Oil production from U.S. stripper wells has sunk to a 20 year low.
The Interstate Oil & Gas Compact Commission reports stripper wells produced 975,000 b/d, or 14% of U.S. oil production in 1993, down 33,000 b/d from 1992 to continue a 9 year slide in yield.
Average production per well from stripper wells, defined as those making less than 10 b/d, slipped from 2.23 b/d in 1992 to 2.16 b/d in 1993, the lowest level since Iogcc began tracking stripper wells in 1941. Well abandonments increased to 16,914, up from 16,211 in 1992.
Iogcc, a conservation group representing the governors of 29 oil and gas producing states, prepared the tally of wells and production. The Coopers & Lybrand accounting firm analyzed the economic effect.
Coopers & Lybrand said production from the 452,000 stripper wells in the U.S. is responsible for 23,000 oil industry jobs and 27,000 jobs outside the industry and pours $8.5 billion into the U.S. economy. Governments receive an additional $247 million from stripper severance taxes.
Each $1 million of stripper oil production generates nine jobs, and each $1 worth of production creates an additional 52cts in economic activity in a state.
DISTURBING NUMBERS
Christine Hansen, Iogcc executive director, said, "The disturbing numbers-lower production, fewer wells, more abandonments-signify that domestic oil resources are being left behind. This is important information for national and state lawmakers.
"The analysis identifies a clear opportunity. Programs that keep stripper wells pumping and put idle wells back into production create jobs and strengthen a state's economy."
Texas, which has the most stripper wells and production, registered gains in both those categories. Iogcc acknowledged that Texas has enacted a package of incentives to keep wells active.
Hansen said, "Absent the increase in Texas, the national picture continues to illustrate loss of an important domestic resource trapped at the bottom of these abandoned wells."
Virginia Lazenby, National Stripper Well Association president, said, "Until and unless our lawmakers act on the facts, the amount of oil produced from these wells will continue to decline, and this resource base will be lost forever.
"Year after year, new studies and reports highlight the amount of domestic production the country is losing, yet little is done to turn the situation around. It's unfortunate because the lack of action makes no sense economically."
The stripper association said since the early 1980s more than 2 billion bbl of oil reserves from stripper wells have been lost due to price instability and overregulation.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
