Page 14 - NorthAmOil Week 24

NorthAmOil PERFORMANCE NorthAmOil

Report highlights wasted

gas from Permian flaring

PERMIAN BASIN A report by the Institute for Energy Economics Exacerbating the rise of flaring is the fact that
and Financial Analysis (IEEFA) has found that as tight oil production boomed in the basin, the
producers in the Permian Basin wasted a record glut of associated gas put downward pressure
$749.9mn worth of natural gas through flaring on regional spot prices. At times since 2019, gas
and venting in 2018. prices at the Waha hub in Texas have dipped into
The think-tank found that around 238.1bn negative territory, making it cheaper for produc-
cubic feet (6.7bn cubic metres) had been flared. ers to flare their gas than to sell it. However, the
Its estimates for the value of gas flared were IEEFA’s report suggests that even at higher gas
worked out using commodity prices on days prices, producers have increasingly been turning
the gas was burned. The value of the wasted to flaring.
gas is nearly double the value of gas flared and In early April, Rystad Energy noted that one
vented the previous year. And given the way of the silver linings of the oil market downturn
flaring rose, 2019 is likely to show an even this year is that flaring in the Permian had fallen
higher figure. sharply. The consultancy estimated that total gas
“Flaring is a gratuitous display of oversupply flaring declined to 700mn cubic feet (20.0mn
with detrimental consequences for the environ- cubic metres) per day in the first quarter of this
ment and is, simultaneously, an impediment to year, with 550 mmcf (15.6 mcm) per day flared at
the growth requirements of the Texas economy,” the wellhead. This was the lowest quarterly flar-
the IEEFA wrote. ing rate since the third quarter of 2018, Rystad
The high volumes of flaring in the Permian said. Notably, oil prices only fell in March – tak-
have resulted from a lack of gas-gathering and ing rig counts in the Permian and elsewhere with
takeaway capacity in a region where natural them. Thus flaring volumes could be even lower
gas is largely a by-product of drilling for oil. in the second quarter of the year.™

PROJECTS & COMPANIES

Canada’s Inuvialuit unveil LNG plan

NORTHWEST A corporation representing the Inuvialuit – an The project had first been proposed in the 1970s,
TERRITORIES indigenous group in Canada’s western Arctic subsequently scrapped and resurrected in 2004,
region – has unveiled a plan to begin produc- but never got off the ground, with the shale gas
ing LNG in a bid to boost the region’s energy boom and collapse in commodity prices in
security. Under the plan, the Inuvialuit Petro- recent years both diminishing the appetite to
leum Corp. (IPC), a subsidiary of the Inuvialuit develop it.
Regional Corp. (IRC), is teaming up with Ferus The new plan to tap gas in the region has been
Natural Gas Fuels to advance the Inuvialuit spurred by the construction of the all-weather
Energy Security Project. Inuvik-to-Tuktoyaktuk Highway.
The project would The project entails developing the TUK M-18 “You couldn’t do it without that road,” a Mat-
replace the declining well and building a plant to liquefy the produced thews Energy Consulting energy analyst and
Ikhil gas well, which gas. The LNG would then be transported by principal, Doug Matthews, was quoted by CBC
supplies some of truck to Inuvik and other communities for use News as saying. “The local market, which is Tuk,
Inuvik’s energy needs. in heating and power. is not big enough to cover the costs of develop-
The TUK M-18 well, which is located 24 km ing that field. With the road, you can reach other
south of Tuktoyaktuk, was drilled by Devon markets, which changes the economics of the
Energy and Petro-Canada almost 20 years ago. project quite significantly.”
The companies said at the time that the well con- The IPC has said the project would replace
tained in excess of 200bn cubic feet (5.7bn cubic the declining Ikhil gas well, which supplies some
metres) of recoverable gas. of Inuvik’s energy needs. The company is plan-
The broader Beaufort-Delta region where ning to complete the design of the gas plant this
the well is located is thought to have extensive autumn, and submit regulatory applications by
gas reserves, but these have been stranded since the end of 2020. If the project goes ahead and all
the proposed Mackenzie gas project was aban- goes according to plan, the project would enter
doned by the companies developing it in 2017. service in the spring of 2022.™

P14 www. NEWSBASE .com Week 24 18•June•2020