Marginal Domestic Wells 'Critical' to Energy Supply -- IOGCC

Marginal wells may not receive the attention of the big oil and gas discoveries, but they are critical to the U.S. energy supply, providing 17% of the domestic oil and 9% of the natural gas produced onshore, according to a report by the Interstate Oil and Gas Compact Commission (IOGCC). Without marginal wells, the IOGCC estimated the United States would have to increase imports by nearly 7%.

Marginal gas is produced from low-volume stripper wells, which typically produce 60 Mcf/d or less. However, despite their small size, the report noted daily marginal gas production in 2005 was at its highest level in 10 years. These small gas wells produced 1,760 Bcf in 2005, or more than 4.8 Bcf/d, according to the IOGCC. Each well averaged 16.7 Mcf/d.

Adding more oil and gas to the domestic supply is not the only benefit of a marginal well, noted the report. In 2005, states collected more than $1.2 billion in taxes from the wells, and nationally, every dollar of production created nearly $1.01 of economic activity. Additionally, the IOGCC estimated nearly 10 jobs are dependent upon every $1 million of marginal oil and gas produced.

In 2005, 288,898 marginal gas wells were producing in the Lower 48. (Alaska was excluded because there is essentially no marginal production there.) Pennsylvania, with the most marginal wells, produced about 9% of the total, while Texas produced about 17%, followed by Kansas, 16%; West Virginia, 11%; and Oklahoma, 10%.

Research remains a critical element for the continued productivity of the wells, the IOGCC noted. This year, the House and Senate Appropriations Committees proposed eliminating funding for oil and natural gas research and development through the Department of Energy's Office of Fossil Energy.

"The small, independent producers who operate marginal wells many times do not have the means to conduct their own research," said IOGCC executive director Christine Hansen. "Research funding is critical to ensuring marginal well producers have the necessary tools to continue supplying much-needed domestic energy to the nation."

To obtain a copy of the report, "Marginal Wells: Fuel for Economic Growth," contact IOGCC at (405) 525-3556 or click here Marginal Wells: Fuel for Economic Growth

Copyright 2006 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

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