Posted on 09/09/2015 5:18:43 AM PDT by thackney
Steve Plants, vice president of Plants & Goodwin Inc. in Shinglehouse, Pa., still pumps crude oil from wells drilled in the 1890s.
But with the price of crude below $50 a barrel, some of those low-producing wells, known as stripper wells, don’t turn a profit. Mr. Plants has permanently closed 10 wells, he says, and plans to plug another 10 by the end of the year.
“We’re losing money every day,” said Mr. Plants, who operates about 200 wells in Pennsylvania and New York. “If we were pumping wells every day, we might be pumping them once a week now,” to save on costs.
Mr. Plants, and thousands of individual operators like him, could turn out to be a key element in ending the oil-price rout, rather than a large producing country like Saudi Arabia or a big public company. A sharp drop in stripper-well output, currently estimated at a million barrels a day, or 11% of total U.S. production, would be nearly impossible to observe as it happens, but it could still shrink the glut that continues to weigh on prices, surprising the market, analysts say.
While investors are closely watching public companies for signs of when crude production is set to slow, many are ignoring the country’s 400,000 stripper wells, most of which produce less than five barrels a day. Stripper wells—so called because they “strip” the remaining oil out of the ground—are mostly aging ones that continue to produce oil, but at much lower rates than when they were drilled....
...In contrast to low-producing stripper wells, shale-oil production accounts for 60% of the country’s output. Offshore wells in federal waters make up 16%.
When oil prices collapsed to nearly $10 a barrel in 1986, half of the country’s stripper-well production was estimated to have been shut in...
(Excerpt) Read more at wsj.com ...
Facts and Figures
https://nswa.us/custom/showpage.php?id=25
Since 2002, marginal wells have contributed $295 billion to overall U.S. production in the form of 2.9 billion barrels of oil and 18.8 Mcf of natural gas.
The United States has an estimated 771,000 marginal wells in production - about 410,000 oil and 361,000 natural gas wells. Combined these wells make up almost 20% of the total of all oil and natural gas produced domestically. (11.3% oil / 8.3% natural gas)
If all marginal oil & gas wells were plugged and abandoned, IOGCC estimates the lost output in direct production and indirect and induced economic effects would total $52.4 billion, with 241,733 jobs lost.
Close to 160,000 American jobs are dependent on stripper well production activities—approximately 10 jobs per $1 million of production.
Over the past decade a cumulative total of more than 131,000 oil wells and 48,000 natural gas wells have been plugged and abandoned with a total market value of lost annual production estimated at $6.1 billion in the year production ceased.
The estimated market value of the lost production from these wells totaled $751.3 million in 2012 - $624.3 million for oil and $127.0 million for natural gas.
and THIS is why Arab oil is so cheap.
It will last just long enough to put these people out of business, and Odumbass won’t bail them out
This will hurt a lot of landowners with rights that have been getting royalties. It’s also an opportunity for someone with the means to take over a well on their property that the production company no longer wants.
Stripper wells, well producing less than 15 bpd, typically have already been sold to those willing to scrape the bottom.
All to often a well like this is producing more waste water than than oil. The disposal costs plus operation cost can often become more than the oil selling price when oil prices drop low enough.
Plugging cost alone would be more than anything you get out of the well.
Many a oil rig worker has lost his entire paycheck to strippers. One dollar at a time.
What do you do with the waste water from a well producing say 10 bpd ?
I assume you must collect it somehow and have it taken away?
Don’t plug it. Around here unlimited FREE gas would be worth making the effort.
Could they let them sit idle until the price rises or do they lose viability when you quit pumping?
You’d have to be careful. If the previous tender had run the well wide open, no amount of swabbing would bring it back.
And then the money saved by each consumer at the pump will be spent on other consumer items and will result in the creation of other jobs. There is no net economic downside to getting cheaper oil, and it doesn’t matter where we get it.
Typically after separating from the oil/gas, the producer pays to have it hauled and pays to have it injected into deep levels , well below drinking water.
This water will have a significant salt content, and is injected into a brine water reservoir.
Sometimes, in a larger field, it can be injected on the edges of an older producing oil field and the fluid flow helps sweep more oil to the producing well.
If “permanently closing” and “permanently opening” these wells is little more than turning a valve the article’s point is turned on it’s head.
(Can’t read WSJ articles so don’t know if they address that cost.)
At ‘some’ oil price they will open again.
You are assuming clean gas that doesn’t need processing to use. Rarely is that the case, and many old strippers will have no gas pressure at all.
ping for your info on idle wells
Permanently closing involves taking away the pump and plugging the hole with grout/cement.
It is not. Well have limits on how long they can be left idle before the bore must be plugged with concrete.
(Can’t read WSJ articles so don’t know if they address that cost.)
Simple search for the title, often the article is allowed to be viewed from web searches while direct links are blocked.
“Don’t plug it. Around here unlimited FREE gas would be worth making the effort.”
That can be very much the case in Appalachia, with some gas wells still producing after 80 - 90 years, though at low volumes. Where the property is covered by an oil and gas lease with a free gas clause and the operator wants to plug the well when it is no longer producing in paying quantities, a number of states provide that the operator can transfer ownership to the landowner, the operator is relieved of the plugging cost, the operator receives his bond back, and the landowner continues to get free gas. Win/win.
Would seem a better way would be to cut back on pumping days to maybe a few hours a month just to keep the downhole pump in good shape.
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