(Reuters) - The chief executive of shale producer Parsley Energy (PE.N) on Wednesday became the latest executive to call out the industry on its high rate of natural gas flaring in the top U.S. oil field.
Flaring, or deliberately burning natural gas produced as a byproduct to oil, can worsen climate change by releasing carbon dioxide, a greenhouse gas blamed for raising global temperatures.
Matt Gallagher, chief executive of Permian Basin shale producer Parsley, called natural gas flaring a “black eye” and urged the industry to reduce emissions, during a speech at the NAPE Summit in Houston.
Oil drillers tend to flare or vent gas when they lack pipelines to move it to market, or when prices are too low to make transporting it worthwhile.
U.S. flaring rose in 2019 for a third year in a row as soaring production in Texas, New Mexico and North Dakota overwhelmed regulatory efforts to curb the practice, according to state data and independent research estimates.
Scott Sheffield, CEO of Pioneer Natural Resources, in November said producers should get flaring and venting rates to 2% or less and not drill wells before pipelines are complete.
On Wednesday at a separate oil and gas conference in Houston, the head of Royal Dutch Shell’s Permian Basin operations, Amir Gerges, said the region had become “famous” for flaring and needs “robust, fit-for-purpose policies and regulatory requirements that incentivize reduction in flaring.”
Permian Basin flaring and venting totaled about 293.2 billion cubic feet last year, according to state regulatory data compiled by independent energy researcher Rystad – up about 7% from 2018.
In North Dakota’s Bakken oil field, flaring rose 36% from 2018, to just over 200 billion cubic feet, Rystad said.
Permian producers need to lower gas flaring rates below 5%, Gallagher said. He pointed to his company’s recent acquisition of Jagged Peak Energy and neighboring properties where Parsley was not flaring natural gas, but Jagged Peak had a 25% flaring rate. “It literally is right next to us,” Gallagher said. “It was a choice.”
Reporting by Jennifer Hiller; Editing by Leslie Adler