--> Optimization Model to Regulate Methane Emissions From Unconventional (Shale) Gas Production—Application to the Permian Basin

AAPG ACE 2018

Datapages, Inc.Print this page

Optimization Model to Regulate Methane Emissions From Unconventional (Shale) Gas Production—Application to the Permian Basin

Abstract

Methane (CH4) emissions from the oil and natural gas industry have been of critical and increasing concern for the public policy. Recent evidence (Zeebe, et al. 2016) has confirmed record high levels of carbon dioxide (CO2) in 66 million years, being CH4 emissions considered a significant risk for global warming and climate change, threatening health and welfare of current and future generations. This concern would become more critical after the United States decision to withdraw from the Paris climate change agreement. This research analyzes a market-based strategy of a cap and trade system to control emissions. It can be demonstrated that this option is more efficient than traditional command and control regulations at achieving the same levels of methane reduction in the oil and gas sector. This hypothesis is verified by applying an nonlinear optimization model to a sample of oil and gas production companies in the Permian Basin of Texas. There are significant geopolitical implications involved in the development of the highly controversial unconventional natural gas (shale gas). It is unquestionable that this industry has brought not only significant new technologies (like fracking) and economic growth, but also has created important environmental concerns, and in spite of all the political-scientific efforts and discussions, we are still far to achieve a public policy strategy that balances sustainability with economic development.