For those concerned about carbon emissions, markets are once again producing something heavy-handed regulation cannot: a sizeable reduction in carbon emissions without straining economic growth. Blue Water Energy has developed a new product called the Cryobox, which is capable of capturing economically-stranded gas at the well and converting it to liquified natural gas (LNG).
Natural gas flaring is the process of combusting natural gas at the wellhead in cases where some natural gas cannot be efficiently captured and processed. This has often been the case during the testing stage of the development of a new well where capturing 100 percent of the methane would require the producers to invest in large-scale infrastructure before they are even certain that the well will be commercially viable. Rather than releasing that methane into the air, producers flare the well as a pragmatic way to limit their methane emissions.
This practice by the industry has drawn a lot of attention from environmental activists and politicians over the years because of the fact that it increases the amount of carbon dioxide emissions that are produced during the extraction process. For nearly a decade, activists and politicians have proposed a number of policy remedies for what they call a “wasteful” practice by the industry. But a new technology has emerged that has the potential to put the flaring debate to rest.
The Cryobox is a mobile LNG production station that can be easily moved between different well sites, this is a particularly important for smaller natural gas fields that are located away from the existing pipeline network. A recent Bloomberg article highlighted the Cryobox’s performance at a well site:
“Edge’s Cryobox can produce as much as 15 metric tons (10,000 gallons) a day of LNG. The rig can be moved between wells and can be up and running within an hour of arriving on site. Peak production is reached in 10 minutes, which is much quicker than the 18 hours it takes for some big conventional liquefaction plants. The daily output of one unit is a tiny fraction—about one-3,000th—of large-scale plants in Qatar and Russia, but the focus is on the units’ portability. The small scale means the system makes sense for isolated pockets of reserves where it’s too costly to build pipelines and other infrastructure to collect flows.”
The emergence of this new technology shouldn’t come to a surprise to anyone as oil and gas producers have had a strong incentive to develop technology to capture stranded gas. Methane is a valuable commodity, so it makes sense that oil and gas companies want to prevent any of it from going to waste. A recent estimate found that the value of stranded natural gas to be $600 million in the United States alone. As I explained in 2017:
“Still, there are instances where the cost of capturing methane emissions exceeds the amount a company could make selling the captured resource on the market. In these instances, companies do not capture all of the methane emissions at a given drill site. However, we can expect oil and gas companies to continue to invest in new technologies that lower the cost of capturing methane emissions, allowing them to continue to reduce their methane emissions over time. In the same way companies invest in their employees in order to improve their productivity, oil and gas companies invest in technology that make their drilling operations more efficient.”
It’s too early to tell the full impact technology like the Cryobox will have on natural gas flaring, but I do think the development of this technology helps to show one of the core principles that proponents of free markets stress: freedom is the best framework for solving problems. In this case, the industry seems to have developed a technology that helps reduce the need to flare natural gas wells. Perhaps more importantly, it has done so in a way that is workable given the existing organization of capital in the economy. This piecemeal process of trial-and-error innovation seems to be completely foreign to energy experts and policymakers whose unconstrained thinking about government’s ability to promote innovation has led to nearly forty years of energy policy failure.
