Production From Stripper Wells at Risk in Current Price Environment
Watching Government: A stripper well owner speaks up | Oil & Gas Journal
A stripper well or marginal well is an oil or gas well that is nearing the end of its economically useful life. Oil wells are generally classified as stripper wells when they produce 10  barrels per day or less for any twelve-month period. Additionally, as of , there are more than , natural gas stripper wells in the lower 48 states. Together they account for over 1. Stripper wells are more common in older oil and gas producing regions, most notably in Appalachia , Texas and Oklahoma. 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 s, the oil that flowed from marginal wells often cost more to produce than the price it brought on the market.
‘Strippers’ Pose Dilemma for Oil Industry
Yet interviews with executives and experts show those smallest, often family-owned, businesses are also among the most resourceful, keeping the oil flowing even as prices near year lows and a growing number of their wells lose money. For example, Nelson Wood who runs Wood Energy, a family business founded by his parents more than 60 years ago, has laid off 14 of his 32 employees and closed 10 of wells in the Illinois Basin, but so far the production is down only 4 percent. He may have to shut more wells, based on electricity, labor, maintenance and salt water disposal costs, but said one key concern was meeting the requirements of oil and gas mineral rights. To be sure, many of these mom-and-pop shops have already cut production to conserve cash and the longer oil prices remain low, the harder it will be for them to keep pumping. Darlene Wallace, who inherited her company Columbus Oil after the passing of her husband over a decade ago, has shut in four of her 25 wells in Oklahoma, cutting about a third of production, and is now focusing on overhead costs.
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