Why Oil & Gas Producers Are Flaring Natural Gas in the Permian Basin

Steve Hendrickson, President of Ralph E. Davis Associates, was recently featured in a radio broadcast on Marfa Public Radio offering commentary on Apache Corp.'s announcement that it intends to put a hold on natural gas production at the southern edge of the Permian Basin called the Alpine High.

In late April, the oil and gas company Apache Corporation announced it’s hitting the brakes on its natural gas operations in an area the company’s been developing at the southern edge of the Permian Basin called the Alpine High.

This comes at a time when there is not enough pipeline capacity to transport the large volumes of gas being produced in West Texas to market, which is leading to low prices.

In a press release, Apache stated the deferrals would reduce its daily gas production by approximately 250 million cubic feet of gas a day. Apache declined to further comment on its announcement.

Steve Hendrickson, president of Ralph E. Davis Associates, a petroleum engineering and geoscience firm, on the other hand, said this amount represents the majority of the companies gas production in the Alpine High.

“I won’t say all, but I would say 80 to 90 percent is what it looks like from the data I have.”

Apache’s announcement surprised Hendrickson at first, but he said it does make sense. Recently, the price of West Texas natural gas bottomed out and fell into the negatives.

Hendrickson explained, “Now we’ve had situations lately, where operators are faced with the choice of flaring the gas or paying for it to be taken away.


CLICK HERE TO LISTEN TO THE FULL BROADCAST ON MARFA PUBLIC RADIO


 

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