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Supermajor BP plans to invest $1.3 billion on constructing a system that would capture and collect natural gas released during oil production in the Permian to eliminate the highly controversial practice of flaring, the Wall Street Journal reports, adding that the company could announce an end to flaring by 2025.
“We will be producing oil and gas for decades, but it will be a certain kind of oil and gas,” the Journal quoted Dave Lawler, chairman of BP America, as saying. “It’s a highly profitable barrel and it’s a responsibly produced barrel.”
Indeed, flaring is not only a polluting practice, but a loss-making one since flaring involves natural gas that can be captured and sold. However, when there is no infrastructure to capture the gas and transport it to a processing facility, oil producers don’t have many options.
Every year, the oil and gas industry flares some 150 billion cubic meters of natural gas. The practice has become one more reason for criticism against the industry and has alerted regulators, including the Texas Railroad Commission. The watchdog surprised many last year when it said it planned to tighten flaring regulations to curb the practice.
It did so in November: the regulator said it would now require more detailed information from applicants, including a justification for their request to flare. The amended rules also reduce the period during which companies are allowed to flare.
BP is among the biggest flaring offenders. In fact, this year, the TRC said BP had the most requests for flaring, after last year, the supermajor took a stand against flaring along with peer Shell.
“We believe there is a real opportunity for the state to set the bar for others to follow,” the two Big Oil majors wrote in a letter to the watchdog in 2020. “We encourage the Railroad Commission of Texas to support an ambition of zero routine flaring in Texas.”
To that end, BP has already begun building some parts of the necessary infrastructure. This has led to a reduction in the amount of gas it flares in the Permian: from 13 percent of all associated gas extracted in the second half of 2019 to just 3.5 percent a year later.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.