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The Oklahoman Editorial
Marginalized: Congress should help 'stripper' wells
Mon August 11, 2008
New federal legislation that would help low-producing oil and gas wells makes good sense as the United States considers all options to meet its energy needs. Sen. Jim Inhofe, R-Tulsa, and Rep. Dan Boren, D-Muskogee, are co-sponsoring the bill they say would help protect a key source of domestic production - marginal or "stripper" wells producing fewer than 10 barrels of oil a day.
According to the Oklahoma Marginal Well Commission, these account for almost 18 percent of U.S. domestic oil production. Inhofe told The Oklahoman's Chris Casteel that wells producing fewer than 15 barrels a day accounted for 355 million barrels nationwide in 2006. In Oklahoma, more than 65,500 marginal wells produce 78 percent of the state's oil.
Likewise, marginal wells contribute 9 percent of the U.S. domestic supply of natural gas and 12 percent of the state's production, the commission says.
This production often is overlooked in the larger U.S. energy picture. But it's clearly an important part of the picture. As such, the Inhofe-Boren legislation would increase the percentage depletion allowance for marginal wells to 27.5 percent from 15 percent. The allowance is similar to business depreciation and helps producers' bottom line.The bill also would permanently eliminate the net income limitation, which prevents a producer from using percentage depletion when it exceeds the income from an individual property. Finally, the legislation would ease emissions and storage regulations.
All are important features that will help keep marginal wells profitable enough to stay in production. Certainly, the United States needs all the oil and natural gas it can get, even as the country seeks alternatives for the future.
Although there's little meaningful time left for legislating this year, Congress should find a way to pass this bill and keep oil and gas flowing from all available sources.