Federal regulators are in the midst of an application process for a proposed 135-mile pipeline that would transport natural gas from Eddy County to Waha, Texas. But with oil and gas prices low, renewables on the rise, and a growing methane emissions problem in the Permian Basin, critics argue building a new pipeline in today’s environment is a step in the wrong direction.
Summit Midstream, the project developer, proposed the pipeline in 2018, when oil production in the Permian Basin was booming. Exxon Mobil acquired about 30 percent ownership of the project, while XTO Energy, which is owned by Exxon Mobil, signed on as an anchor tenant to use the majority of the pipeline’s capacity. In March, the Federal Energy Regulatory Commission (FERC) gave the project its first big greenlight when it released a draft environmental assessment that found it would have little impact on the surrounding environment and communities.
While proponents of the pipeline say it will help alleviate some of the excessive venting and flaring of natural gas that comes up with the oil in the Permian Basin, critics argue FERC failed to consider the cumulative climate impacts of the project, particularly the impact of increased methane emissions both in the Permian Basin, where the natural gas is produced, and in the “downstream” market when that natural gas is combusted.
XTO Energy flares about 5 percent of its production, and is responsible for roughly 10 percent of statewide flaring, according to research conducted by Tom Singer, senior policy advisor at the Western Environmental Law Center (WELC). WELC submitted comments critical of the FERC’s draft EA on behalf of the Center for Biological Diversity, the Sierra Club and WildEarth Guardians.
XTO Energy did not respond to a request for comment.
Those high flaring levels are illustrative of a growing problem in the Permian Basin, Singer said. On the one hand, existing oil and gas wells are contributing to off-the-charts methane emissions in the Permian. That’s in part due to a flurry of new drilling in the basin and a lack of natural gas pipeline infrastructure to support it. On the other hand, critics of the project are concerned that a new pipeline will lock in natural gas use — and its emissions — for decades to come, at a time when many believe the window to address climate change is closing.
“There are really two separate pipeline issues. One is the ‘new wells’ issue, where pipelines need to be in place before wells are drilled to avoid venting and flaring,” Singer told NM Political Report. “The other is the pipeline environmental review issue, where government agencies need to scrutinize any pipeline proposal for environmental and public health impacts and require mitigation measures to protect the public interest.”
“What is the pipeline going to do for us?” Singer added. “When you sink vast amounts of capital into these megaprojects, you’re locking in 20 or 30 more years of [natural gas] use.”
Glut of methane in the Permian
More methane was flared in the Permian Basin in 2019 than ever before, thanks to a boom in oil production in the area and woefully inadequate infrastructure to capture and transport the associated natural gas to market. Jon Goldstein, director of regulatory and legislative affairs at the Environmental Defense Fund (EDF), described the situation as a “market failure.”
“In drilling those wells, you’re always going to get natural gas in the oil. The resources don’t exist independent of each other,” Goldstein told NM Political Report in an interview in April.
As oil production in the basin ramped up, so too did the gas that comes up with the oil. But natural gas prices weren’t strong enough to incentivize developers to build out natural gas pipelines.
“They’re investing in drilling oil wells, building oil pipelines, to get that more lucrative commodity to market. Meanwhile, all the associated gas that’s coming up with it is really viewed as a waste product,” Goldstein said. “So rather than building natural gas pipelines and devising ways to put that natural gas to good use, they are just allowing it to burn off, flaring it, or even worse, allowing it to escape through the atmosphere through venting or leaks.”
Oil and gas activities in the Permian have released methane at twice the average rate found in previous studies of 11 other major U.S. oil and gas regions, according to a study published in the journal Science Advances in April used satellite imagery to map emissions.
The study found 3.7 percent of the gross gas extracted in the Permian is emitted, which is about 60 percent higher than the national average leakage rate for methane.
“These are the highest emissions ever measured from a major U.S. oil and gas basin,” said Dr. Steven Hamburg, who was co-author of the study and also serves as chief scientist at EDF. “There’s so much methane escaping from Permian oil and gas operations that it nearly triples the 20-year climate impact of burning the gas they’re producing.”
Climate, community impacts not considered
That’s exactly the type of cumulative climate impact that WELC attorneys argue was left out of FERC’s decision-making so far. Earlier this year, FERC issued a finding of no significant impact and released a draft environmental assessment (EA), rather than completing a more robust and thorough environmental impact statement.
“The global warming potential of methane is so much higher than CO2, the impact of those emissions are amplified, relatively speaking,” said Ally Beasley, legal fellow at WELC. Beasley helped prepare comments on the draft EA.
“In addition to all the climate impacts, there are other air quality impacts that potentially could be a big concern,” Beasley said, pointing to air quality issues with construction and related emissions, particulate matter concerns, and disproportionate impacts to minority communities living within a one mile buffer along the pipeline.
“Now that we see more and more things come out about the relationship between exposure to [particulate matter] and increased vulnerability to COVID, the pandemic exacerbates all those concerns,” she said.
And because the proposed pipeline route will see it cross the Pecos River, Beasley said there are possible water quality and endangered species concerns that were not thoroughly explored in the EA.
“Looking at all those things, how can you say this isn’t significant?” Beasley said. “In this more-volatile-than-usual, less-profitable-than-usual environment, that calls into question the whole purpose and need, especially when you look at all these additional impacts.”
Natural gas’s future in limbo?
The energy sector has had a rough 2020. A slew of pipeline projects halted across the country in recent weeks, amid a four-month long pandemic and weeks after a brutal price war between two of the world’s top oil producers drove the price of oil per barrel into negative territory for the first time ever. The current energy market, coupled with the rise of cost-competitive renewable energy resources, has put the oil and gas industry — including pipeline developers — in a tough bind.
Developers recently scrapped plans for the Atlantic Coast pipeline, which would have carried natural gas through West Virginia, Virginia and North Carolina. National Grid’s proposed Northeast Supply Enhancement (NESE) natural gas pipeline has been delayed indefinitely after regulators in New York and New Jersey denied permits for the project; and pipeline developer Kinder Morgan is considering abandoning its proposed Permian Pass natural gas pipeline in Texas because it can’t find any customers.
Analysts Tom Sanzillo and Suzanne Matte at the Institute for Energy Economics and Financial Analysis argue FERC regulators tend to approve pipeline projects without needing much proof in terms of actual need.
“The tendency of pipeline developers to overbuild is well established. FERC, which could and should require a more rigorous assessment of actual need, instead defers to pipeline developers,” the two wrote in a recent report.
Once considered the “bridge to renewables,” natural gas is looking less and less attractive as the transition fossil fuel, at least in the current low-price environment. These pipeline failures make up what some are calling a major pivot in fossil fuel production in the U.S.
Meanwhile, recently established energy transition mandates across the country, and including here in New Mexico, have opened up an opportunity for renewables to be given priority over natural gas. The state Public Regulation Commission’s hearing examiners, for example, recently recommended an all-renewables generation scheme over one proposed by PNM that relied on a mix of renewables and natural gas.
Amid these developments, Singer suggested the time has come to fully pivot to renewable energy.
“We believe the economy can transition to clean energy, starting now,” he added. “We don’t do this work because we have a grudge against the oil and gas industry. It’s all about climate change, the real climate impacts and the community impacts. The impacts are huge, and we’re trying to help society understand that it’s real.”