DOI Secretary Babbit Relaxes Stripper Well Rules
The Independent Petroleum Association of America (IPAA) praised
the action of Interior Secretary Bruce Babbit in allowing marginal
oil well operators producing on public lands to suspend operations
for up to two years without losing their leases. The announcement
came Thursday on the heels of the release of an IPAA survey showing
historically low oil prices have increased the number of shut-ins
and the industry unemployment rate.
"This will help alleviate the economic impact low oil prices may
have on small federal stripper (less than 15 b/d) oil operations,"
Babbit said. The suspension of operations waiver will apply to
those properties that are qualified to receive stripper royalty
rate reduction. Only those properties where producible wells on the
lease are classified as oil wells qualify for the suspension. Other
well operators may apply for the relief on a case-by-case basis.
IPAA's survey showed 16,147 crude oil producing wells were shut
in in 1997 with 72 million barrels of production lost and 8,226
natural gas wells were shut in with 13.1 Bcf of production lost.
Also, 3,093 jobs were lost. The IPAA membership survey turned up
720 responses from companies accounting for 11.9% of U.S. crude oil
wells and 14.2% of natural gas wells. Extrapolating the response to
the full universe, the producers group estimated 136,132 crude
wells and 57,958 natural gas wells have been shut in since
November, 1997 when crude prices tanked. It projects additional
shut-ins as long as oil prices remain at an average $14 a barrel.
The average price in 1998 was about $11.25 a barrel, IPAA
calculated. Ellen Beswick
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