Wasted Energy: Texas’ Surplus of NG Emphasizes Need for Pipeline Infrastructure

Texas is home to the second-largest natural gas producing shale basin in the United States: the 86,000 square mile Permian basin. Though second in natural gas production, it is the top oil-producing shale formation in the nation, producing 8.52 million barrels of shale oil daily. While still operating as a top shale gas producer, the industry has shifted its focus to oil, wasting natural gas in the process.

Where there is shale oil, there is most likely shale gas. Both fossil fuels are used in various applications, from home heating to energy generation. However, markets and infrastructure vary between shale basins, leading the oil and gas industry to invest in the most profitable fuel.

Texas is currently experiencing a massive surplus in natural gas. With storage facilities maxed out, and limited pipeline infrastructure to move the fuel across state lines, operators have been forced to purge the excess through other means. Two of the most common methods of purging are venting and flaring. Venting is a process in which natural gas is purposefully leaked into the atmosphere. Flaring is similar to venting, but the excess gas is ignited and burned off. Though unfortunately necessary at times, both venting and flaring waste gas resources, which has both environmental and economical downsides. The release of gas obviously prohibits these supplies from going to market, thus driving down natural gas prices and depressing operator’s profits. There are environmental ramifications as well as venting releases methane, a greenhouse gas, directly into the atmosphere, and the combustion of flaring natural gas creates carbon emissions.

Some operators in Texas have tested an alternative method which would utilize the surplus to extract more oil from the shale. Through a process called enhanced oil recovery (EOR), natural gas is pressurized and injected into older oil wells in order to further fracture the shale and extract the last of the resource. This process was common in conventional oil drilling, but has only recently been tried with unconventional drilling. Experts estimate that if this method is adopted by all oil wells in Texas that it would have the ability to “utilize 25 percent of the associated gas produced”. However, this process could also extract more natural gas along with oil, only adding to the surplus.

One of the key factors that have led to Texas’ surplus of natural gas is its lack of pipeline infrastructure capable of transporting it to states with gas demand. Pipeline infrastructure allows Texas operators to access markets far outside of the state, which has the ability to raise prices for gas and limit waste. Pennsylvania has been rapidly developing its pipeline infrastructure to avoid the problems that Texas is dealing with. Major projects such as the Mariner East, Constitution, and PennEast pipelines expand Pennsylvania’s gas market. This not only drives demand and prices up for Marcellus shale gas but also supplies gas-starved states with fuel for heat and energy generation.