Natural Gas Flaring and Venting:

Opportunities to Improve Data and Reduce Emissions

GAO-04-809: Published: Jul 14, 2004. Publicly Released: Aug 13, 2004.

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Since 1995, the average price of natural gas in the United States has almost tripled as demand has grown faster than supply. Despite this increase, natural gas is regularly lost as it is burned (flared) and released into the atmosphere (vented) during the production of oil and gas. GAO was asked to (1) describe flaring and venting data and what the federal government could do to improve them; (2) report, on the basis of available information, on the extent of flaring and venting and their contributions to greenhouse gases; and (3) identify opportunities for the federal government to reduce flaring and venting.

U.S. and global data on natural gas flaring and venting are limited. First, the Department of Energy's Energy Information Administration (EIA) collects and reports data voluntarily provided by oil- and gas-producing states. Because EIA has no authority to require states to report, some do not, leading to incomplete data. Second, EIA has provided limited guidance to states to promote consistent reporting. As a result, only about one-fourth of the states reporting provide data that EIA considers consistent. Third, the data EIA collects do not distinguish between flared gas and vented gas--an important distinction since they have dramatically different environmental impacts. Data on flaring and venting outside the United States are also limited, since many countries report unreliable data or none at all. To improve data on flaring and venting, EIA could use its authority to collect data directly from oil and gas producers; to obtain more consistent data, EIA could improve its guidelines for reporting. From an environmental perspective, EIA, the Minerals Management Service, and the Bureau of Land Management could require flaring and venting data to be reported separately from each other. Globally, the federal government could set an example by continuing to improve U.S. data, continuing to support global efforts, and using U.S. satellite data to detect unreported flaring. On the basis of the limited data available, the amount of gas emitted through flaring and venting worldwide is small compared with global natural gas production and represents a small portion of greenhouse gas emissions. Nevertheless, flaring and venting have adverse environmental impacts and result in the loss of a significant amount of energy. Annually, over 100 billion cubic meters of gas are flared or vented worldwide--enough to meet the natural gas needs of France and Germany for a year. While flaring and venting do occur in the United States, less than 1 percent of global production is flared and vented. Opportunities exist in several areas to help reduce flaring and venting, both in the United States and globally. For example, exploring ways to address market barriers affecting associated gas could help identify approaches to reduce global flaring and venting.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: For federal oil and gas leases, the Secretary of the Interior should direct MMS and BLM to consider the cost and benefit of requiring that companies flare the natural gas, whenever possible, when flaring or venting is necessary.

    Agency Affected: Department of the Interior

    Status: Closed - Implemented

    Comments: The Department of the Interior, in a response dated June 15, 2006, outlined actions it has taken in response to GAO's recommendation to require flaring instead of venting at oil wells. Specifically, MMS completed a cost/benefit review of requiring offshore operators to flare natural gas instead of venting it. MMS estimated that 80% of the current production facilities are not equipped with flare tips and that it would cost an average of $150,000 per facility to install the equipment to flare the natural gas. BLM also conducted a cost/benefit review of requiring flaring. The agency concluded that onshore operations occurring on Federal and Indian lands contribute a very small portion of greenhouse gas emissions (less than .07 percent). The total cost to implement flaring at those locations where venting is now occurring would require an estimated $18 million dollars. BLM also concluded that onshore operations do not economically lend themselves to flaring due to the aerial expanse of onshore oil and gas facilities. BLM does have flaring and venting guidance in place for approving/accounting for flared and vented gas which directs the operator to weigh the value of flaring versus venting after considering the trade-off in environmental degradation and cost to the operator. DOI stated that in the U.S. there are no established standards for assigning a monetary value to methane emissions. The cost to industry of flaring over venting outweighs the benefits to industry and therefore does not support requiring flaring. If the U.S. were to adopt a standard similar to what is used in Europe to establish a monetary value for reducing methane emissions, these analyses results would support requiring flaring.

    Recommendation: The Secretary of Energy should explore opportunities for improving data on flaring and venting and to weigh the cost and benefit of making such improvements. Such opportunities could be considering working with the Secretary of Commerce to provide EIA access to the National Oceanic and Atmospheric Administration's analysis of satellite data to improve the accuracy of worldwide data on flaring.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: EIA considered the recommendations provided by GAO in light of available resources and other priorities for improvement. EIA does not have a program for the collection of venting and flaring data from international well operators or from other countries. Rather, EIA relies upon data provided by international agencies. Further, EIA does not have the expertise or resources to assess satellite imagery. In light of available resources and other priorities, as well as the level of effort implied by pursuing this approach, EIA will not proceed along the lines of using satellite data to improve the accuracy of worldwide data on flaring. EIA considers this item closed.

