Stripper wells

deereman63 · May 23, 2005

I would like to ask a question of you guys in oil country. When I was traveling around the country in the late 80s many of the old stripper wells that I passed were idle as the low price of crude made them uneconomic. With the price of oil up here does it make sense to reopen any of those wells or have they dried up?

hobbyfarm · May 23, 2005

osymandius,
I've got an uncle upstate that has four wells on his property and has pumped them for years (since the 60's). It takes a few months to fill the tank battery. His take is something ridiculous like 2/47th of the total. But, out of that are his expenses. Last I heard, he made so little in the year, he barely had to claim it as income on his taxes. Most of the $ are tied up with middlemen.

EastTexFrank · May 23, 2005

( does it make sense to reopen any of those wells )

Some people make a very good living doing just that. Some people do buy old abandoned fields and wells and with the use of modern technology and techniques, turn them into a profitable operation. It all boils down to economics and luck. There is also a huge liability concern when doing this as you inherit the ecological problems sometimes associated with older wells and fields.

There can be many reasons for a well not being pumped. Some of it can be legal, some wells can only legally be pumped a certain number of days a month in order to produce the whole field to its maximum efficiency. Some wells are shut in because they are uneconomic, some because of mechanical problems and some because they have started producing water, etc. Lots of reasons.

There aren't many completely NEW ways of making a buck, just variations of old ways and doing this is a very risky way of making a living. You have to be very, very good AND very, very lucky. If you like to sleep nights, this is not the line of work to get into.

texbaylea · May 27, 2005

In my area there are many old wells being plugged as uneconomic. These wells date from the '80s. In the meantime there is new drilling going on nearby to take advantage of new technology. I keep hoping to be offered a new lease soon.

Vernon

sneaky_pete · May 27, 2005

What Frank said. Oil wells almost never "dry up", but there are a lot of expenses involved in keeping one pumping; taxes, regulatory compliance, the cost of electricity (to run the pump), chemicals, transportation of the oil, royalties, office overhead, the pumper (guy to check on it every day), repairs to the tubing and sucker rods, etc., etc. It is usually just a matter of simple economics when you quit pumping a stripper well. When it costs you more to operate it then you get after paying all of those bills, then you plug it. If the well is in a water-drive reservoir, then it could suddenly produce all water instead of oil, but that is still just economics.

If an older stripper well was plugged and abandoned, it is probably not worth the money to re-enter it and drill out the plugs and re-perforate it, but if it was just shut-in and not plugged then it could be returned to production fairly easily as long as the casing, tubing, and pump are still there and in good shape. The state will usually require the operator to plug and abandon the well if it has not produced in a certain amount of time.

As has already been said, the oil business is very risky and requires a lot of capital (money).

deereman63 · May 31, 2005

Thanks for your input. It looks as if the economics of these wells is not really a function of crude prices. Back to the drawing board.

texbaylea · May 31, 2005

I would see workover rigs on the wells around me every few months so they weren't paying very much, hence time to plug. Pumps, pump jacks and tubing pulled. The left over tankage is slowly being removed. There were a lot more wells around me than I thought. I am still seeing workover rig masts around and this has been going on for more than 2 months.

Vernon