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Economic Analysis

In recent times, drilling in the United States has focused on natural gas for several reasons. e United States has been heavily explored, and as drillers probe deeper, they are more likely to en- counter gas than oil. Additional gas pipelines have spurred development of once remote areas of the Rocky Mountain region. significant portion of our domestic energy supply. Incentives enacted during the 1990s when prices were low have had a direct impact in preventing their premature abandonment. Now that prices are higher, these wells are still around to contribute. But even at cur- rent prices, natural production deple- tion will continue to push many wells to the point where their production is not economic to maintain. Continued or expand- ed incentives for those wells will allow con- tinued production and contribute to domestic production levels. Finally, advances in fracture stimulation and higher natural gas prices have combined to make many low permeability reservoirs commercial. As a result, natural gas production increased in 2006 over 2005, for both total U.S. pro- duction and stripper production. Even at current prices, natural production depletion will con- tinue to push many wells to the point where their produc- tion is not economic to main- tain. Continued or expanded incentives for those wells will allow continued production and contribute to domestic production levels.

As with the drilling activity, the number of strip- per gas wells has increased as well. Stripper gas accounted for 8.8 percent of U.S. production in 2006, while the number of stripper gas wells rose by about 3 percent. Stripper gas wells produced more than 1.7 TCF (Trillion cubic feet), at an av- erage of 4.7 MMCF (Million cubic feet) per day.

In short, stripper oil and gas production is a

Development of Report Findings

Using data from the IOGCC’s 2007 Marginal Well Report, Table 1 shows that the 11 survey states have 317,351 marginal oil wells, or more than 75 percent of the total reported marginal oil wells in the United States. ese wells produced more than 90 percent of marginal oil well production. Oil wells in the survey states averaged 2.6 barrels of oil per day

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