The oil market turmoil sparked by Saudi Arabia and Russia is threatening U.S. jobs even in Cut Bank, Montana, and Magnolia, Arkansas — relatively obscure communities in the world of energy. Oklahoma is no different as thousands of oilfield workers lose their jobs and companies reduce drilling, small towns are feeling the economic impact.
In such places, mom-and-pop outfits run so-called stripper wells, which generate no more than 15 barrels a day. After crude’s crash in 2014, they were forced to reduce jobs and shrink costs just to keep afloat.
Now, as prices plunge to 18-year lows, they’re doing it again, but this time there’s little left to cut, according to Darlene Wallace, who heads Columbus Oil Co. in Oklahoma, the operator of 21 wells.
“Most of us in 2015 cut back severely, and have continued to in the last five years,” said Wallace, who is also the chairman of the National Stripper Well Association, by telephone. “Many of us have been in the business and have seen more than one shock like this. But none of us dreamed it would fall so far. We now have lots of hard decisions to make.”
While America’s shale boom over the past few years decreased the importance of such stripper wells, they still account for 6%, or about 850,000 barrels a day, of U.S. output, according to data provider Enverus. Now, as vaunted fields in regions such as Texas and big drillers like Exxon Mobil Corp. are rocked by oil’s rout, these smaller private operators are facing an uncertain future.
Source: Bloomberg