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As much as 3 million cubic feet of natural gas a day goes up in flames on the Cane Creek oil field outside Moab.
Imagine putting a match to a 150-bill stack of C-notes. Every day. That's what Fidelity Exploration and Production Co. has been doing the past couple of years, flaring the excess fuel.
Last year, the company burned more than $2 million in natural gas. And Fidelity managers want to keep burning — at least in the short term.
Blaming delays associated with a Bureau of Land Management permitting process, Fidelity executives appeared before Utah oil and gas regulators Wednesday asking for another extension of their exemption from state flaring limits.
Fidelity environmental affairs manager Mike Keller told the Oil, Gas and Mining Board that Utah BLM managers approved the field's gathering lines late on Oct. 2 and then insisted the oil and gas developer notify all 321 recreation outfitters that use the Big Flat project area over a three-week period.
Keller said those requirements cost the company thousands of dollars and set back construction of pipelines that are supposed to reduce the need for flaring.
In the end, the board extended Fidelity's license to flare through March 31, when the company hopes to have a $70 million two-phase pipeline project operational.
Utah environmentalists have argued Fidelity should be ordered to choke back oil production rather than be allowed to torch the natural gas that comes up with the oil.
The state closely monitors and regulates flaring since the practice wastes a non-renewable resource, costs taxpayers millions in uncollected royalties and pollutes the air. The practice also has come under fire from conservation groups that argue states are putting oil company profits ahead of the public interest.
In the West's booming oil fields, waste associated with flaring is "stunning," particularly in shale plays like North Dakota's Bakken field, according to the Western Organization of Resource Councils (WORC).
Councils organizer Mark Trechock says drillers are rushing to sink wells in search of oil, but lack incentives to invest in pipelines to capture incidental natural gas because of persistent low prices and weak regulations.
"All this boils down to the haste to get that oil to market. That's the driver," said Trechock, a co-author of the group's new report, "The Flaring Boom."
"They don't want to build the infrastructure [for natural gas] because it's a short-lived play and the money is in the oil," he said.
WORC recommends charging operators royalties on flared gas.
"That would be much more fair to the mineral owner," Trechock said. "It's not the owners' fault they are wasting the gas. They ought to be paid for that."
Only Alaska bans flaring. Other states allow unrestricted flaring for the first year of a well's life.
Utah allows flaring of up to 1.8 million cubic feet per month on single wells. Flaring beyond that requires permission, which the state has granted to Fidelity since May 2013, when the company pledged to develop pipelines that would diminish the flaring.
Fidelity's Cane Creek oil field occupies 53,000 mostly federal acres on Big Flat, a scenic area next to Canyonlands National Park and Dead Horse Point State Park that is heavily used for outdoor recreation.
Fidelity has 19 producing oil wells on the spot. The BLM predicts another 52 will be developed. The company, which is currently for sale, is obligated to drill at least two new wells a year, Keller said.
The operator recently completed a 25-mile above-ground "lateral" pipeline and on Oct. 20 started work on gathering lines to connect the trunk line with wells. The goal is to deliver gas to a new processing plant near the Canyonlands Field airport, then to a major transmission line to the east.
Keller said at least seven wells should be connected to the trunk line by mid-January, but it may take several more weeks to commission the processing plant, needed to remove impurities and fluids. The plant requires a minimum of 1.1 million cubic feet of daily flow-through, or about 75 percent of the field's current gas production.
Last year, the field torched 456,000 thousand cubic feet, or Mcf, the standard sales unit for natural gas. Gas currently fetches $4.83 on the spot market, so last year's flared gas was worth about $2.2 million.
Cane Creek flaring represented nearly one-fifth of the 2.6 million Mcf torched at Utah's 4,000 active oil wells.
The Southern Utah Wilderness Alliance and the Sierra Club had challenged the BLM's decision to authorize the gathering lines. But Utah BLM director Juan Palma upheld it on Dec. 1.
Sierra Club is weighing whether to pursue further appeals.
Environmentalists object to the pipeline not because they would rather see the gas flared, but because they believe the BLM should analyze the various components of Cane Creek as a single project, rather than what they see as a piecemeal approach.
Keller pushes back at that idea.
"We feel that doesn't hold water. This is still an exploratory area and wells operate independently of gas-gathering infrastructure," Keller said.