Wasted natural gas pollutes the air and robs Louisiana of millions in tax revenue, report says

Fixing leaks could provide jobs, boost tax revenue, according to experts

BY TRISTAN BAURICK | Staff writer Apr 13, 2023 www.nola.com

Enough methane leaks from Louisiana’s oil and gas wells and pipelines to meet the natural gas needs of more than half the homes in the state, according to a new analysis, suggesting the fossil fuel industry is both extremely wasteful and a bigger air polluter than was previously known.

Louisiana’s oil and gas producers allowed more than 27 billion cubic feet of methane, the largest component of natural gas, to escape from leaks, flaring and venting in 2019, Synapse Energy Economics said in a report commissioned by the Environmental Defense Fund and Taxpayers for Common Sense.

The report, which relies on data from the U.S. Energy Information Administration, comes as state leaders consider new limits on methane waste. Last month, the state Department of Natural Resources proposed rules that would prohibit flaring and venting during routine drilling and other production operations at well sites. The rules are patterned after ones adopted by Colorado and New Mexico.

More than 80% of the gas loss was from leaks at the 31,000 active wells and other oil and gas infrastructure in Louisiana. Nearly 19% of wasted methane came from flaring, a common method of disposing of excess gas created during oil production.

The colorless, odorless gas contributes to ground-level ozone, also known as smog, a pollutant that exacerbates asthma and other respiratory problems. Methane also has far greater climate-altering potential than the carbon dioxide coming from cars and power plants.

Oil and gas producers don’t have to pay taxes or royalties on the gas they waste. In 2019, the lost potential revenue for Louisiana amounted to $2.5 million, according to the report.

“Methane flaring and venting is bad for the environment, the state economy and state budget,” said Ned Randolph, a consultant with the Louisiana Budget Project. “It robs all of us of important revenue which needs to be made up by other taxes.”

The total economic loss amounted to $82 million from leaks, flaring and venting in 2019. That’s enough natural gas to meet the needs of almost 700,000 residential natural gas customers. The gas lost to just flaring could supply most households in New Orleans for a year, according to the report.

“This is a valuable domestic resource that belongs to all of us,” said Autumn Hanna, vice president of Taxpayers for Common Sense, a budget watchdog group based in Washington D.C.

The Louisiana Mid-Continent Oil and Gas Association cited industry data that indicates leaking is a relatively small problem, with only about 1% of all natural gas escaping from pipes and wells.

Flaring and venting emissions are in decline, according to the Independent Petroleum Association of America, which notes that methane lost from flaring and venting fell by nearly 15% in recent years.

Methane waste “varies wildly” by operator, said Elizabeth Lieberknecht, an EDF policy expert. While many larger oil and gas operators have taken steps to curb methane loss, smaller operators are still exceedingly wasteful.

“We know low-producing wells make up just 6% of production, but half of all well-site emissions come from these smaller producers,” she said.

Tougher regulations like the ones proposed by DNR could force the smaller and mid-size producers to clean up their act, she said.

The regulations could also spur the growth of jobs focused on capping or improving wells, Randolph said.

“Mitigation is a job creator,” he said. “And it gets us closer to a clean energy transition.”