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The royalty-free flaring of natural gas from wells on public and tribal lands amounts to a hidden federal subsidy worth tens of millions of dollars, according to a new study by the environmental group Friends of the Earth that focused on the industry in North Dakota.

But one of the biggest producers of oil in the state, Continental Resources, Inc., challenged the findings, suggesting that the research overstated the volumes of hydrocarbons being burned at wells. The study didn’t account for a high percentage of inert materials in the flared gases, the company said.

The dispute underscores how difficult it is to determine how much natural gas is flared by oil and gas companies, and not just in North Dakota. Well operators reported that 0.13 percent of natural gas produced nationwide is vented into the atmosphere or flared, according to a 2010 report by the Government Accountability Office. The GAO noted, however, that estimates from the Environmental Protection Agency and the Western Regional Air Partnership showed volumes as much as “30 times higher” than those reported by industry.

The widespread flaring of natural gas from oil production is clearly an important source of carbon dioxide, the most pervasive greenhouse gas. A snapshot of data reviewed by InsideClimate News showed that gas flared at two North Dakota wells this year contained a significant percentage of methane and other hydrocarbons, contrary to the assertions of company officials.

“Drillers are allowed to destroy resources and not pay royalties on them,” said Lukas Ross of Friends of the Earth, which produced the peer-reviewed North Dakota report. “For over 100 years we’ve had this regime in place where public wealth is transferred to the oil and gas industry at the expense of taxpayers and at the expense of the environment.”

Over a six-year period, the U.S. Bureau of Land Management subsidized the burning of $524 million of natural gas by oil and gas companies operating on public and tribal lands in North Dakota, according to the Friends of the Earth’s study published last Wednesday. Federal regulations allow oil companies to flare gas without paying royalties if it is the only way they can economically extract oil from a well, Ross said.

The companies in the North Dakota study flared 107 billion cubic feet of natural gas from 2007 to 2013, the study found. The carbon dioxide emissions from this were equal to the annual output of more than 1.3 million cars, according to the report.

This royalty-free flaring resulted in a $66 million subsidy over the six years of the study for oil and gas companies in North Dakota, the report found. The findings were based on BLM data obtained through a public records request

Fracking of oil from North Dakota’s Bakken shale formation is one of the biggest sources of flared gas in the country. Continental Resources was responsible for more than half of the flared gas in North Dakota over the six years, the Friends of the Earth report found.

Continental Resources officials, however, said the study overstated the company’s share of flared methane or other hydrocarbons by 97 percent. The 48-year-old independent oil company based in Oklahoma City is one of the biggest Bakken formation producers, according to its website.

“They have obtained flare volume reports which are accurate, [but] what they don’t realize is the majority of gas that is reported as flared is inert gas, not hydrocarbons,” said Jeff Hume, vice chairman of strategic growth initiatives at Continental Resources.

Of the 55 billion cubic feet of gas that Friends of the Earth reported as hydrocarbons flared by Continental Resources in North Dakota, Hume said more than 53.4 of it, or more than 97 percent, was carbon dioxide or nitrogen from enhanced oil recovery operations outside the Bakken formation in Bowman and Slope counties. Continental Resources flared the gas to burn “trace” amounts of hydrocarbons that made up “less than 1 percent” of the total gas volume, he said.

Continental Resources spoke to Ross last Wednesday after the study was released and asked him to correct the figures, Hume said.

“Ross should do what all grownups do when they make a mistake, which is correct it and move on,” Hume said.

Ross said he stands by the findings.

“They are supposed to record volumes of natural gas, that is our understanding of how [Oil and Gas Operations Reports] work,” Ross said. Oil and Gas Operations Reports are filed with the Department of the Interior’s Office of Natural Resources Revenue, which collects and disperses royalties from oil production.  “The industry obviously has a set interest in wanting to undermine this study,” Ross said.

It is possible that the gas reported by Continental Resources included carbon dioxide or nitrogen gas, said Patrick Etchart, a spokesman for the agency.

“We do not require companies to report the chemical composition of flared or vented gas,” Etchart said.

The Bureau of Land Management, which regulates oil production on public and tribal lands, challenged the likelihood that the flared gas contained less than 1 percent hydrocarbons.

“Flared means it lights, and if it lights the end of the flame, I think it needs at least 15 percent methane” or other hydrocarbons, said Don Judice, BLM deputy state director in Billings, Montana.

Oil and gas companies are required to provide additional documentation to the BLM stating the composition of the gas they flare at each well. Friends of the Earth received hundreds of flare volume records from roughly half a dozen oil wells operated by Continental Resources in Bowman and Slope counties, but the records did not include information on gas composition.

InsideClimate News requested gas composition data for two randomly selected wells that correspond to the Friends of the Earth data. The BLM provided gas composition data from the two wells that it said were collected between January and June of 2015, roughly two years after the six-year period reviewed by Friends of the Earth. The data provide a snapshot of the composition of gas flared by Continental Resources at enhanced oil recovery wells.

Flare gas from one of the wells consisted of 78 percent nitrogen, 12 percent carbon dioxide, and 6 percent methane and other hydrocarbons. Flared gas from the second well contained 58 percent nitrogen, 6 percent carbon dioxide and 31 percent methane and other hydrocarbons.

For both wells, the percentage of methane and other hydrocarbons is significantly higher than the “less than 1 percent” figure stated by Continental Resources. But  the gas is also not primarily methane or natural gas as reported by Friends of the Earth. The environmental organization said it is asking Continental Resources to provide additional information about the composition of the gas flared from 2007 to 2013.

Earlier this month, regulators in North Dakota allowed a 10-month delay, until November 2016, before oil and gas producers are required to capture 85 percent of natural gas produced from their wells.

“Their goal first and foremost is to go in and get the oil out,” said Jeremy Nichols of the environmental group WildEarth Guardians.  “With oil you don’t need that much infrastructure. You need tanks and a truck. With gas it’s more complex. Companies just aren’t willing to make that investment while the getting is good for oil.”

The BLM challenges the notion that it allows companies to flare unlimited amounts of gas, saying producers that wish to flare must prove that capturing the gas would lead to a premature abandonment of recoverable oil reserves. Companies must also submit a plan that eliminates flaring within one year, according to BLM spokesperson Bradford Purdy.

The widespread practice of flaring natural gas without paying royalties, however, doesn’t make sense given what is known about climate change, environmentalists said.

“The BLM is approaching it from the standpoint of ‘Well, if we didn’t let them flare, then they wouldn’t develop the oil, and we’d rather get the oil and get the money from that,'” said Nichols of WildEarth Guardians. “Absent from that thinking is the climate consequences. Is it really worth it if you consider the cost of those emissions being produced?  I think the answer in most cases is we are not reaping a benefit and in the process we are effectively incentivizing a very dirty form of energy.”