Benefits of Infrastructure Expansion is Two – Fold

The lack of sufficient infrastructure in the Permian Basin is starting to show, as recently featured in the Wall Street Journal. Natural gas companies are resorting to ‘flaring’, the process of burning off excess natural gas, to handle the surplus natural gas until infrastructure expansion catches up to production. As a result, the skies of Texas and southeast New Mexico are alight with flaring stacks.

During the second quarter of 2018 flaring in the Permian Basin reached an incredible 320 million cubic feet a day, holding a market value of $1 million. The largest companies in the Permian Basin find themselves burning anywhere from 6-10% of their daily yields and are part of a 20,000 member group that applied for flaring permits in the region in the last five years. The Texas Railroad Commission (TRC), the oil and gas regulator in Texas, did not deny a single request of the 20,000. TRC member, Ryan Sitton, says “There’s nothing for us to do. If gas becomes a waste product, people will flare it.”

Basic economics push businesses into flaring as the only immediate alternative is to halt production. This situation reinforces the immediate need for more pipelines and storage facilities so that businesses can operate fully and stop the wastefulness they’ve been forced into.

Infrastructure can alleviate the financial pains flaring causes businesses as well as ease the environmental impact flaring has on the atmosphere. Flaring 320 million cubic feet of natural gas is wasteful. The Energy Information Administration has estimated it to be equivalent to the daily needs of some small states. Additionally, such aggressive flaring has a comparable greenhouse gas emission level to that of 2 million cars.

Undeniable business and environmental consequences make flaring an obvious problem. Fortunately, expanding infrastructure is an obvious solution. Broadening pipeline networks can work two – fold to rectify missed business opportunities and reduce environmental impact. Other regions across the U.S have had a similar flaring problem, particularly in North Dakota. As the U.S natural resources industries continue to boom with the realization of Marcellus Shale reserves and the Permian Basin, a national push to increase infrastructure is imperative to preserving economic opportunities and the environment.

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