Natural gas production is booming in the United States.
Operators, aided by advances in hydraulic fracturing, have ramped up production, whether by reworking old oil wells or exploiting new formations altogether.
However, just because an operator has the ability to produce natural gas does not necessarily mean that it can sell the gas; compressors, pipelines, treatment plants, and other infrastructure must be prepared in order to get the gas to market.
However, just because an operator has the ability to produce natural gas does not necessarily mean that it can sell the gas; compressors, pipelines, treatment plants, and other infrastructure must be prepared in order to get the gas to market.
In some cases, this lack of infrastructure has led operators to vent or flare gas at the wellhead.
In order to get a better understanding of where the law stands and in what direction it may head, below is a survey of the major gas-producing states’ regulations regarding flaring.
Note: this survey covers only the regulations that speak directly to the question of whether an operator may flare the gas on private lands. Flaring has other potential legal repercussions, such as the particles that are emitted in the process that could call into question state or federal clean air laws or endangered species, and different regulations apply to wells located on state- or federally-owned land. Those concerns are beyond the scope of this survey.
Arkansas
Arkansas allows operators to vent or flare gas within 7 days of when gas is first encountered in a well. After that time, gas may not be vented or flared unless the operator obtains an exception from the Arkansas Oil and Gas Commission.Colorado
In Colorado, all flaring must be authorized by the Colorado Oil and Gas Conservation Commission unless it is done during an upset condition, well maintenance, well stimulation flowback, purging operations, or a productivity test.Louisiana
In Louisiana, flaring of natural gas is prohibited unless the Louisiana Office of Conservation finds upon written application that such a prohibition would result in an economic hardship on the operator. The regulations further note that no such economic hardship can be found if the current market value—at the point of delivery for the gas proposed to be vented—exceeds the cost involved in making the gas available to market.North Dakota
Gas may be flared during the first year of production from a well. N.D. Century code 38-08-06.4. After the one-year grace period, the well must be either connected to a pipeline or used at the wellhead to power an electrical generator, unless the producer applies for and obtains an exception. Id.
Producers can obtain exceptions from the Industrial Commission for additional flaring if the producer presents evidence demonstrating the economic infeasibility of piping gas from the well. Id.
It is economically infeasible to connect the well to a natural gas gathering line if the direct costs of connecting the well to the line and the direct costs of operating the facilities connecting the well to the line during the life of the well are greater than the amount of money the operator is likely to receive for the gas, less production taxes and royalties, should the well be connected to the gathering line. N.D. Century Code 43-02-03-60.2.
Oklahoma
In Oklahoma, an operator may vent or flare up to 50 mcf/day without a permit if: (i) it is not economically feasible to market the gas; (ii) a suitable stand, line, or stack is used to prevent a hazard to people; and (iii) there is less than 100 ppm of hydrogen sulfide in the gas. For venting or flaring at rate greater than 50 mcf/day, the operator must seek an administrative permit from the Conservation Division of the Oklahoma Corporation Commission.Pennsylvania
Pennsylvania’s oil and gas conservation regulations do not address flaring, other than to say that it may be done so long as it does not endanger people.Texas
Texas producers have a grace period of 10 days after the initial completion, recompletion in another field, or workover operations in the same field, during which they may flare natural gas. 16 TAC 3.32(f)(1)(A). Releases of gas that are not routinely measured (such as small amounts that escape during the initial completion of a well) are exempt from flaring requirements and need not be measured for the purposes of well allowables. 16 TAC 3.32 (d)(1).
Producers may also vent or flare gas when a well must be unloaded or cleaned-up to atmospheric pressure, but may only do so for fewer than 24 hours in one continuous event or a total of 72 hours in one calendar month. 16 TAC 3.32(f)(1)(B). Texas producers may obtain exceptions from the railroad commission for the release of gas when the operator presents information to show the necessity of the release. 16 TAC 3.322(f)(2).
However, such administrative exceptions shall not be granted for periods exceeding 180 days, though they may be renewed. 16 TAC 3.32(h).
Wyoming
Wyoming allows for flaring without any additional regulatory authorization in the following situations:- During emergencies or upset conditions, which are temporary situations that result in the unavoidable short-term venting or flaring of gas;
- For well purging and evaluation tests;
- During initial or recompletion evaluation tests which shall not exceed 15 days unless otherwise authorized; or
- If it is a venting or flaring of casinghead gas from an oil well that produces less than 60 MCF of gas per day, unless the Wyoming Oil & Gas Conservation Commission determines that waste is occurring.
Texas RRC Press Release, May 23, 2012
Texas Railroad Commissioner David Porter discussed the possibility of new regulations in a May 23 news release. Noting that gas drilling activity “is outstripping capacity and awaiting pipeline infrastructure,” Commissioner Porter asserted that Texas “must proactively address flaring.” The only specifics provided in the news release were:
- that the Railroad Commission is seeking to work in partnership with Texas electrical energy regulators to use excess gas for strategic generation in light of the threat of weather-induced power curtailment; and
- that the Railroad Commission is studying a pilot program for using gas as a source of power for on-lease operations in lieu of flaring the gas.
This article was prepared by Barclay Nicholson (bnicholson@fulbright.com / 713 651 3662) from Fulbright's Energy Law Practice.
