Value of U.S. stripper wells dropped by $1 billion in 1997

Oil and Gas Stripper Well Cummulative Impact on U.S. Economy [50,683 bytes]

The economic value of stripper wells to the U.S. economy decreased to $13.4 billion in 1997 from $14.4 billion the prior year.

The decline stems from an 8% drop in crude oil prices from their 1996 level, says the 1998 edition of a report issued this month in Salt Lake City during the Interstate Oil & Gas Compact Commission's annual meeting.

The report was compiled by Dan Olds, manager of petroleum engineering consulting for PricewaterhouseCoopers LLP, Houston. It was based on an annual survey conducted by Iogcc.

Stripper production

The decline in the value of stripper wells occurred even though stripper well production was slightly higher in 1997 than in the previous 3 years.

Considering that stripper well abandonments decreased by about 11% from the 1996 level of 17,023, production from stripper oil and gas wells did not increase significantly. This is because the percentage of wells abandoned as compared with the total well count remained about the same, the report said.

Iogcc's survey is based on data collected from California, Colorado, Kansas, Louisiana, Mississippi, New Mexico, North Dakota, Oklahoma, Texas, Utah, and Wyoming, which account for more than 68% of the total reported stripper oil wells and 88% of the stripper oil well production in the U.S.

Those 11 survey states have a little more than 35% of the total 176,530 stripper gas wells in the U.S.

Stripper contribution

During 1997, U.S. production outside Alaska and federal offshore areas was 1.416 billion bbl of oil and 12.7 tcf of gas.

Stripper oil production accounted for 352.9 million bbl, or 24.9% of that total. Stripper gas production accounted for 1.013 tcf, or 8% of the total, excluding federal offshore production. Iogcc said, "Any incentives to prolong the life of stripper wells have the potential to increase the future recovery of oil and gas from all wells."

The study examined the total effect of abandoned stripper oil and gas wells on the U.S. economy (see table below). According to the report, $2.77 billion of economic activity and 15,837 jobs have been lost during the 6 years Iogcc has studied stripper well abandonments.