By on May 7, 2015

Natural Gas Flaring In Arnegard, North Dakota Circa July 2013

A new report by the Government Accountability Office says the Bureau of Land Management has yet to revise standards over natural gas, costing taxpayers.

The report notes the GAO had been urging the BLM — which oversees oil and gas development on federal and Indian lands — to update the standards in regards to venting and flaring natural gas since 2010, Autoblog says. The group found by doing so, up to 40 percent of the resource could be captured cheaply, then sold on the market.

However, the bureau is just now in the early process of updating those standards, leaving the taxpayers at “high-risk” for fraud and waste under its current resource management plan. Currently, this means the government is losing around $23 million on annual royalty payments, with more millions disappearing into the air since oil and gas production in the United States began booming in recent years.

Other issues in BLM’s management noted in the GAO report include failing to meet its annual goals for high-risk wells, and the venting of methane into the environment in an EPA-estimated amount equal to 3.1 million cars removed from the road or the closure of four coal-powered plants if the greenhouse gas had been captured instead.

In response, the bureau and its parent department, the U.S. Department of the Interior, agreed with the GAO’s findings, stating funding was the main reason for not being able to remedy the issues reported. The department said it was working to update the standards, adding that President Barack Obama was working on collecting fees from oil and gas companies in order to have the budget to inspect the high-risk wells.

[Photo credit: Tim Evanson/Flickr/CC BY-SA 2.0]

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26 Comments on “GAO: Current Natural Gas Standards Cost Taxpayers Millions...”


  • avatar
    CoreyDL

    “Oh sorry we can’t save money because we don’t have the money to show us how to save money.”

    So they are:
    -Not paying correct royalties.
    -Polluting the environment.
    -Wasting sale-able natural resources at a steady rate.

    Penalties, now. They have not fixed the issue because there is no penalty. The Accountability Office (basically internal audit) doesn’t have any power, clearly.

    • 0 avatar
      Hummer

      It’s not (as) profitable to sell it, and the government isn’t due royalties on something the producer isn’t even selling. And finally, the environmental affects are basically nil.

      Nothing unusual here, just the government laying claim on money that it was never privy to.

      • 0 avatar
        CoreyDL

        It’s not as profitable to sell it, as opposed to let it burn up? I guess I’m unaware what causes the need to vent. Are they digging minerals or something?

      • 0 avatar
        adamiata

        “Basically nil?” Citation needed, as they say.

        Given that the article states “…the venting of methane into the environment in an EPA-estimated amount equal to 3.1 million cars removed from the road or the closure of four coal-powered plants if the greenhouse gas had been captured instead.”

        • 0 avatar
          Hummer

          Four coal plants, especially today with scrubbers, are not gross emitters of dangerous gasses. Similarly 3.1 million modern (N/A Gas) vehicles are, in certain conditions, emitting cleaner air than what’s going into them.

          • 0 avatar
            Sjalabais

            Not sure if what you’re saying combined with your user name and -image is intended to be taken serious?

          • 0 avatar
            Luke42

            He’s just convinced that changing the chemical composition of earth’s atmosphere is free of consequences.

            Here’s a graph of one point on earth which presents the trends nicely:
            http://www.esrl.noaa.gov/gmd/ccgg/trends/
            It’s hard to imagine how changing the composition of earth’s atmosphere wouldn’t have far reaching consequences, and the consensus among people who have actually studied the issue is that it does have far reaching consequences.

            Other than having his head in the sand on atmospheric chemistry and platentary energy balance, he’s pretty reasonable otherwise. But he likes his Hummers and doesn’t want to accept that they come with non-obvious consequences.

          • 0 avatar
            Hummer

            Oh please, you need to get real, carbon is not a pollutant and we are no where near the carbon levels that existed 20 million years ago. Every bit of carbon released into the air is carbon thats returning to the air. You need a different religion.

  • avatar

    Government by definition is WASTE.

    Unlike corporations, they needn’t EVER worry about profit and loss statements.

