U.S. Senator Jim Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee, yesterday introduced with Rep. Dan Boren (D-Okla.), a Member of the House Natural Resources Committee, the Marginal Well Production Preservation and Enhancement Act. This bipartisan and bicameral bill ensures that the nation’s policies recognize and reflect the economic importance of marginal well production. The average marginal well produces less than 2.2 barrels of oil per day.
Inhofe said, “A vast majority of Americans support expanding and taking advantage of our domestic resources of oil and natural gas,” Senator Inhofe said. “I have been proud to work with Congressman Dan Boren to advance this important effort by reintroducing in the 111th Congress our Marginal Well Production Preservation and Enhancement Act. This legislation will reduce our dependence on foreign oil by streamlining and clarifying government regulations, prolonging economic feasibility, and enhancing production volumes from marginal wells, a well which produces 15 barrels or less daily. In addition to reducing our dependence on foreign oil, a producing well provides both state and federal taxes, pays royalties to land and mineral owners, and keeps jobs and dollars on American soil and in American pockets. A plugged well provides none of this. In fact, the latest Interstate oil and Gas Compact Commission (IOGCC) report demonstrated that plugged and abandoned marginal wells resulted in the loss of $1.77 billion in economic output, $369.2 million in earnings reductions, and 8,223 lost jobs in 2006.
“Marginal wells produced more than 335 million barrels of oil in 2006. That’s equivalent to more than 60 percent as much as the United States imports annually from Saudi Arabia or 67 percent as much as the nation imports annually from Venezuela. In my own state of Oklahoma, it is the small independents, basically mom-and-pop operations that produce the majority of oil and natural gas, with 85 percent of Oklahoma’s oil coming from marginal wells.”
“The Oklahoma Independent Petroleum Association appreciates the bipartisan leadership of Senator Inhofe and Congressman Boren as they work to make America more energy secure,” said OIPA Chairman John Pilkington. “By fixing the marginal well percentage depletion rate at 27.5 percent, eliminating the net income limitation for percentage depletion, allowing the accelerated depreciation of tertiary injectant properties, and providing common-sense regulatory relief, this bill would help independent producers more effectively meet the demands of operating marginal wells and enhance producers’ ability to develop new domestic crude oil and natural gas resources.”
“The National Stripper Well Association would like to thank Congressman Boren and Senator Inhofe for sponsoring the Marginal Well Production Preservation and Enhancement Act,” said NSWA Chairman Dewey Bartlett Jr. “America’s marginal wells collectively produce half as much oil as America imports from Saudi Arabia each year and are an important part of the domestic energy security equation. We hope Congress will consider this bipartisan bill as part of a comprehensive solution to our nation’s energy supply challenges.”
“The State of Oklahoma Commission on Marginally Producing Oil and Gas Wells would like to express its appreciation on behalf of Oklahoma marginal oil and gas well operators to Senator Inhofe and Congressman Boren for their bipartisan leadership as they work to make America less dependent on foreign oil and improve national security,” said Marginal Well Commission Executive Director James M. Revard. “At this critical time, this bill will help the independent producer more effectively meet growing market demands while operating in a cost-effective manner. This bill will allow operators to offset the rising cost of operations while making it possible to reinvest in new development of domestic oil and gas.”
The Clean Air Act (42 U.S.C. 7412(n)(4)(A)) prevents the Environmental Protection Agency (EPA) from aggregating emissions from exploration and production equipment, pipeline compressors, and pump stations for purposes of the Act’s Hazardous Air Pollutants, Section 112. This bill would make clear the intent of Congress to not aggregate emissions from these individual sources, precluding unrealistic and unnecessary regulation of marginal well properties.