(MENAFN- Gulf Times) Investors managing more than $2tn are calling on Texas regulators to ban the routine burning of natural gas from shale fields, arguing that the energy industry hasn't moved quickly enough to curb the controversial practice.
AllianceBernstein, California State Teachers' Retirement System and Legal & General Investment Management said they support eliminating gas flaring by 2025, according to a letter to the Texas Railroad Commission, which oversees oil and gas in the state. All three investors have been vocal on environmental issues before, but it's the first time large institutional investors have taken such a public stance to the Texas regulator.
'Actions of leading operators demonstrate the financial and technical viability of ending routine flaring, the fund managers said in the letter, which was seen by Bloomberg. 'It is clear, however, that voluntary actions alone have been insufficient to eliminate routine flaring industry-wide.
Investors and environmentalists are increasingly drawing attention to flaring because of its wastefulness and contribution to climate change. Flaring is utilised around the world as a way to deal with gas that producers can't or don't want to transport or store. Much of what's burned, especially in the shale fields of Texas, is so-called associated gas coming from oil wells.
The sheer abundance of gas in the Permian Basin of West Texas and New Mexico means local prices for the fossil fuel are often so low that it's cheaper for shale operators to burn it rather than pay for pipeline connections and storage. Last year the Permian flared enough gas to supply 5mn US homes, according to Oslo-based Rystad Energy.
The Texas Railroad Commission has come under attack for allowing companies to effectively flare at will over the past decade as shale production boomed and helped make the US the world's top oil producer. The commission allows companies to flare during the start-up of wells and during emergencies. It also issues waivers that can be utilised right through the early and most productive phase of a shale well's operation.
After more than a year of public pressure, the commission recently proposed reducing the amount of flaring time allowed under some waivers and requiring operators to provide information on why they need to flare, but it set no targets and resisted calls for an outright ban. Lower oil production due to the Covid-19 pandemic has meant flaring rates have dropped significantly this year, the commission said in a statement last month.
'Strong and effective regulatory action beyond initial steps to improve data gathering and transparency is essential to build stakeholder confidence and solve this challenge across industry, the investors said in the letter, which is part of the commission's public consultation.
The commission 'has been taking steps to further reduce flaring in its recent proposals, spokesman Andrew Keese said in an e-mailed statement. The changes are 'within parameters of existing rules, he said.
LGIM, the UK's biggest asset manager, supports the role of gas in the transition to cleaner energy sources but the industry 'must get hold of its emissions challenges, said John Hoeppner, head of the firm's US stewardship and sustainable investment unit.
MENAFN0509202000670000ID1100753633
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.