Last week’s State-of-the State address was delivered by Gov. Mike Dunleavy incorrectly stated that Alaska’s oil-and gas producers are prohibited from releasing gas into our atmosphere and burning it. This is known as flaring.
He stated, “We don’t flare our gas. We never have. And we don’t have to be told by the federal government not to.”
It’s , not.
The state has been strictly limiting gas flaring since 1970s. However, producers are allowed to flare gas during maintenance periods and to test new oil or gas wells.
For example, in November, the Alaska Oil and Gas Conservation Commission approved a special permission which allows a producer, to flare gas for at most three months, and possibly nine, from a new well close to the Dalton Highway.
Flaring is an economic option for oil producers who are testing new wells. They don’t need to worry about the location of the gas they produce as a side effect from oil drilling. Flaring is a method of reintroducing gas from the North Slope to normal production. This involves expensive equipment and compression.
However, the state does not generally require that test drilling be reinjected. According to the Alaska Department of Revenue, while gas production is taxed by the state, flares that burn below the AOGCC’s limits are exempt from the state’s tax. This amounts to a subsidy by the state for testing wells and flaring their results.
6 billion cubic feet natural gas was flogged by Alaskan producers in 2021. Chugach Electric, on the other hand, used 13.4 billion cubic footage in 2022. This is based upon an average of 36.8 millions cubic feet per day.
This was an excellent year for flaring according to historical standards. The state flinched almost twice as much in 2012 than it did in 1993.
State regulations require that producers “take action in compliance with good oilfield engineering practices and conservation purposes, to minimize the volume gas released, burnt, or allowed to escape into the atmosphere.”
This regulation is not for environmental reasons. Because Alaska’s subsurface oil & gas is owned and managed jointly by all Alaskans, state law requires that efforts be made to eliminate waste.
About 0.17% of Texas’s total gas production was flared by 2021. Texas, which is like Alaska, is a major oil-and gas producer. It flared nearly 1% of its gas or 102 billion cubic yards. California produced almost 1.1% of all the gas, Wyoming 4.75%, and North Dakota 7%.
According to AOGCC reports, Alaska fetched approximately 0.27% of all the gas produced in 2022. Other states figures have not yet been released.
State seeks investment
Although the incorrect statement made by the governor in the State of the State might have been a simple mistake, the governor’s office did not answer any questions about the basis of the statement.
Dunleavy made a request for $5 Million to market Alaska as “leader in responsible resource-development.”
Advertising campaigns have high stakes.
Banks and other companies are now imposing policies that prohibit Arctic oil and natural gas investment. They emphasize non-economic considerations under environmental governance rules. The Dunleavy administration has tried to market Alaska oil as an environmentally better alternative to oil and gas from Russia or the developing world.
Dunleavy stated last week that ESG has been a part of our lives since before it was fashionable on Wall Street and in Washington.
Although the administration has flown former Senate President Peter Micciche (R-Soldotna) to New York City to talk directly with investment officials, problems in the oil and gas sector have not been resolved.
In a presentation to the Senate Resources Committee on Monday, Department of Natural Resources Commissioner-designee John Boyle said an impending natural gas shortage in Cook Inlet may be partially attributable to drillers being unable to find financing because of the new restrictions.
Dunleavy stated last week that “We’re going tell this story, our tale, the real story and it’s certainly not the one extremists want to believe,” in his speech. We’ll spread our unmatched investment and development opportunities through multiple media channels and targeted outreach to the industry.
The state could improve its record in flaring, which is a major source for greenhouse gas pollution worldwide, by highlighting its shortcomings.
Flaring is limited to economics, and not state rules.
This comes with risks. Flaring limits in Alaska are determined by what constitutes waste. Environmentalism is not the determining factor. The state’s sterling reputation may also change if the economics of flaring changes.
Flaring is currently at a low level, but historical data shows that this can change rapidly. According to the Energy Information Administration, in 1993 flaring accounted for 0.8% of all gas produced by the state. This was less than in other states, but much higher than what the state had previously flared.
The state wants to be seen as a leader in responsible and sustainable development. However, regulatory action has been slow in backing up that advertising.
