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IOGCC Details Oil, Gas Production Data From Nation's Stripper Wells

Posted on: Wednesday, 18 January 2006, 03:03 CST

By Haines, Leslie

Marginal or so-called stripper oil and gas wells are important to overall U.S. production, but just how much so? These small wells provide some 16% of U .S. oil and 8% of gas production onshore.

Marginal wells are defined as those that produce 10 barrels or 60,000 cubic feet a day or less. Although that may seem inconsequential, the production adds up. In 2004, it totaled 310 million barrels of oil and more than 1.5 trillion cubic feet of gas, according to the Interstate oil and Gas Compact Commission's (IOGCC) annual report, "Marginal oil and Natural Gas: American Energy for the American Dream."

"Currently marginal oil wells produce almost 850,000 barrels each day and marginal gas wells produce 4.2 billion cubic feet a day...," says Dan Olds, with the Ryder Scott petroleum consulting firm.

In 2004, the latest year for which IOGCC has data, stripper wells produced an average of 2.14 barrels of oil each, and there were 397,362 of these wells. The average gas well produced 15,500 cubic feet a day, and there were 271,856 of these.

In 2004. some 11,977 marginal oil wells were plugged and abandoned. And for the fourth consecutive year, the number of marginal gas wells that were plugged and abandoned increased, totaling 4,129, despite growing U.S. gas demand.

"If all the marginal wells were abandoned in 2004, the United States would have lost more than $20 billion in revenue, 200,213 jobs and $40.7 billion in economic output," the IOGCC reports.

"In Wyoming, 88% of the oil wells are classified as marginal producers, and the majority of them are 75 to 115 years old," says Don Likwartz, Wyoming state oil and gas supervisor and IOGCC vice chairman.

second vice chairman Victor Carillo, a member of the Texas Railroad Commission, says Texas is committed to maintaining its stripper production from 121,490 oil and 35,000 gas wells as long as possible. He cites IOGCC data as being helpful in the state legislature, which has recently enacted severance-tax breaks for marginal wells if prices fall below certain thresholds.

The IOGCC has produced this report annually for 60 years.

-Leslie Haines

Copyright Hart Energy Publishing, LP Jan 2006

Source: Oil & Gas Investor

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