OKLAHOMA CITY, OK – The Interstate Oil and Gas Compact Commission (IOGCC) has released the 2015 Marginal Well Report that documents marginal well activity and the economic contribution of marginal production in the United States.
Despite current industry challenges, marginal wells remain in widespread operation across the country and continue to reliably produce a meaningful share of total domestic oil and natural gas output. According to the report, 72.2 percent of all operating wells in the U.S. in 2015 are marginal.
“The time period provided in this particular report is during a dramatic shift in production with extreme price swings for the oil and natural gas industry,” stated IOGCC Executive Director Carl Michael Smith. “This report will show the vital role marginal wells play for our nation’s energy security and independence.”
The IOGCC defines a marginal well as a well that produces 10 barrels of oil or 60 Mcf of natural gas per day or less. The current report, which includes twenty-nine states, is based on data collected from the IOGCC marginal well survey that covers production activity for the calendars years of 2013, 2014 and 2015.
"Marginal wells are an integral part of Oklahoma’s oil and natural gas landscape,” said Oklahoma Energy Resources Board (OERB) Executive Director Mindy Stitt. “Along with the IOGCC, the OERB and Sustaining Oklahoma Energy Resources (SOER) are committed to supporting marginal well owners and operators through both public and professional education.”
The report states that marginal wells have contributed more than $300 billion of production in the form of 2.85 billion barrels of oil and 19.9 billion Mcf of natural gas over the last ten years.
The total number of producing marginal wells increased by nearly 24,000 since the prior survey in 2012. Though that is only a three percent increase, marginal production remains a substantial share of U.S. oil and gas.
“Stripper (marginal) wells are the small business sector of the nation’s oil and gas industry. They are frequently family-owned, predominantly in rural areas, and passed down through generations,” stated Darlene Wallace, National Stripper Well Association Chairman, and owner/operator of Columbus Oil Company, Seminole, Oklahoma. “Stripper well producers know there are tremendous economic benefits from extending the operations of oil and gas production as long as possible from existing wells.”
The elimination of both marginal oil and natural gas wells in 2015 would trigger an estimated direct loss of 57, 560 jobs in the oil and gas sector and $4.4 billion in direct earnings within the survey states, according to the report.
Generally, marginal wells start their productive life producing much greater volumes using natural pressure. Over time, the pressure decreases and production drops. It has been estimated that in many cases these wells may be accessing a reservoir that stills holds two-thirds of its potential value.
"The IOGCC marginal well report highlights the value of these reserves to the U.S. economy. This important study provides the justification for maintaining access to literally billions of barrels equivalent of reliable oil and natural gas in the United States," said Research Partnership to Secure Energy for America (RPSEA) President Thomas Williams. "The report also lays the groundwork to identify policies focusing on marginal and conventional wells in the U.S. for fair taxes, reasonable regulations, as well as investments in R&D needed to lower cost while reducing the environmental impact, particularly during this time of low commodity prices."
In addition to supplying much-needed energy, marginal wells are important to communities across the country, providing jobs and driving economic activity. Today, as the nation ponders the solution to its energy challenges, the IOGCC will continue to tell the story of how low-volume producing wells can collectively contribute to a sound energy and economic future.
The 2015 Marginal Well Report is now available for download on the IOGCC website.