Exclusive: Exxon halts routine gas flaring in the Permian, wants others to follow

By Sabrina Valle  January 25, 2023 reuters.com

• Company to launch satellite to monitor and curb leaks
• Exxon seeks tougher regulations to 'level the playing field'

HOUSTON, Jan 24 (Reuters) - Exxon Mobil Corp (XOM.N) said it has stopped routine flaring of natural gas from production in the top U.S. shale basin and will press for stronger regulations for rivals to do the same, company officials said in an interview.

The largest U.S. oil producer is battling lawsuits that accuse it and other oil companies of contributing to global warming and rising sea levels. At the same time, it has moved to cut its own emissions and supported government efforts to crack down on oil and gas operators to find and fix gas leaks.

Exxon said its embrace of tighter methane regulation is designed to put oil and gas producers on equal footing. Methane, the main component of natural gas, is a potent greenhouse gas.

"It levels the playing field," Exxon's chief environmental scientist Matt Kolesar said in an interview. "We need strong regulations so it doesn't matter who owns the facility" or where they operate around the world.

LOW HANGING FRUIT

Burning less gas during production is an easy way to curb greenhouse gas emissions and increase gas production, according to consultants Rystad Energy.

Still, Exxon remains opposed to making oil companies responsible for emissions from the use of products sold to consumers. Some oil companies such as Europeans Shell and BP have included emissions by customers in their 2050 net-zero targets.

Exxon counters that focusing on methane, which can be up to 80 times more potent a greenhouse gas than carbon dioxide, is a better route to slowing climate change.

"It is by far the most cost effective" decarbonization strategy available in the industry, Kolesar said.

As a next step, Exxon plans to launch a satellite to begin track greenhouse gas emissions in the Permian by year-end -the first of 24 satellites to be deployed globally in the next three years in association with climate monitoring firm Scepter Inc, said David Scott, Exxon's general manager in the basin.

Some changes to its production in the Permian have been minor, such as adding a small compressor to push natural gas to a pipeline. Those costs are more than offset by the value of the gas sold, Scott said.

Exxon is allocating $17 billion through 2027 to lower its greenhouse gas emissions globally. The money will primarily go toward reducing emissions from oil, gas and chemicals production, including burying CO2 underground.

Environmentalists say coupling emissions cuts with increased oil and gas production is short-sighted. "Companies need to reduce their oil production, not only emissions," says Robin Schneider, executive director with environmental group Texas Campaign for the Environment.

European oil companies that are moving to develop solar and wind power are offering a better approach to apply today's high oil prices to accelerate their transition to renewable fuels, Schneider said.

PERMIAN FIRSTExxon is starting with 700 sites in the U.S. Permian basin to end routine flaring globally by 2030. It installed acoustic sensors, optical gas imaging cameras, additional pipelines and is expanding technology to quickly shut down operations remotely if needed.

Most of its U.S. shale operations are in New Mexico, one of the few states which already limits gas flaring. Exxon reached a flaring intensity of 0.4% at the end of 2022 in the Permian, still behind rivals like Norway's Equinor and Brazil's Petrobras, which face stricter local regulations.

Exxon's goal of halting all flaring by 2030 is shared by Chevron (CVX.N) and BP (BP.L). London-based Shell (SHEL.L), which sold the bulk of its U.S. shale assets, aim to halt most of its global routine flaring by 2025.

The amount of gas flared globally is almost equivalent to all the natural gas Europe was importing annually from Russia before sanctions against Moscow last year, according to the International Energy Agency (IEA).

At last year's peak U.S. price of $10 per million British thermal units (mmBtu), the waste gas amounted to $55 billion sent into the atmosphere, the IEA said.