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Marginal Wells: Fuel For Economic Growth

(BOPD), better than the overall national average of 2.2 BOPD. In 2006, 11,738 oil wells were plugged and abandoned, which is a decrease over last year’s total of 13,265 oil wells plugged. Last year’s report noted an unexpected increase in stripper oil well abandonment. ๎•is report notes a substantial increase in stripper oil wells, an increase of 21,183 wells over last year.

Looking at the marginal gas wells, Table 1 shows the 11 survey states have about 43 percent of the total 296,721 marginal gas wells in the United States. ๎•e total number of marginal gas wells in the United States increased by 7,823 over last year’s total.

Our original 11 survey states were based on the largest producers of marginal oil, which excluded the Appalachian states from consideration. ๎•e Ap- palachian Basin accounts for about 51 percent of the marginal gas well count and almost 29 percent of the marginal gas produced. In order to preserve the comparability of this report, the marginal gas wells use the same survey states as the oil wells, as any error that may be introduced is not thought to be materially significant due to the higher relative value of marginal oil to marginal gas production.

Marginal gas wells produced 1,708 billion cubic feet (BCF) in 2006, about 4.7 BCF per day. Each well averaged 15.8 MCFD (thousand cubic feet per day). Of the total marginal gas wells, the same percent-

age as the last two years, 1.5 percent or 4,463 wells were plugged and abandoned in 2006. Given the higher prices for both oil and gas, and the growing maturity of gas production, the changes in stripper well counts and plugging activity are in line with expectations.

Because of differences in the way and the time each state and the federal government gathers oil and gas statistics, it is always a challenge to compile and ana- lyze the data behind this report. ๎•is year’s efforts were compounded by changes in the way the U.S. Department of Energy’s Energy Information Ad- ministration (EIA) gathers gas production statistics.

Starting in 2006, they adopted a new system that focuses on obtaining early gas production data from a few key states. As a result, detailed state-by-state production data for 2006 will not be available until late 2007, although an overall U.S. total was avail- able for this report. State gas production data has been allocated based on prior year’s relative produc- tion totals.

Stripper well statistics are gathered at the state level. Analysis of this year’s data suggests that some states have not been consistent in the way their statis- tics are compiled, as year-to-year changes appear anomalous. While this does not directly impact the findings of this report, it does make year-to-year comparability difficult.

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