement systems and
track emissions
○ Can employ multiple measurement tools and update them as technology improves
■ Smart flow meters to send data directly to database
○ Reports data to governments instead of self-reporting from companies
○ Subscriber system to gain support and participation from companies
■ Companies pay to have emissions independently measured and verified
■ Saves companies money with less measurement and reporting time and
tools
■ Can easily alert members to problems (leaks, unlit flares, emergencies etc)
○ Can report up to date flaring data online (see below)
○ Definitely requires transparency and representatives from all stakeholders
○ You can’t manage it if you can’t measure it
● Standardize reporting requirements
○ Reporting of safety vs waste or excessive flaring
○ Flaring vs venting
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○ Include leaking/fugitive emissions and unreported categories of release
○ Forcing companies to report all data will help them and the public be more aware
and can lead them to solve the problem, and secure social license to operate
● Less of a burden to implement than a tax or infrastructure
○ Infrastructure is expensive and time consuming
○ Trying to implement a tax or cap and trade scheme without accurate measurement
and reporting will be impossible
● Investment/capital sector support -
○ ESG ratings tie in,
○ concrete data for analysis
● Possible industry incentives/implications of accurate measurement and timely reporting
○ Up to date data transparency may increase competition between companies to
achieve the best practices and lowest emissions
○ Cost savings from streamlined reporting,
○ Quickly fixed leaks improve safety and save resources, (more) accurate analysis
of economic value
2. Design gas capture requirements that would set firm limits on the percentage of gas that
companies are allowed to flare across the basin
● Cannot monitor or enforce compliance without accurate measurements

● Gas capture percentage relies on many factors
○ including ratio of oil and gas,
○ operator and well size,
○ location,
○ access to infrastructure
● Need a methodology for determining ideal capture amounts
○ North Dakota goal was 90-95% by this year, which they are not going to meet
● Several technologies for cap capture and utilization
○ On-site power generation -
■ if there is not infrastructure/pipeline access, associated gas can be captured
to be used to generate power locally,
■ Used to power drilling and well equipment
■ sell location-based access to power - Bitcoin mining or cloud computing
○ Sell through pipeline
○ Sell through LNG, gas to liquid
○ Reinjection
3. Extend gas production tax to flared gas (from project description)
● Cannot implement a tax without accurate measurements -

○ No way to know how much each company owes or estimate revenue, no way to
enforce
○ If the tax is implemented before issues with reporting are solved, companies will
have even less incentive for accurate reporting and measurement.
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○ May be able to gain measurement/reporting regulation support from the industry
if a tax is taken off the table (at least temporarily)
○ Use accurate reporting to implement best practices, use fines/shutdowns for
operators who don’t comply,
● Flaring Cap and Trade system
○ Allows companies without access to infrastructure to purchase “emissions
permits” from companies with access
○ Can be an efficient way to reduce emissions with less economic burden on
producers
○ There’s a lot of research for pollution and the reduction of acid rain
○ Still requires accurate measurement and reporting
4. Display up-to-date flaring data online (from project description)
● Need real-time detection and measurement reporting -

