Stripper well
Encyclopedia
A stripper well or marginal well is an oil or gas well that is nearing the end of its economically useful life. In the United States of America a "stripper" gas well is defined by the Interstate Oil and Gas Compact Commission as one that produces 60000 cubic feet (1,699 m³) or less of gas per day at its maximum flow rate; the Internal Revenue Service
, for tax purposes, uses a threshold of 75000 cubic feet (2,123.8 m³) per day.
Oil wells are generally classified as stripper wells when they produce ten barrels per day or less for any twelve month period.
Additionally, as of 2006, there are more than 296,000 natural gas stripper wells in the lower 48 states. Together they account for over 1.7 Tcuft of natural gas, or about 9 percent of the natural gas produced in the lower 48 states. Stripper wells are more common in older oil and gas producing regions, most notably in Appalachia
, Texas
and Oklahoma
.
When marginal wells are prematurely abandoned, significant quantities of oil remain behind. In most instances, the remaining reserves are not easily accessible when oil prices subsequently rise again: when marginal fields are abandoned, the surface infrastructure – the pumps, piping, storage vessels, and other processing equipment – is removed and the lease forfeited. Since much of this equipment was probably installed over many years, replacing it over a short period should oil prices jump upward is enormously cost prohibitive. Oil prices would have to rise beyond their historic highs and remain at elevated levels for many years before there would be sufficient economic justification to bring many marginal fields back into production.
As a result, once a marginal well is abandoned, the oil that remains behind is often effectively lost forever. Estimates are that the marginal wells plugged and abandoned between 1994 and 2003 represented 110 Moilbbl of crude oil reserves. Although the situation is less severe for natural gas, as of 2005 there is nonetheless a growing concern about the premature abandonment of gas stripper wells. As of 2006, the United States would have to import an additional 860 Moilbbl of oil (this figure must be wrong! it is about 10 times greater than the world's total oil consumption!!) every day (an increase of 7%), and 1.5 Tcuft of natural gas (an increase of 38%) without the aggregate production from its stripper wells.
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
, for tax purposes, uses a threshold of 75000 cubic feet (2,123.8 m³) per day.
Oil wells are generally classified as stripper wells when they produce ten barrels per day or less for any twelve month period.
Economical importance
In the United States of America, one out of every six barrels of crude oil produced comes from a marginal oil well, and over 85 percent of the total number of U.S. oil wells are now classified as such. There are over 420,000 of these wells in the United States, and together they produce nearly 915000 barrels (145,473.4 m³) of oil per day, 18 percent of U.S. production.Additionally, as of 2006, there are more than 296,000 natural gas stripper wells in the lower 48 states. Together they account for over 1.7 Tcuft of natural gas, or about 9 percent of the natural gas produced in the lower 48 states. Stripper wells are more common in older oil and gas producing regions, most notably in Appalachia
Appalachia
Appalachia is a term used to describe a cultural region in the eastern United States that stretches from the Southern Tier of New York state to northern Alabama, Mississippi, and Georgia. While the Appalachian Mountains stretch from Belle Isle in Canada to Cheaha Mountain in the U.S...
, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
and Oklahoma
Oklahoma
Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...
.
Premature abandonment
Many of these wells are marginally economic and at risk of being prematurely abandoned. When world oil prices were in the low tens in the late 1990s, the oil that flowed from marginal wells often cost more to produce than the price it brought on the market. From 1994 to 2006, approximately 177,000 marginal wells were plugged and abandoned, representing a number equal to 42 percent of all operating wells in 2006, costing the U.S. more than $3.8 billion in lost oil revenue at the EIA 2004 average world oil price.When marginal wells are prematurely abandoned, significant quantities of oil remain behind. In most instances, the remaining reserves are not easily accessible when oil prices subsequently rise again: when marginal fields are abandoned, the surface infrastructure – the pumps, piping, storage vessels, and other processing equipment – is removed and the lease forfeited. Since much of this equipment was probably installed over many years, replacing it over a short period should oil prices jump upward is enormously cost prohibitive. Oil prices would have to rise beyond their historic highs and remain at elevated levels for many years before there would be sufficient economic justification to bring many marginal fields back into production.
As a result, once a marginal well is abandoned, the oil that remains behind is often effectively lost forever. Estimates are that the marginal wells plugged and abandoned between 1994 and 2003 represented 110 Moilbbl of crude oil reserves. Although the situation is less severe for natural gas, as of 2005 there is nonetheless a growing concern about the premature abandonment of gas stripper wells. As of 2006, the United States would have to import an additional 860 Moilbbl of oil (this figure must be wrong! it is about 10 times greater than the world's total oil consumption!!) every day (an increase of 7%), and 1.5 Tcuft of natural gas (an increase of 38%) without the aggregate production from its stripper wells.