Environmental And Industry Groups Agree Natural Gas Flaring Should Stop. The Question Is: How?

One Texas lawmaker proposed a 25% tax to deter the practice. But producers want time to build the infrastructure to capture and sell it.

By Alexandra Hart & Caroline CovingtonFebruary 12, 2021 11:04 am, , ,

Texas leads the nation in natural gas flaring and venting. That’s when oil producers burn or release unused natural gas into the atmosphere as a byproduct oil extraction. But that gas is both valuable and harmful to the environment. And it’s put environmentalists and energy industry leaders at odds about how to handle it.

State and environmental reporter for the Austin American-Statesman, Madlin Mekelburg, told Texas Standard that environmental groups are backing proposed state legislation that would tax oil producers for flared or vented gas.

Dallas Rep. Jessica Gonzalez’s bill proposes a tax of 7.5% of market value on flared gas. Another bill by Austin Rep. Vicki Goodwin proposes a 25% tax, with revenue going toward schools, roads and the state’s rainy day fund. Mekelburg says that bill is meant to be a deterrent, especially as drilling picks back up after a big pandemic slump.

Even though it is literally a tax bill, it isn’t really a tax bill; it’s more about trying to incentivize companies from flaring by making it more expensive to pay the tax than it would be to invest in that necessary infrastructure to capture and transport or capture and use that gas instead,” she said.

But ending flaring and venting altogether could be tricky since it’s so common. Producers are allowed to flare or vent for the first 10 days of a new oil well. After that, they need a permit. But Mekelburg says the Texas Railroad Commission has issued 38,000 permits since 2011.

Energy industry leaders want to end the practice, too, she says, but for a different reason: natural gas is valuable and they leave money on the table when they treat it as a waste product. They’re working toward ways to capture it at wells, but they argue a tax would make it harder to develop the infrastructure needed to do that.

Industry leaders say that … by imposing a tax, it may make it harder for companies who are already planning to invest on that infrastructure by imposing an additional burden,” she said. “And so a lot of these groups actually end up having the same goal, but there’s deep disagreement about where the responsibility lies on enforcing it.

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