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Change Lets Texas Marginal Wells Be Even More Marginal

The Railroad Commission of Texas (RRC) on Tuesday adopted lower production thresholds at which the state's low-producing oil/natural gas wells may attain "active" status and avoid being shut in.

Now to be considered active an oil well must produce 5 bbl/month for three consecutive months, or 1 bbl/month for 12 consecutive months. A natural gas well must produce 50 Mcf/month for three consecutive months or 1 Mcf/month for 12 consecutive months.

The previous threshold for oil wells was 10 bbl/month for three consecutive months. The threshold for gas wells was 100 Mcf/month for three consecutive months.

Industry commenters on the proposed rule favored the change. The Permian Basin Petroleum Association and the Texas Independent Producers & Royalty Owners Association said in comments that the changes "...provide relief to Texas operators confronted with depressed commodity prices and encourage marginal well producers to produce and maintain marginal wells," RRC said. "Five comments expressed support for the changes to production threshold minimums and noted the changes would especially benefit smaller operators by allowing lower-performing wells to remain active, thereby reducing the burden of plugging active wells permanently."

Also supporting the change were the Texas Oil and Gas Association and the Texas Alliance of Energy Producers, as well as several producing companies.

The Texas Land and Mineral Owners Association and the Lone Star Chapter of the Sierra Club, as well as three individuals, objected to the lower thresholds, saying the changes "...will encourage non-economic production and the delay of site cleanup obligations," according to RRC, which said the changes align with its mission to prevent waste.

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