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Issues » Fact Sheets
Oil Fact Sheets
Marginal Wells
The United States has approximately 457,000 marginal wells, which collectively produce approximately 1.2 million barrels per day of annual production. These wells account for nearly 20 percent of total oil production in the United States, about the same amount that we import from Saudi Arabia.
Since 1993, America's marginal well producers have plugged and abandoned approximately 150,000 marginal wells and 150 million barrels of crude oil. This has led to the loss of over $3.5 billion in lost economic output for the US and over $500 million in lost earnings for U.S. producers
Recovery from the 1997-1999 downturn in world oil prices highlights the importance of America's marginal oil production. They have suffered greatly from attrition and their forward profitability will remain extremely sensitive to prices, operating expenses, and regulatory compliance costs. Approximately 150,000 marginal wells were shut-in over the past three years and it is critical that these wells come back on-line as opposed to being permanently plugged and abandoned.
The United States currently imports 56 percent of its oil, which puts our national security and millions of jobs at risk. Regrettably, the ability of our economy to adjust to oil import disruptions has actually become weaker over the last decade.
Preserving marginal wells is central to America's energy security. When a marginal well stops producing oil, the nation doesn't reduce its oil consumption. Instead, we import a greater quantity-contributing dollars to other nations' economies rather than our own and worsening our dependence on unstable foreign sources.
In order to meet the goal of enhancing the security of the domestic energy market, policy makers should focus on preserving the 1.2 million b/d of annual production from marginal wells. The nation's internal tax and regulatory structure must be relied upon for preserving marginal well contributions.
We urge policy makers to implement the legislative and regulatory initiatives put forward by IPAA to help preserve the contribution of marginal wells to the domestic economy. Implementation of these recommendations is an investment in the domestic oil and gas industry and America's energy security.
September 2000
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