○ ALFa LDS, VIIRS, smart meters
● Regulations currently require reporting on forms to different states -
○ A central database would be easier and cost effective for operators, governments,
and researchers
● Removes the multi-tiered system of operator-state-national-world
● Also removes the 9+ month delay for data
○ Companies flare in real time and respond to immediate/short term demand, but
flaring data is not available for researchers/policy makers for almost a year
■ A lot can change in a year
● Side-by-side comparison of satellite vs reporting can help close the gap between the two
forms of data
5. Ensure that innovation and new data streams such as satellites are incorporated into
policies (from project description)
● How can satellite data be incorporated into regulations without operator-level data?
○ Operator level data is needed for enforcement and compliance
○ Satellite data can be used to set goals or for comparison, unclear how it could be
used effectively to reduce emissions directly through policy
● Other forms of new data streams
○ High resolution satellites
○ Leak detection
6. Regulation improvements and goals
● Accurate data - can’t regulate from satellite data because you can’t differentiate operators
○ Satellites can provide an overall overview or goal
● Crack down on leaking/fugitive emissions
73
○ Increase data sharing practices between emissions reporting agencies (EPA) and
production reporting (BLM/BSEE)
○ Require more frequent/accurate emissions inspection
● Problem of enforcement -
○ Even where regulations exist there is little oversight or enforcement
○ Fines for incorrect or late reporting
○ Random site inspections
● Participation in a climate initiative could be made mandatory -
○ At least a commitment level could be mandatory,
○ enforcement is still a problem
● Remove reporting exceptions from legislation
○ everything should be measured and reported
○ even if the loss is unavoidable
● Create model legislation
○ With supporting information, which can be used as a vehicle to modernize state
laws.
○ For reporting requirements, flaring/venting regulations, and emissions
○ Tactic often used by conservative groups 200
7. Public awareness/education campaigns
● Educate the public in critical states about the role of flaring/venting and how it affects
pollution, health, climate change etc.
● Avoid greenwashing of flares: “Flares help reduce the amount of pollution released into
the environment by burning and destroying the gas instead of allowing it to vent directly
into the atmosphere.” 201
○ Not wrong but rather misleading:
● Avoid greenwashing of natural gas
○ Natural gas is cleaner than oil and coal but it’s not a clean alternative energy
○ Still produces carbon
8. Operational solutions
● Leasing electric and natural gas powered equipment instead of purchasing 202
○ Reduces reliance of diesel fuel
○ Allows associated gas to be used on site to power equipment
○ Reduces up front investment for new drilling equipment
● Improve safety with better leak detection
○ MONITOR and METEC at CSU research to test low-cost methane sensing
technologies to help reduce methane leaks
200 Resolution Concerning EPA Proposed Greenhouse Gas Emission Standards for New and Existing Fossil-Fueled
Power Plants
201 Flaring at Oil and Natural Gas Production Sites (RG-457)
202 Carbon limits pg 21
74
○ Offers quick return on investment
● Green completion
○ Practices to reduce casinghead gas emissions during drilling and completion
● Easier for major companies to implement
● Companies can tie executive variable compensation to reducing emissions through flaring
and methane metrics 203
9. Technology-specific solutions
● Flare efficiency technology

○ More policy/regulatory incentives are needed for flare efficiency technology
applications
○ Grants and funds from federal level on encouraging flare efficiency technologies
are essential
○ Oil/gas investment projects are encouraged to include flaring monitoring and
efficiency as criteria of environmental concerns
● Measurement:
○ Future flow meters can have real-time measurement data, wireless capabilities
and self-verification systems, which can be applied to larger lines. Companies can
access the flow rate in a second and link the data to their internal database
○ Satellite data can be utilized for parent companies to supervise their branches on
environmental behaviors or for companies to supervise their regional offices
● Gas Utilization:
○ Integrated E&P companies are encouraged to develop pilot small-scale LNG
projects as the storage backup near the drilling well or alternatives for pipelines
○ North Dakota and Texas should adopt more flexible oil/gas business models and
portfolio strategies on selling gas
○ Data centers for cloud computing, blockchain and bitcoin mining could be a
future trend for gas power generation
10. Maintaining the Status Quo by not directly intervening in flaring
● The production boom in the US may only last a few more years, some regulators and
operators want to “wait it out”
○ Quote from TRRC chairman “that’s just what happens in a boom”
○ Allows states to benefit from increased revenue while it lasts
○ Governments and operators save infrastructure and technology costs
● Cons of maintaining the status quo:
○ continued emissions are very bad for environment and climate change
○ don’t know exactly how long boom will last - could be many more years
○ Results in wasted natural resources
Meanwhile:
203 Chevron Greenhouse Gas Management — Chevron.com

