The flaring-related CO2 emissions intensity of oil production in the US Permian basin is set to reach historically low levels in the second half of 2020, averaging at between 4 and 5 kilos (kg) of CO2 per barrel of oil produced, Rystad Energy estimates. The CO2 equivalent emission intensity associated with wellhead flaring has already improved from the peak level of 11–12 kg CO2 per barrel of oil produced in 4Q18 and June 2019, to 8 kg CO2 per barrel of oil in March 2020. Rystad Energy forecasts that the flaring-driven emission intensity will reach a low of 3.9 kg of CO2 per barrel produced in November, an unparalleled low in the modern history of Permian development. "In 2Q20 a material part of Permian oil production is being curtailed, resulting in an abnormal oil production decline that is supporting emission intensity at a level of 7–8 kg CO2 per barrel, despite continuous deceleration in flaring. "However, assuming that most volumes are brought back in 2H20, we anticipate a significant downward shift in flaring-driven emission intensity," says Artem Abramov, Rystad Energy's head of shale research. As frac activity in the basin fell to record-low levels and 2H20 is expected to be weak in terms of new production additions, we anticipate a substantial reduction in the total wellhead flaring in the Permian from 500–600 MMcfd in the November 2019–March 2020 period to 220–280 MMcfd in 2H20. Our latest estimate suggests that total Permian wellhead gas flaring was relatively flat at just above 500 million cubic feet per day (MMcfd) throughout November 2019 to January 2020 and saw a jump towards 600 MMcfd in February, driven by a large number of major completion rounds in the first two months of the year. Preliminary estimates for March 2020 indicate the beginning of a counter-seasonal and fundamental declining trend — the first signs of activity slowdown caused by low oil prices and delayed POPs. Approximately 460 MMcfd of flared gas for March 2020 comes from our interpretation of reported disposition data, while an additional 70 MMcfd is the estimated impact of delayed reporting for the month. Wellhead gas flaring in 1Q20 was not distributed evenly across the Permian Basin. In the Delaware part of the basin, we saw concentrated flaring clusters on the TX-NM border in Loving County (the far eastern part of the Delaware basin) along with several clusters in the southern portion of the basin, gassy Delaware West (more in Reeves County than in Culberson) and isolated flaring sites in New Mexico. In the Midland basin, there is very little flaring (compared to the gas production level) in Midland County, and flaring clusters are primarily located in Martin County and the Midland East basin (Howard County). Core parts of the Delaware Basin (north, east and west) have seen total wellhead gas flaring hovering around 300 MMcfd since 4Q18. Meanwhile, flaring intensity has improved substantially in Delaware North and Delaware East since 4Q18, but has been flat at about 5% to 6% in Delaware West. Midland North and Midland East saw flaring spikes in 4Q18–1Q19, but flaring intensity has since been reduced substantially to 3%–4% in each basin. This month in the operator benchmarking section for flaring intensity, we also analyzed the top 45 Permian operators based on their total gross gas output in January 2019 to March 2020. Our analysis of the most recent data shows that more than half of the group have improved their flaring intensity in the past year, with 10 of them flaring less than 1% of the gas produced in 1Q20. — Rystad Energy
