November 5, 2019 / 7:33 PM / 9 days ago

Pioneer Natural CEO calls out shale industry for Permian Basin gas flaring

HOUSTON (Reuters) - The chief executive of Pioneer Natural Resources (PXD.N), Scott Sheffield, on Tuesday called on producers in the top U.S. shale field to limit natural gas flaring and monitor for methane leaks.

FILE PHOTO: Natural gas flares off at a production facility owned by Exxon near Carlsbad, New Mexico, U.S. February 11, 2019.REUTERS/Nick Oxford

Companies are targeting oil in the fast-growing Permian Basin field, but pipeline construction has lagged, leaving natural gas as a byproduct to be burned or vented.

Producers should get flaring and venting rates to 2% or less and not drill wells before pipelines are complete, Sheffield said during a call with analysts a day after releasing quarterly results.

“We do not connect any new horizontal wells to production unless the gas line is already in place,” Sheffield said. “I think that’s something that should be adopted by all producers in the Permian Basin.”

His comments come as several oil and gas companies have pledged to limit leaks of methane, a potent greenhouse gas, and to reducing flaring and venting.

Gas flaring and venting in the Permian in Texas and New Mexico reached a new high of 750 million cubic feet per day (mmscfd) in the third quarter, according to estimates released on Tuesday by Rystad Energy, up from 600 to 650 mmscfd during the previous nine months.

The upswing is being driven by more drilling and fracking, pipeline bottlenecks and new production in areas that lack gathering lines and processing plants.

Pioneer’s flaring rate is around 1%, the second lowest in the basin behind Chevron Corp (CVX.N), according to an investor presentation with Rystad Energy data. The average for its peer group was a 5% flaring rate.

BP Plc (BP.L), which took over BHP Petroleum’s assets in the Permian in March and has a relatively small amount of production in the field, had a flaring and venting rate around 14%.

“We are working across our portfolio of new assets in the Permian Basin to reduce emissions including flaring,” a BP spokesman said by email, adding that the company is building central gathering and processing facilities to eliminate a large source of Permian flaring and will not bring new wells online unless they have access to a pipeline.

Pioneer’s low rate of flaring “proves it can and should be done by all operators,” said Colin Leyden, senior manager of regulatory and legislative affairs for the Environmental Defense Fund. “And calling for concrete, actionable change across industry is important and needed.”

The Texas portion of the Permian’s Delaware Basin accounted for 40% of the field’s flaring and venting, Rystad said.

Reporting by Jennifer Hiller in Houston; Editing by Leslie Adler and Richard Pullin

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