    They simply TAKE from SOME by FORCE and REDISTRIBUTE to others.

    When they run in the red (always) they simply raise taxes.

    Somebody tell me I’m wrong!

    • 0 avatar
      Fordson

      You are wrong.

      They got into the field and drilled, and took the low-hanging fruit, and now created a glut and drove prices down, rather than taking a little more time to install flare-gas compressors and the required piping network, developing the resource more slowly and keeping prices at a more sustainable level. And not releasing greenhouse gases and wasting a resource.

      Because nobody in corporate America thinks long-term.

      But it’s government’s fault for not making them do the right – and smart – thing.

      • 0 avatar
        Landcrusher

        They who?

        What field?

        What failed requirement?

        How do you have time to post here with all the money you need to spend after figuring out how to tell which holes would produce gas and how much?

        You really want to try to compare Exxon management to our President and Congress on long term planning?

        Really?

        Dude, I don’t even like Exxon but they gonna win that contest.

        • 0 avatar
          Erikstrawn

          I’ve been in both the private sector and government jobs. Private companies are every bit as poorly managed and wasteful as the government, they just don’t have to show their books. The only reason they survive is that every other company is at least as bad. The problem is that we’re all human and we all make stupid decisions.

        • 0 avatar
          Fordson

          In the Bakken field in ND, there was literally no infrastructure to capture flare gas when they started drilling.

          I’m pretty sure that there was an expectation of producing gas there, and skid-based flare-gas compressing systems are movable and you can pipe up to them fairly quickly once they’re placed.

          As for long-term planning, as Hummer says in his comment below, “…companies aren’t made to function like a government, if they cannot profit, they cease to exist, they don’t get to survive by losing money.” Governments ARE allowed to lose money in the short term in order get a better long term. Although when you’re talking about THIS Congress, I kinda have to concede your point.

          • 0 avatar
            Landcrusher

            Unless tech has changed, you cannot capture the gasses right away under any circumstance. Then, it’s still not a universally applicable device, nor universally available. It might be recommended that there is some sort of accountability for flaring, and there may already be some, but the best accountability is that it usually costs not to capture and burn when it makes sense to do so.

            Governments and companies both lose in the short term to profit more greatly in the long term. Governments just tend to have an even harder time fixing ridiculous nonsense. The basic difference is the lack of buy in by government leaders who often profit more personally when the government makes bad choices. Modern law, accounting, and finance are doing a good job creating this situation in corporations now as well though.

    • 0 avatar
      Luke42

      @BTSR,

      I used to believe that government was a waste until I got into the working world and observed how people actually behave.

      When I started to understand the role of information in markets, I found that the free market is a wonderful machine for optimizing things — but it can only optimize on thing which can be priced — which is far from everything that currently has a price, and even farther from everything of value.

      There’s a lot we could do to simplify our government and take away powers and polices that don’t help anyone. But that can’t happen as long as the discussion lacks nuance, as your comment does.

      • 0 avatar
        28-Cars-Later

        “A cynic is a man who knows the price of everything, and the value of nothing.”

        Oscar Wilde

        http://www.goodreads.com/quotes/454-a-cynic-is-a-man-who-knows-the-price-of

  • avatar
    Landcrusher

    Need pipelines. Need government to okay pipelines. Oh, wait…

    Tech is coming to the rescue on this, but, of course, government and liabilities are holding up progress. As soon as the compliance teams can catch up with the regulatory output…Oh crud…

    In spite of all that. More and more sites are capturing the gasses and using them for on site power or even putting the power on the grid if it’s physically and, of course, legally possible.

    Meanwhile, most places in the world just flare all of it for decades because they have socialized their energy industry and are therefore not accountable to anyone.

