June 15, 2020 Read More →

Report points to flaring issues, lack of control on Texas gas waste

OK Energy Today:

Texas oil producers burned a record $749.9 million by flaring or venting unneeded natural gas into the air, according to a report released today by the Institute for Energy Economics and Financial Analysis (IEEFA).

The Texas Railroad Commission, the chief industry regulator in the state, passed up the opportunity to curb flaring last month when it rejected a proposal to cut oil production by 20 percent. The 2-1 vote against taking action occurred even as oil and gas prices plunged because of oversupply conditions exacerbated by the coronavirus pandemic and a price war with Saudi Arabia and Russia.

“The Railroad Commission failed to adopt production cuts and closed its eyes to the declining financial conditions of the oil and gas sector and its impact on the Texas economy,” said Tom Sanzillo, IEEFA Director of Finance and a co-author of the report. “Their decision was driven by looking in the rear-view mirror, and they are heading for a crash. The hard issues will haunt them going forward, but the commission is unwilling and unprepared to address them.”

Reducing or eliminating flaring would help address oversupply issues that have plagued the oil and gas industry for years. Even so, the report found that the oil and gas regulator failed to fulfill its responsibilities on multiple fronts:

The commission voted against curbing production, even though state law requires it to take prompt action when the supply of oil and gas exceeds reasonable demand.

The commission is required to adopt rules and orders to “conserve and prevent the waste of gas,” yet has taken no action directly or indirectly that could reduce the wasteful flaring of gas.

The commission’s failure to take action flies in the face of U.S. Supreme Court rulings ordering it to consider the impact of the oil industry on the entire state, especially the revenue that it produces for the state’s university, school, general revenue, transportation and rainy-day funds. 

[Staff Report]

More: New report critical of lack of controls on flaring in Texas

Posted in: IEEFA In the News

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