The Economics of Natural Gas Venting, Flaring and Leaking in U.S. Shale: An Agenda for Research and Policy

Mark Agerton (), Ben Gilbert and Gregory Upton
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Mark Agerton: Department of Agricultural and Resource Economics, University of California Davis and Non-Resident Fellow at Baker Institute for Public Policy, Rice University

No 2021-02, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: Natural gas venting, flaring and leaking (VF&L) are closely intertwined environmental policy issues for U.S. shale oil and gas operations. In this paper, we lay out an agenda for researchers and policymakers. We describe why VF&L are closely related, both physically and in terms of policy. We perform an interdisciplinary literature review on measurement of VF&L. We marshal granular industry data to identify constraints in the natural gas system correlated with upstream VF&L. Motivated by this descriptive analysis, we discuss the economic reasons for VF&L and the market distortions that could exacerbate VF&L. We then discuss the external cost of VF&L. We calculate that reported 2015 and 2019 flaring and venting imposed climate damages of $0.9 to $1.8 billion and $1.7 to $3.4 billion. We calculate that climate damages of 2015 upstream U.S. methane emissions estimated by Alvarez et al. (2018) were $16.8 billion. Finally, we discuss both existing policy and economic insights relevant to future policy.

Keywords: methane; venting; flaring; natural gas; shale; environmental policy (search for similar items in EconPapers)
JEL-codes: Q35 Q48 Q53 Q54 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021-09
New Economics Papers: this item is included in nep-ene and nep-env
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http://econbus-papers.mines.edu/working-papers/wp202102.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp202102

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