August 17, 2021
Surface land owners In the oilfield can’t always choose the oil and gas company that has mineral rights below their property. The resulting relationship between land owner and operator can be stressful or good.
As a land owner working with an existing operator or mineral owner deciding on a lease, it’s important to understand how well a company runs its field activities.
Oilfield operations can influence the land owner’s lifestyle along with air and water quality. These affect people, livestock, wildlife, and the overall property value. Here are the key issues to consider.
Onshore US oil and gas production contributes one-third of the industry’s greenhouse gas emissions, 94% of which is carbon dioxide (CO2). Many operators are addressing this, but data on this subject helps understand the progress being made.
The top contributors are pneumatic devices (which control pressure and temperature), equipment leaks, gas flaring and venting. Routine leak detection and repair reduce this risk.
Gas flaring is the controlled burn of excess natural gas, converting it to carbon dioxide (CO2) and water. Temporary flaring happens during drilling, well tests and maintenance. Longer term flaring may occur in oil-producing areas when gas is uneconomic or pipelines aren’t available.
Flaring is safer than venting methane directly into the air. But some harmful components like volatile organic compounds (VOCs), sulfur dioxide, carbon monoxide and unburned methane could be emitted. In June 2020, the Environmental Defense Fund found that 11% of Permian basin flares were unlit or not working properly, essentially venting the gas. This underscores the importance for operators to monitor and maintain their equipment and for land owners to be involved. Again, most operators understand the scrutiny that flaring receives and are very responsive to improving their operations.
People living near flares experience nuisances of noise and smoke. Light pollution at night breaks up previously dark starry skies. Whether perceived or real, operators receive complaints from land owners regarding flaring. Thus, improving flare operations can only help the relationship between the operator and land owner.
US Energy Information Administration (EIA) data shows that flaring volumes increased five-fold from 2000 to 2020. Growing drilling and production– particularly in the Permian Basin – drove the trend. Rystad Energy reported that flaring dropped in 2020 due to low activity. Operators, understanding the environmental and social effects, have now dedicated to eliminate routine flaring by 2030, if not before.
Flaring is regulated by state and federal agencies. Under pressure from investors and regulators, some public operators have committed to reduce flaring, striving to eliminate it entirely in the future.
While actively producing wells present obvious risks, inactive sites can cause issues too. Wells may be temporarily shut-in for maintenance, field management, economic limitations or low production rates. Long-term inactive wells are considered abandoned. Wells that aren’t intended for reuse should be plugged, but that doesn’t often happen immediately.
Terminology and Definitions:
Inactive or idle well: Not currently producing.
Shut-in: Not flowing, valves are closed. Temporarily not producing or injecting fluids but the well can be reopened to resume use.
Temporarily abandoned: Longer term shut-in well, often with steps to remove pumps or equipment and preserve the wellbore.
Abandoned: Plugged or unplugged wells that are no longer in use.
Plugged and abandoned (P&A): Permanently secured, not intended for future use. Sealed with a series of mechanical or cement plugs in the wellbore to prevent fluid migration underground or to the surface. All equipment and flowlines are removed, and wellsite reclaimed.
Orphaned: Abandoned wells whose previous owner is unknown, bankrupt or no longer in existence. Some may be very old, lacking complete records.
US Environmental Protection Agency (EPA) estimated over 3.3 million abandoned US oil and gas wells in 2019, and about two-thirds were not plugged. EPA reports indicate that most plugged wells release little to no methane. Unplugged wells present more hazard, emitting methane and air pollutants along with potential oil or salt water leaks, according to a Columbia University report.
Land owners would be wise to identify low producing and abandoned wells on your property, then confirm they are properly plugged at end of life to prevent leaks and emissions.
Hydrogen sulfide (H2S), present in “sour” oil and gas, can be a deadly toxin. It smells like rotten eggs at low concentrations. But high concentrations kill the sense of smell, so H2S might go unnoticed.
At low levels, H2S causes symptoms like eye irritation and shortness of breath for people. Even small concentrations may be dangerous to animals and wildlife. High concentrations quickly lead to respiratory failure and death.
In the oilfield, good operating practices reduce the risk for H2S exposure. Safety equipment like signage and windsocks alert people how to respond when H2S concentrations exceed safe thresholds. Move upwind of release and avoid low-lying areas where the heavier-than-air gas accumulates. Hydrogen sulfide corrodes unprotected steel pipes over time, which can allow leaks, so well-maintained facilities reduce potential H2S releases.
Not all oil and gas fields hold H2S. It depends on the type of rocks drilled. But the most active areas – Permian, Bakken and Eagle Ford – do contain the chemical. Find out if wells on your property could have H2S, and the steps to take in an emergency.
Operators should take precautions to prevent spills and leaks – such as liners under equipment and routine monitoring. Nonetheless, sometimes freshwater, saltwater, oil, mud or other fluids escape. Even small spills must be reported.
What causes leaks and spills? Underground, steel and cement may deteriorate in old or inactive wells, forming casing leaks that allow groundwater contamination. On the surface, production structures like storage tanks and flow lines present longer-term spill risks for land owners, due to:
• Mechanical weak points at valves and pipe connections
• Poor facility maintenance
• Damage from weather events like lightening, extreme cold, or hurricanes
Large spills can damage soil, vegetation, crops and groundwater. In particular, saltwater is very harmful and difficult to clean up, because the high salinity alters the soil, making it infertile. Heavy metals or radioactivity may also be present.
Professional environmental spill impact investigation may include sampling the surface and subsurface soil, sediment surface water and groundwater.
Reputation matters. The size of the operating company does not…both large and small operators have been cited for environmental violations. Check whether the operator has incurred fines or penalties, through EPA, state regulators, or digital databases. Historical performance serves as a strong indicator of how the operator will behave on your land.
Even if you can’t choose the operator, an informed land owner may be able to partner with the company and develop a surface use agreement that meets the environmental needs of your property while still allowing the operator to conduct business.
For tools and assistance to evaluate an operator or environmental issues on your land, please reach out to ESG Dynamics at email@example.com
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