  • avatar
    raph

    ” equal to 3.1 million cars removed from the road or the closure of four coal-powered plants ”

    That’s interesting, there are around 500-600 coal fired plants still operating in the US

  • avatar
    Conslaw

    The people of North Dakota and other places benefiting from the current Natural Gas boom would do well to learn the history lesson of the Indiana Gas Boom of the 1880s. A large reservoir of natural gas was discovered in 1876. The gas field covered most of east central Indiana and into western Ohio. The town of Harrisburg Indiana changed its name to Gas City. In 1882 the population of Gas City was 150. IN 1894 it was 25,000. There was a rush to dig wells to tap into the gas field. As they do today, in those days they would openly burn a flare at the top of the gas pipe. Perhaps as much as 90% of the gas in this deposit was wasted in this fashion, and the deposit was pretty much depleted within 20 years. Gas City went from boom town to practically a ghost town. The community and the communities around it appear to have gained no long term benefit from the natural bounty below the earth. History is repeating itself in the current boom, and the opportunists appear to be running the show. Today’s boomtowns will be ghost-towns tomorrow with nothing but waste and pollution in the land of opportunity.

    • 0 avatar
      Landcrusher

      That’s like comparing The Chinese Communist Revolution to the current discontent in Baltimore.

      Try again.

    • 0 avatar
      Hummer

      Yes, I’m sure billions of dollars of investments in oil is being improperly managed. We can refine a much larger amount of fuels today with modern technology, that coupled with sky high pricing, only the most expensive to refine gets burned.

      They aren’t necessarily burning the good stuff. If we as a country truly cared, we wouldn’t be fighting tooth and nail to prevent pipelines from being built. And companies aren’t made to function like a government, if they cannot profit, they cease to exist, they don’t get to survive by losing money.

      • 0 avatar
        tedward

        Hummer

        The people who don’t want pipelines in their communities aren’t the government though they are individuals, and they have a very very good reason to oppose that. An entire valley town in upstate ny literally blew up immediately down the road from where my mother lives right now (a friend of mine was in a school bus leaving town add it happened). That was an ng pipeline, which is arguably more benign than other fossil fuel options. The coercive power of government is undeniably on the side of the pipeline builders in these scenarios. Why are their property rights less important than those of the public lands leading extraction companies?

        • 0 avatar
          Landcrusher

          That’s just not true anymore. We now have a government agency gone rogue determined to stop the burning of fossil fuels one hassle at a time.

          Also, the laws about pipelines are pretty similar to those about roads. It stinks when it happens to you, but you should get adequate compensation. As a car guy, I assume you appreciate adequate roads.

          They cut my step mom’s ranch in Tennessee into half for a highway and had the nerve to run it a hundred feet from the nicest house in the county. Then when she passed the inheritance tax collectors acted like the house was some palace despite the fact no one would ever pay that much for a house like that sitting on a busy highway.

          The state cleverly denied the loss of value twice. It finally sold for pennies on the dollar.

  • avatar
    shaker

    Keep the pedal to the metal – the Earth has more to give before all hell breaks loose.

    The “kids” will be all right.

    Really.

  • avatar
    George B

    Natural gas needs either pipelines or some other infrastructure to use the gas that’s flared off. Would be great if it could be used to generate electricity, but that requires power lines.

  • avatar
    sllloyd

    1. very little of the oil and gas drilling boom has occurred on Federal land. It has happened on State and private acreage.
    2. Up til recently, natural gas was a nuisance byproduct of oil drilling. if the natural gas is not disposed of, through either flaring, or piped out, the oil well will pressure up, constraining the flow of oil.
    3. The price of oil was near $100. The price of natural gas was between $2 and $4. Which hydrocarbon was more important, do you think?
    4. F*ck NIMBY. Natural gas gathering systems, processing plants, and transmission pipelines are fucking expensive. When the gross spread (the difference in what you can sell the cleaned up gas for, less the cost of gas) is maybe $.20/mm but and it costs $.50/mmbtu just to build THE PIPE, let alone the gathering systems and processing plants, hopefully you can see that economic hurdle.
    5. NIMBY issues.
    6. Seemingly endless litigation
    7. ad nauseum

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