75
● Implement programs for carbon offsets or credits
○ Can help industry move towards carbon neutrality and offset effects
○ Compile a living list of qualifying programs, research, and technologies for
companies to invest or participate in
● Invest/promote the scaling up of alternative clean energy to reduce reliance on oil and gas
○ Market solution intervention - money talks
○ May help incentivize producers to capture more/become ESG rated
○ Incorporate ESG metrics into credit rating
○ Provides opportunities for oil companies to invest and develop/transition to clean
energy
○ Large companies are more aware of/put efforting into resolving flaring issue
○ Reduced oil and gas demand means that existing infrastructure may suffice, can
temporarily shut down highest flaring fields
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7. Questions raised and further research
Off-Shore
● We didn’t address offshore drilling in this report, but flaring is also a problem on
offshore rigs.
How to expand to other countries?
● International flaring/venting/emissions treaty among major producing countries and

consuming countries
○ One of the most successful environmental treaties in history was the Montreal
Protocol, which successfully eliminated the international use of
chlorofluorocarbons and related substances which were causing the “hole” in the
ozone layer of the atmosphere. The Montreal Protocol can provide a framework
for effective cooperation, enforcement, and monitoring of an international gas
flaring treaty.
○ Can use satellite data to monitor country-level, and eventually company-level
compliance
■ Montreal Protocol used atmospheric CFC measurements to successfully
locate and stop non-compliant producers
● World Bank Initiatives, International NGOs, etc
○ Participation and compliance is voluntary
○ Increase “naming and shaming” when participating companies/countries don’t
comply
■ Can use satellite data for country level, but not for individual operators or
companies
■ Only works if countries/companies are affected by “shame”
● Private operators with an international presence
○ Use incentives for large companies to standardize their own practices
internationally, at least internally
○ ESG ratings
Further Research Ideas
Research for standardized reporting and measuring

● Research and invest in infrastructure for high resolution detection
○ Global satellite data does not detect/measure intermittent or small flares
○ Network of both high resolution gas detection for venting and infrared imaging
for flares
77
○ A technology from LANL is focused on NO and SO2 detection instead of
methane/CO2 emission,204 but it may be able to be adapted/applied
■ Aerosol Absorbing Index (absorbing soot/smoke vs scattering aerosols)
might be interesting for flares. The 500 m pixel size is relevant.
○ ALFa LDS - Autonomous, Low cost, Fast Leak Detection System 205
● Create a central reporting database that is user-friendly for all stakeholders
○ Precedent for a centralized, non-governmental reporting/monitoring system
○ EU “Independent Institution”, proposed at 20 March 2020 workshop
● Draft common legislation language to help local governments and convince them to
use/buy in to a central system
○ Draft legislation so they’re all reporting the same way - industry might help lobby
for that, eases their reporting time/costs
● Smart meters? If they can install a smart meter on every apartment in NYC, there must be
a way to use similar real-time measurement with flowmeters
○ In industry this is called SCADA: supervisory control and data acquisition
○ Can then be calibrated/measured against emissions detection
Research for operational/safety interventions

● Help reduce emissions from fugitive leaks and (possibly) reduce necessary flaring for
safety purposes
● ARPA-E program called MONITOR, including METEC at CSU are developing and
testing technologies for onsite detection of methane leaks
● Possible input/collaboration from major industry players
● Research to reduce gas lost during initial drilling stages
○ EPA Green completions IPIECA
● Real-time VOC sensors
● Improve emergency sensors and prediction/tests
○ Redundancies for power outages
204 NACHOS
205 https://www.lanl.gov/discover/news-stories-archive/2019/July/0710-alfa-lds-technology.php
78
8. Acknowledgements
The Columbia SIPA Capstone team would like to extend our gratitude to our mentors,
interviewees, participants, and advisors who made our research possible.
Jason Bordoff, Columbia University Center on Global Energy Policy and Mark Brownstein,
Environmental Defense Fund, who conceived and designed this program.
Dr. Robert Kleinberg, Adjunct Senior Research Scholar at the Center on Global Energy Policy,
whose excellent advising and feedback guided us throughout this research project.
Our clients, particularly Dan Grossman and Colin Leyden, who provided us with a wealth of
information and contacts to guide our research and analysis.
Suzanne Hollmann, Saleha Awal, and the rest of the Columbia SIPA Capstone Program for
their logistical support.
All industry experts, scientists, researchers, and policy makers who took time to discuss their
perspectives and expertise with us. Their willingness to participate in our research has furthered
our understanding of the problem of gas flaring and provided insights for technological
innovation and policy solutions.
9. Interviews
79
Interviewees Position Date
Founding Director of the Center on Global Energy Policy at

