Marginal Wells Essential to State

Marginal wells accounted for nearly 17 percent of oil and 9 percent of natural gas produced in the U.S. last year. Oklahoma ranks in the top five in the production in both categories.
Marginal oil wells produced more than 321 million barrels of crude, which is more than the U.S. annually imports from Iraq, according to a study from the Interstate Oil and Gas Compact Commission.
Marginal gas wells produced more than 1.76 tcf of natural gas, with average daily production the highest in a decade. Marginal gas is natural gas produced from a well that operates on the lower edge of profitability. Generally speaking, these are low-volume “stripper” gas wells – defined by the IOGCC as a natural gas well that produces 60,000 cubic feet per day or less.
It is important to preserve these marginals wells, said Tom Hull, a commissioner with the Oklahoma Marginal Well Commission. Hull is an independent oil producer from Osage County and is on the board of the Osage Producers Association. He has served on the board of the Oklahoma Independent Petroleum Association.
“If we don’t, we will have a lot more trouble taking care of our own needs,” Hull said. “We have to do everything politically and environmentally to keep from losing this resource.”
The report outlines the economic benefits these wells create.
In 2005, states collected more than $1.2 billion in taxes from marginal wells. On a national level, every dollar of marginal oil and gas production creates nearly $1.01 of economic activity, essentially doubling the impact of production value alone. Additionally, nearly 10 jobs are dependent upon every $1 million of marginal oil and gas produced.
If all marginal wells were abandoned in 2005, the U.S. would have lost more than $29.5 billion in revenue, according to the report. In 2005, the U.S. lost more than $883 million in revenue from abandoned marginal wells.
Hull predicts “a hard spike” in oil and natural gas prices because the economies in China and India continue expanding. He foresees $100 barrel oil next year.
“We need to do something,” he said. ?



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