[FourHand451]

The practices you're describing largely seem sensible, but I think they are also beside the point made by the article, namely that Texas seems to emit more gas per unit of production than a neighbor.

> gas doesn't have a ton of value in the Permian basin.

You note this, but the assertion that selling or using the gas to run generators are top preferences for producers seems contradictory, or perhaps a bit oversimplified.

If gas is abundant and has little value, I would expect there would also be little incentive to sell it when it isn't trivially easy to do so, or to store it for later use running compressors or generators. Cheap gas would mean venting or flaring are the least expensive option in more situations.

[Ographer]

You're exactly right. I used to be a production engineer for an O&G company and new wells were usually ready to begin producing oil before the gas pipeline company had finished construction of the pipeline or the compressor station to operate it.

Because of the time-value of money, they want to produce the oil ASAP so that they can reinvest the proceeds to drill new wells. This meant that we had to flare gas the maximum legal amount every day for months until the pipelines were completed. I had to keep track of how much we flared and tell them to shut the well in if we were getting close to the legal limit.

Oil companies will ALWAYS pollute the maximum amount they are allowed by regulations when that is the most profitable solution.

[nerdponx]

The fact that the economics of not-venting gas aren't great for operators is precisely an example of externalities and why they can't be handled effectively without financial incentives or equivalent regulation.

Either you buy gas from Permian basin operators at inflated prices to make it worth capturing, or you make the cost of not capturing it high enough that it becomes worthwhile to capture. The latter is a classic Pigouvian tax. The former would be unpalatable to most voters (but a delicious opportunity for the oil and gas companies).

[auspiv]

There are a lot of nuances to assign the gas a value. Our electricity is apparently in the 5-6 cents per kWh range. I did the math recently and running a generator on site can cut that in half. But then you're in the business of running a fleet of hundreds of generators. Is it cheaper per kWh? Yes. But then factor in the cost of mechanics, techs, maintenance, etc. and that bring it close to even. You've also locked yourself into a bad spot if the price of natural gas spikes 3x like it did in summer 2022 with the Russia/Ukraine war and all of a sudden your self-generated electricity is far more expensive than utility and you can't sell any of your gas because you never build the gathering lines to get it to a pipeline.

[vel0city]

If you're self-generating from gas you'd otherwise just release to the air, your generation costs aren't changing from the spike in markets you're not even participating in. You're not buying the gas, you're getting it directly from the ground.

If you have a water well on site, does a drought far away change the cost for you to get water from the ground? One could argue you're not realizing the gains in the market by bringing your water to sale and losing out on opportunity, but those are theoretical dollars you're losing. Your actual costs stayed the same.

[pixl97]

No, not really...

Most companies have a pot of money they can put across multiple projects and will typically put that money towards projects that are going to profit the most. If you have a well near a major transmission pipeline, that's where you're going to invest most of your time and effort.

Self-generating still means your turning power over to the market, and in long runs of sunny/windy days power prices may go negative for some amount of time.

It's a lot of risk, hence why the oil/gas industry has lots of booms and busts.

[vel0city]

I was speaking to this:

> You've also locked yourself into a bad spot if the price of natural gas spikes 3x like it did in summer 2022 with the Russia/Ukraine war and all of a sudden your self-generated electricity is far more expensive than utility and you can't sell any of your gas because you never build the gathering lines to get it to a pipeline.

The war in Ukraine spiking natural gas prices aren't increasing your costs if you're using waste gas. Your costs are the same regardless of whatever the global market of gas prices are, because you're not selling this gas on the market nor are you buying from the market. And for the vast majority of markets the war led to utility rates increasing, not decreasing, so chances are your self-generation rate was less than the grid not more.

> Self-generating still means your turning power over to the market

That's an assumption, but depending on the setup it might be true or it might not be true. One could self generate just for their own local usage and not be tied to the grid.

I agree with the idea of it potentially not being competitive with renewables, once again you're talking potential lost opportunity when talking about renewables coming in cheaper. But the fact renewables came in cheaper some days doesn't make your costs increase, it just makes it less competitive than the grid power. The grid going negative doesn't change your costs if you're not connected to the grid, it just means you're spending more than you potentially needed to. And I agree its this risk of the price of electricity going lower than the costs of actually gathering and burning this gas for electricity that leads to it being flared and vented instead of put to something useful.

But still, from the perspective of self-generation your costs aren't changing from grid conditions. Say it costs you like $0.05/kWh to self generate with the waste gas. The grid goes down to only $0.02/kWh. Did your costs to generate go up? No, its still $0.05/kWh. Sure, you're overpaying by $0.03/kWh compared to just using the grid power but your costs were still the same.