Dunleavy stated that he does not believe that greenhouse gas emissions contribute to climate changes. The Legislature has declined to adopt climate legislation, and the state courts are unwilling to include climate change in existing laws.
The state’s new carbon sequestration program is still hypothetical and would not directly alter the environmental impacts of oil and gas drilling.
This allows the state to market existing initiatives that don’t benefit the environment as being environmentally-friendly.
Dunleavy stated that the world will continue to need oil and gas for many decades and decades. “And it is my opinion that Alaska does it better than sending it abroad to countries like Russia, Africa, or South America. The premise should be that we want as much oil and natural gas produced here. It benefits all Alaskans.
Alaska has some of the most stringent spillage reporting requirements due to the Exxon Valdez oil disaster. Dunleavy said that these requirements were similar to images of crude oil flowing through channels and canals in Russia during a news conference last January.
Gas flaring could be used as an example. Because they are required to, oil companies in this country are very careful about spilling oil. Flaring is not permitted in this country because it does not usually make economic sense and it is not prohibited by the state.
Commission permits gas flaring in oil field testing
Great Bear Pantheon was an Anchorage-based subsidiary a London company. It requested permission to flare gas from an oil well for nine month in August to test the potential production of an oil field.
Flaring for new test wells is typically limited on the North Slope because they’re normally only accessible by cold-weather-dependent ice roads, but Great Bear’s site is near the Dalton Highway, which makes year-round access — and testing — possible.
Pat Galvin is the husband of Rep. Alyse Galvin I-Anchorage and an official at Great Bear. He said that the planned gas release helps the company determine how much oil it has found. This find, if it is proven and developed, could bring in millions of dollars for the state. He said that future gas could be captured if it is produced.
Although the flare’s length was unusual, the AOGCC approved the request. It noted that Great Bear had made an economic discovery that would allow them to create production facilities to support a full-field development.
Because of the impact on the atmosphere, environmental groups have focused their attention on flaring natural gas in oil work. They are also concerned about venting which is the accidental release of gas into the open air.
One of the main components of natural gas is methane, and over a 20-year period, methane released into the atmosphere will create 80 times more global warming than a comparable amount carbon dioxide.
The Biden administration is also interested to limit these practices. The Bureau of Land Management has suggested new restrictions for flaring and venting oil and gas production on federal lands.
As in Great Bear’s case the rules for state land in Alaska are different. The guiding principle is economics, not environmentalism.
The environmental group Trustees for Alaska petitioned AOGCC not to grant Great Bear Flaring Request. They cited the effect on the atmosphere. However, the commission did not address this issue in its final determination.
Environmental issues have been ignored by the commission for a long time as they are not within its purview. Kate Troll, a Juneau resident, and 46 others petitioned the AOGCC for a ban on all non-emergency flaring or venting in order to limit global warming.
After a public hearing in 2013, the commission rejected the petition. It concluded that petitioners had “acknowledged”, and reiterated that the AOGCC has not been authorized to act on the subject matter.
The commission was also renamed in 2022 to the fine oil and gas producer Hilcorp. This was due to the fact that the state had already paid for the leakage.
Millions of cubic meters of gas were released into the atmosphere over the course of the four-month-long leak. However, the AOGCC determined that the problem and its impact on the atmosphere was not within its purview because it wasn’t the state’s gas.
“The principal purpose of the prohibition against ‘waste” is to maximize resource recovery,” commissioners concluded.
At the moment, economics and environmental issues are in sync. Alaska does not ban flaring completely, but its drive to eliminate waste has resulted in one of the lowest rates for flaring in the country.
Environmental concerns in other parts of the United States are pushing states to surpass Alaska in the race for reducing emissions. Colorado passed a law in 2019 directing its oil-and-gas commission to adopt environmentally-centered regulations that ban flaring in the majority of cases and limit emissions when it occurs.
In 2021, Colorado flinched less than one-tenth percent of its produced gasoline, which is the lowest rate of any nation, according to federal statistics. The state is now marketing itself as capital of “responsibly source” oil and gas, which is the same goal Alaska has set.
The Alaska Beacon originally published this story. It is republished with permission.