    Recommendation: The Secretary of Energy should explore opportunities for improving data on flaring and venting and to weigh the cost and benefit of making such improvements. Such opportunities could be considering, in consultation with the Environmental Protection Agency, the Mineral Management Service (MMS), and the Bureau of Land Management (BLM), how to best collect separate statistics on flaring and venting.

    Agency Affected: Department of Energy: Energy Information Administration

    Status: Closed - Implemented

    Comments: EIA considered the recommendations provided by GAO in light of available resources and other priorities for improvement. EIA continually works with MMS and BLM to improve the quality and of production statistics. This collaboration includes efforts to improve the quality of data related to venting and flaring. While EPA's STAR program is a voluntary partnership with industry aimed at reducing natural gas emissions by producers, processors, transporters, and distributors, the program does not lend itself to systematic, statistically valid measurement of volumes vented and flared. EIA considers this item implemented and closed.

    Recommendation: The Secretary of Energy should explore opportunities for improving data on flaring and venting and to weigh the cost and benefit of making such improvements. Such opportunities could be working with industry and state officials, and using guidance already in existence, to enhance guidelines for reporting consistent flaring and venting data.

    Agency Affected: Department of Energy: Energy Information Administration

    Status: Closed - Implemented

    Comments: EIA is working with the Interstate Oil and Gas Compact Commission (an organization of oil and gas producing states that are each responsible for the development and regulation of the oil and gas resources within that state) to improve the quality, timeliness, and coverage of production data collected by the States and subsequently submitted to EIA. Even though EIA has a monthly survey of producers to collect more timely production data, EIA relies on the more detailed annual data provided by State offices for a comprehensive assessment of production activities. Since one of the detailed data elements collected by States continues to be the volumes vented and flared, EIA will continue its efforts to work with the States to address issues of comprehensiveness and accuracy of such data. EIA considers this item implemented and closed.

    Recommendation: The Secretary of Energy should explore opportunities for improving data on flaring and venting and to weigh the cost and benefit of making such improvements. Such opportunities could be considering the use of the department's authority to collect flaring and venting information directly from the producing companies.

    Agency Affected: Department of Energy: Energy Information Administration

    Status: Closed - Implemented

    Comments: EIA considered the recommendation to collect flaring and venting information directly from the producing companies when implementing a new version of a survey of natural gas producers (form EIA-914). Comments received indicated that producers' records related to venting and flaring (and the corresponding submissions) would not support valid estimation of volumes vented and flared. An additional independent survey aimed primarily at assessing the volume of natural gas vented and flared would add a significant reporting burdens to natural gas producers causing them substantial investments. Also, EIA weighed the cost to other programs of redirecting EIA's resources from core energy supply and disposition programs to suppor this activity. After considering all the options, EIA decided not to collect this information directly from producers.

    Recommendation: For federal oil and gas leases, the Secretary of the Interior should direct MMS and BLM to consider the cost and benefit of requiring that companies use flaring and venting meters to improve oversight.

    Agency Affected: Department of Energy: Energy Information Administration

    Status: Closed - Implemented

    Comments: The Department of the Interior, in a response dated June 15, 2006, described actions taken in response to GAO's recommendation of metering flared and/or vented natural gas. Specifically, BLM completed a cost/benefit analysis of requiring operators to meter flared and vented natural gas volumes and review the current methods used to account for flared and vented volumes. BLM estimated the cost to install flare or vent metering equipment to be $32 million, and an additional $5 million in annual operating expenses. Since BLM administers many scattered wells (around 70,000), the agency concluded that there is no benefit to knowing the volume over the current methods used to estimate volumes. Also, BLM engineers would be required to inspect this equipment for compliance and accuracy -- thus significantly increasing the workload of these engineers. In addition, the MMS completed a cost/benefit analysis for offshore production facilities. This analysis supported requiring meters on facilities that process more than 2000 barrels of oil per day. The agency has proposed revisions to 30 CFR 250, subpart K to require operators to install a meter to measure flared or vented gas on facilities that process more than 2,000 barrels of oil per day.

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