A new study by the Interstate Oil and Gas Compact Commissionreports the number of idle gas and oil wells nationwide has jumpedby more than 58,000 in four years to 343,030 wells in 2000, whichillustrates the impact of low oil and gas prices over the past fewyears and the potential for increased marginal well production overthe next few years.
Idle wells are not currently producing but many still canproduce. In fact, the vast majority of the wells currently idle arenot producing because they have been unprofitable due to depressedcommodity prices and high environmental compliance costs over thestudy period, IOGCC stated. If those factors are improved oreliminated, production will return. “Many state regulatorsdeveloped programs that allowed operators to idle wells for longerthan normal to save these wells from being permanently sealedbecause of poor profitability,” said IOGCC Executive DirectorChristine Hansen.
Now that the oil and gas markets have recovered, many marginalwells are likely to be brought back on stream given favorableregulatory and environmental factors.
For the oil market, the idle wells represent more of a drop inthe bucket, but for the gas market the impact of adding marginalwell production could be significant, according to the IOGCC. “Sixstates (Arizona, Illinois, Indiana, Louisiana, New York and Ohio)have average production from marginal gas wells that is less than10 Mcf per day, while the national average daily production permarginal gas well is 15.6 Mcf. Assuming gas wells idle with stateapproval could produce an average of 10 Mcf per day, the resultingincrease of 156,000 Mcf per day could be significant for somestates.”
In comparison, if all of the nearly 95,000 oil wells that areidle with state approval were returned to production at an averageof one barrel per day, it would represent a 1% increase in domesticproduction.
The IOGCC study, “Produce or Plug: The Dilemma Over the Nation’sIdle Oil and Gas Wells,” focuses on how states might encourageproducers to bring their marginal wells back into production anddiscusses the issues related to plugging orphaned wells, or thosein which the operator has gone out of business. Orphaned wellsrepresent 17% of idle wells and the cost of plugging them all wouldbe a significant financial burden on the states. The ultimate goalfor states is to have every well produce for as long as possible,while ensuring wells that have outlived their productivity, or area threat to the environment, are plugged and abandoned, IOGCC said.The IOGCC represents governors of 30 states and promotes theconservation and efficient recovery of domestic oil and gasresources while protecting the environment.
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