Economics Research Seminar: Wesley Blundell

Wesley Blundell is an assistant professor in the School of Economic Sciences at Washing State University with research interests in environmental economics, industrial organization and applied microeconomics.

Title: Midstream Infrastructure and Environmental Externalities in Oil and Gas: Permian Basin Flaring and Methane Emissions

Abstract:

In this paper, we estimate the short-run causal effect of congestion in natural gas midstream processing and transmission infrastructure on upstream environmental externalities from oil and gas production in the Permian basin between 2015 and 2021. We estimate that transmission congestion caused 34 percent of flaring and 10 percent of methane emissions valued at $527M and $674M in annual climate costs. We also find significant increases in flaring around processing plants when they experience congestion. At the well level, we find that gas-directed wells reduce output in response to midstream congestion, while oil-directed wells, which produce the majority of Permian gas, do not. Instead, oil wells flare excess gas. We find that wellhead netback gas prices respond differently at oil versus gas-directed wells when there is congestion, and that wells which are vertically integrated with a processing plant also respond differently compared with ones that are not. Results of this research have implications for understanding the environmental externalities of the oil and gas supply chain and the role transportation infrastructure plays.

Learn more about Professor Blundell’s work here.