Jason Bordoff Columbia University April 16, 2020
Marco Cota CEO Talanza Energy May 1, 2020
Director of the National Center of Hydrocarbons Information at the

Adamelia Burgeño Mexican National Commission of Hydrocarbons May 13, 2020
Associate Professor Atmospheric, Oceanic and Space Sciences, and

Eric A. Kort Applied Physics at the University of Michigan March 23, 2020
February 22,
Donald Hickmott Researcher at Los Alamos National Laboratory 2020
80
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Technology and Policy Solutions to

Reduce Harmful Natural Gas Flaring

Columbia University School of International and Public Affairs

graduate capstone report in consultation with

Environmental Defense Fund

Columbia University Faculty Advisor:

Environmental Defense Fund Contacts:

Introduction and Context 8

Comprehensive Assessment of the Extent of the Problem 14

Oil and Natural Gas Market Dynamics 28

Natural Gas Flaring and Venting Regulation 51

Questions raised and further research 77

Technology and Policy Solutions to Reduce Harmful Natural Gas Flaring

Background and Context

Comprehensive Assessment of the Extent of the Problem

These factors include:

● Inconsistent and Unenforced Reporting: There is no systematic reporting of flared or vented

1. Introduction and Context

1.1 Associated Gas - Flaring, Venting, Capturing 9

1.1. Associated Gas - Flaring, Venting, Capturing

1.2. Effects of Gas Flaring - Climate Change to Public Health

1.3. Geography and History

1.4. Drivers that maintain the status quo

31 New Mexico Aims To Be Fossil-Fuel Free By 2045, Despite Oil Boom

2.1 Measurement Tools and Practices 15

Note on Data Availability

2.1. Measurement Tools and Practices

Operator Measurement Requirements

35 Texas Administrative Code 3.27

Research and Satellite Measurement

2.2. US Federal and State Reporting

In addition to inconsistencies in measurement practices, there is no systematic reporting

US Federal Reporting and Regulations

47 NM methane draft report 2019, p 112

54 Table Definitions, Sources, and Explanatory Notes

2.3. Infrastructure, Operational, and Safety Factors

69 (p 156 of NM methane report)

On-site Processing and Power Generation

78 Federal Register/Vol. 81, No. 107/Friday, June 3, 2016/Rules and Regulations

2.4. Independent, Non-profit, and International Efforts

84 Hydrogen Sulfide (H2S) in the Permian Basin, #10950 (2017).

Initiatives and Partnerships

World Bank Initiatives

Methane Guiding Principles

Oil & Gas Methane Partnership

The Environmental Partnership

Note on Large Operators

3.1 Crude Oil Supply and Demand in the US 28

3.1. Crude Oil Supply and Demand in the US

Recent Oil Market Black Swan Events

Saudi-Russia Oil Price War

101 Short-Term Energy Outlook - US Energy Information Administration

Long Term Forecasts

The Future of US Markets

105 Oil Nations, Prodded by Trump, Reach Deal to Slash Production

Global Oil Prices

US Natural Gas Prices

3.1. Natural Gas Supply and Demand

110 AEO2020 - Petroleum