New Report from East Daley Analytics and Validere
Monitoring Operational Data and Market Fundamentals Is Key to Limiting Environmental Impact
GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)–#crudeoil—East Daley Analytics and Validere, a measurement, reporting, and verification (MRV) SaaS company, released a new report: Emissions Critical: Flaring, Methane, and the Cost of Looming Permian Gas Takeaway Constraints. The report addresses the outlook for infrastructure constraints in the Permian and the potential for increases in flaring rates, and highlights how operators can limit the impact of rising flaring rates on the environment and their social license to operate.
Permian Basin flaring caught the attention of governments, investors, and consumers in 2019 as natural gas transmission capacity lagged the associated gas production coming along with explosive oil production growth. Another round of infrastructure projects is now under construction, but Permian production growth again looks set to exceed this pipeline build-out.
“In an ideal world, infrastructure would stay ahead of supply growth, but for both commercial and regulatory reasons, production-limiting constraints can occur in gathering, processing, and transmission,” said Justin Carlson, co-founder, and chief commercial officer at East Daley Analytics. “In mid-2024, when we estimate the excess gas problem to be at its worst, shutting in enough gas production would take 200 Kb/d of oil production offline, reducing U.S. exports and pushing up both domestic and global prices. Delays in scheduled pipeline capacity could push that figure even higher.”
Relative to the last time Permian production outgrew takeaway capacity, environmental concerns have become more prominent for Permian operators. They have sharply ramped up spending on environmental monitoring, and several large operators have either already ended routine flaring or have pledged to do so soon. Some larger operators likely will manage infrastructure constraints by delaying completions or shutting in production rather than flaring, prioritizing environmental performance over near-term cash flows.
Each 100 MMcf/d of flaring adds 2.2 million tons of CO2 emissions per year, and methane emissions contribute an additional 1 million tons of CO2 equivalent emissions per year, based on the 20-year greenhouse gas impact and 98% combustion efficiency. However, several external studies suggest that true combustion efficiency is much lower. Even 97% combustion efficiency adds 0.5 million tons of CO2-equivalent emissions per year, the equivalent of the CO2e emissions from 100,000 passenger vehicles. By effectively monitoring operational data like thermocouples and quickly addressing any unlit flares, operators can limit the environmental impact of rising flaring rates.
“With Permian flaring levels likely to rise, operators in the basin will face increased environmental scrutiny,” said Jen Snyder, senior advisor at Validere. “It will be more important than ever to monitor both new and old flares, to ensure that this increase in flaring doesn’t also cause a sharp uptick in methane emissions, which has a much bigger near-term climate impact.”
East Daley and Validere will host a webinar on the report on June 14, 2023 at 11:00 a.m. CT. Register for the webinar.
Access the full report.
About Validere
Validere is a measurement, reporting, and verification (MRV) SaaS company that helps energy organizations transform disconnected, incomplete data into clear and immediately actionable pathways to financial and environmental value. Over 50 of North America’s leading energy companies rely on Validere’s technology and multidisciplinary experts to understand their physical and environmental commodities and navigate an increasingly complex environment with clarity and ease. Validere is on a mission to better human prosperity by making the energy supply chain efficient and sustainable. The company has offices in Houston, Calgary, and Toronto.
About East Daley Analytics, Inc.
East Daley Analytics specializes in dissecting the energy value chain to drive transparency. The company has built the largest U.S. energy asset database to cash flow to help identify which assets are most important and isolate their operational value. It can help with the heavy lifting by providing access to capital and commodity market experts through both subscription and consulting services. For more information visit, https://www.eastdaley.com.
Contacts
East Daley Analytics
Meredith Bagnulo
mbagnulo@eastdaley.com
303-513-7494
Validere
Nicole Yager
nicole.yager@validere.com
Matthew Juul
