The U.S. Bureau of Land Management will allow stripper well operators on federal lands to suspend operations without losing their leases.
Interior Sec. Bruce Babbitt said, "This will help to alleviate the economic impact low oil prices may have on small federal stripper oil operations. We understand what the small operators are going through, and this is the right decision at the right time."
BLM said that, in 1997, stripper wells (producing 15 b/d or less) accounted for 32%, or 37.4 million bbl, of oil production on public lands.
The agency's current policy re- quires operators to promptly plug wells that are not producing in paying quantities.
The suspension will apply to those properties qualified to receive a stripper royalty rate reduction. Only those properties where producible wells on the lease are classified as oil wells qualify for the suspension.
BLM will consider suspension applications on a case-by-case basis for properties that do not qualify for the stripper royalty rate reduction.
It said the suspension policy will be in effect for 2 years, or until the price of West Texas intermediate reaches or exceeds $15/bbl for 90 consecutive days.
ResponsesGil Thurm, Independent Petroleum Association of America president, said, "We hope (this action) represents a clear recognition by the Clinton administration that significant domestic oil and natural gas resources are at risk. While these initiatives address an important concern for stripper wells, we hope the administration understands that the risk is far broader."
Energy Sec. Bill Richardson said, "The Interior Department has done the right thing with this decision. Preventing premature abandonment of valuable domestic oil resources is good energy policy."
Sen. Jeff Bingaman (D-N.M.), said, "Allowing these wells to be idled without penalty will help alleviate some of the worst pressures on independent producers, especially in New Mexico, where we have the greatest amount of U.S. production from stripper wells."
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