Two of Europe’s biggest oil companies urged Texas regulators to end the routine flaring of natural gas, joining with large investors who want greater oversight of the harmful environmental practice.
BP Plc and Royal Dutch Shell plc are calling for tougher rules than those proposed by the Railroad Commission of Texas, which regulates oil and gas in the state. The commission is considering requiring operators to disclose more data when they apply for flaring permits and issuing them for shorter periods.
“We believe there is a real opportunity for the state to set the bar for others to follow,” BP and Shell said in a joint letter to the regulator dated Sept. 4 and published late Wednesday. “We encourage the Railroad Commission of Texas to support an ambition of zero routine flaring in Texas.”
Last week, investors managing more than $2 trillion asked the commission to end routine gas flaring by 2025. AllianceBernstein, California State Teachers’ Retirement System and Legal & General Investment Management said the actions of leading operators “demonstrate the financial and technical viability” of their proposal.
The boom in shale production over the past decade has led to a massive excess of natural gas, which is often a by-product of oil in some basins such as the Permian. Prices for gas are often so low that it’s cheaper for operators to burn it, releasing carbon dioxide and sometimes methane, rather than pay for pipelines to take it to market.
Routine flaring refers to the burning of gas during normal operations. Most operators and regulators also reserve the right to flare during emergency situations.
The business-friendly commission has historically taken a hands-off approach to flaring, granting permits and waivers when needed, but that may soon change with increasing pushback from environmentalists, investors and some oil companies.
In their letter, BP and Shell didn’t set a date for ending routine flaring but called for improvements from operators, improved flaring data, more oversight and collaboration with pipeline operators.
© 2020 Bloomberg L.P.