Member Article

In a move that indicates significant regulatory changes may be coming to deepwater operations, federal authorities are eyeing new rules curtailing venting of natural gas in the Gulf of Mexico. The Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) will hold a public meeting on March 30, 2010, in New Orleans, to discuss possible new requirements on flaring and venting of natural gas from platforms located on the Outer Continental Shelf (“OCS”) of the Gulf of Mexico and elsewhere. BOEMRE is considering whether to require flaring rather than venting where practical to reduce the potential effect of greenhouse gas emissions.

BOEMRE’s upcoming public meeting builds upon an April 2010 initiative, in which BOEMRE issued regulations which required operators to install flare or vent meters on large platforms and to report flared gas separately from vented gas. Data taken from the new meters and reports presumably will be used by BOEMRE to analyze the need for further regulations.

Flaring converts methane and the heavier components of natural gas into carbon dioxide through ignition at the end of a boom or flare stack. In contrast with venting, the natural gas is released directly into the atmosphere as (primarily) methane. While both carbon dioxide and methane contribute to the overall amount of greenhouse gases introduced into the atmosphere, the benefit of flaring is that carbon dioxide contributes approximately 23 times less to greenhouse gases than methane.

Cost considerations have been raised, however, over the flaring option. After conducting a cost-benefit analysis on a similar requirement in 2005, BOEMRE’s predecessor, Mineral Management Service, decided not to pursue new regulations at that time, citing excessive costs. In addition, while some amount of flaring or venting is necessary in most cases, BOEMRE has acknowledged data that estimate operations in the Gulf of Mexico OCS flare and vent to be less than half a percent of the total volume of the gas produced in the Gulf of Mexico. This data would indicate that the Gulf of Mexico OCS is by far one of the least wasteful areas of natural gas production when compared to other comparable gas producing regions worldwide, particularly those in Russia, Iraq and the Nigerian Delta.

Many industry commentators agree that whether flaring or venting is appropriate depends on a variety of factors, including the type of reservoir encountered, the design, age and size of the individual platform, safety and costs. Safety concerns in particular may impact cost and operational processes and potentially may include required burn technologies and specific flare practices, limits on the specific hours and duration of flaring, guidelines on the location of flaring stacks, and limits on smoke, heat, and noise generation.

The proposed public meeting will cover all of the topics discussed above.

Anyone wanting to attend must register in advance by contacting Ms. Robin Vaughn at BOEMRE. (Telephone: (504) 736-2675 Email: [email protected])

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