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FREEPATHON
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moving the last piece
Posted on 09/09/2015 5:18:43 AM PDT by thackney
Steve Plants, vice president of Plants & Goodwin Inc. in Shinglehouse, Pa., still pumps crude oil from wells drilled in the 1890s.
But with the price of crude below $50 a barrel, some of those low-producing wells, known as stripper wells, don’t turn a profit. Mr. Plants has permanently closed 10 wells, he says, and plans to plug another 10 by the end of the year.
“We’re losing money every day,” said Mr. Plants, who operates about 200 wells in Pennsylvania and New York. “If we were pumping wells every day, we might be pumping them once a week now,” to save on costs.
Mr. Plants, and thousands of individual operators like him, could turn out to be a key element in ending the oil-price rout, rather than a large producing country like Saudi Arabia or a big public company. A sharp drop in stripper-well output, currently estimated at a million barrels a day, or 11% of total U.S. production, would be nearly impossible to observe as it happens, but it could still shrink the glut that continues to weigh on prices, surprising the market, analysts say.
While investors are closely watching public companies for signs of when crude production is set to slow, many are ignoring the country’s 400,000 stripper wells, most of which produce less than five barrels a day. Stripper wells—so called because they “strip” the remaining oil out of the ground—are mostly aging ones that continue to produce oil, but at much lower rates than when they were drilled....
...In contrast to low-producing stripper wells, shale-oil production accounts for 60% of the country’s output. Offshore wells in federal waters make up 16%.
When oil prices collapsed to nearly $10 a barrel in 1986, half of the country’s stripper-well production was estimated to have been shut in...
(Excerpt) Read more at wsj.com ...
Exactly. I am buying rights to capped stripper wells right now, for chump change.
It cost more to produce the oil or gas than what you get out of it, it’s not free.
I know some add a timer, to run a partial time of the day I believe.
Most lease require production. If the well is completely shut down for a long enough period of time, the rights to produce the oil are lost and revert back to the owner.
I know several landowners that own their wells. One converted a tractor and his truck to run off natural gas. He bought a surplus high pressure compressor to fill his tanks with CNG. Lots of people in this county get free gas.
There’s more well tenders around here than you can shake a stick at. Several well service companies with work over rigs too.
“What do you do with the waste water from a well producing say 10 bpd ?
I assume you must collect it somehow and have it taken away?
“
Yes, it goes into tanks on the lease, then is periodically hauled away, to be disposed underground in salt water disposal wells. a few places have their own disposal system.
I ran a line for a landowner that bought a double wide to use the free gas from the well about 150’ away. Other than a moisture separator and the regulators that were already at the well, nothing is done to the gas that they use to cook and heat the place. It’s recommended you install a drip leg, That’s it. I’ve seen orifices carbon up after awhile. That’s not difficult to clean.
I would want the gas tested annually if it ran into my house.
I’ve seen H2S levels grow over time. I would want to know the CO level as well.
When the wells stop producing and it’s time to pug it, plugging isn’t free, you’re going to pay.
Workover isn’t free either.
Tubing corrodes and gets holes in it. You think it’s free to replace it?
On top of that you have a lot of wells where there are multiple mineral owners.
Unless the person using the gas owns 100% of the minerals the other mineral owners still get paid.
You’re talking about such a small number of wells that fits your scenario it isn’t even worth mentioning.
No body does that around here. You can tell the folks with free gas. In the winter you’ll sweat inside their homes.
And no odorization I assume.
Working around industrial plants, and working on the repairs after explosions, I probably have more concerns than the average homeowner.
A Natural Gas leak from wellhead gas was the reason Texas added the Professional Engineer Registration and License Requirement. 290 died, mostly school children.
https://tshaonline.org/handbook/online/articles/yqn01
There are over 3,500 wells in this small county (340 sq miles). Many would qualify. You’re correct about multiple individuals for royalties. Not so for free gas. Corrosion depends on the salt. Some wells are notorious for salt damage. Others not so much.
If the well isn’t producing gas for transport, the royalty owners get nothing.
More than just salt. Moisture levels, CO, H2S, etc all will contribute to corrosion. In large gas treating facilities, these are all additional expenses for treating or use of alloys in piping.
Not just salt. H2S causes hydrogen embrittlement. I have seen large oil companies plug wells despite good tests because the H2S content was too high.
Add to thin that shale wells which went into production during the last year or two are still in the steep part of their decline curves, and will experience a 75% to 80% reduction in daily production over the first couple of years.
That part of the curve has yet to catch up.
If anyone thinks prices will stay low if the OPEC et al are successful at putting American rigs in the weeds, they should reconsider. When our production falls low enough, the prices will come back up, and that could happen sooner than people think.
Thanks! Those are valid points. Those are not common issues here.
Good. I know fields vary greatly. I hope y’all never have those concerns.
Cheers!
If a property owner gets a well from an oil co. the leases are transferred.
If the new owner only owns 50% of minerals they are entitled to use 50% of production the other 50% is the property of the other mineral owners.
New owner uses 100% he has to pay the other mineral owners royalty on 50%.
Transport and use are considered one and the same.
You have to report what is being produced or the well is considered inactive and you have to plug it.
I inspected pipe for a living, gas is also corrosive not just the salt.
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