Stripper well

Stripper well

A stripper well or marginal well is an oil or gas well that is nearing the end of its economically useful life. In the United States of America a "stripper" gas well is defined by the Interstate Oil and Gas Compact Commission as one that produces or less of gas per day at its maximum flow rate; the Internal Revenue Service, for tax purposes, uses a threshold of per day. Oil wells are generally classified as stripper wells when they produce ten barrels per day or less for any twelve month period.

Economical importance

In the United States of America, one out of every six barrels of crude oil produced comes from a marginal oil well, and over 78 percent of the total number of U.S. oil wells are now classified as such. There are over 400,000 of these wells in the United States, and together they produce nearly of oil per day, 15 percent of U.S. production.

Additionally, as of 2005, there are more than 260,000 natural gas stripper wells in the lower 48 states. Together they account for over of natural gas, or about 7 percent of the natural gas produced in the lower 48 states. Stripper wells are more common in older oil and gas producing regions, most notably in Appalachia, Texas and Oklahoma.

Premature abandonment

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 1990s, the oil that flowed from marginal wells often cost more to produce than the price it brought on the market. From 1994 to 2003, approximately 142,000 marginal wells were plugged and abandoned, costing the U.S. more than $3.0 billion in lost oil revenue at the EIA 2003 average world oil price.

When marginal wells are prematurely abandoned, significant quantities of oil remain behind. In most instances, the remaining reserves are not easily accessible when oil prices subsequently rise again: When marginal fields are abandoned, the surface infrastructure - the pumps, piping, storage vessels, and other processing equipment - is removed and the lease forfeited. Since much of this equipment was probably installed over many years, replacing it over a short period should oil prices jump upward, is enormously cost prohibitve. Oil prices would have to rise several times higher than their historic highs and stay at elevated levels for many years - before there would be sufficient economic justification to bring many marginal fields back into production.

As a result, once a marginal well is abandoned, the oil that remains behind is often effectively lost forever. Estimates are that the marginal wells plugged and abandoned between 1994 and 2003 represented of crude oil reserves. Although the situation is less severe for natural gas, as of 2005 there is nonetheless a growing concern about the premature abandonment of gas stripper wells. As of 2006, the United States would have to import an additional of oil every day (an increase of 7%), and of natural gas (an increase of 38%) without the aggregate production from its stripper wells.

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