Stripper well leaders have come out in support of President Trump’s plan to put a tariff on foreign crude oil production including Canada and Mexico.
The National Stripper Well Association, once headed by Darlene Wallace of Seminole, Oklahoma, came out this week praising Trump for his leadership and highlighting the importance of curbing flows of crude oil entering the United States. The Association is comprised of small-business oil producers from 32 states.
In a letter to the President from the Association and co-signed by small business oil producers from 8 states, including California, Colorado, Illinois, Kansas, Louisiana, Montana, Oklahoma, and Texas, they told the President, “You have made clear your desire to protect domestic producers, millions of royalty owners, and the tens of thousands of workers we employ; we appreciate and value that position. In the past, and to some degree currently, foreign oil producers – particularly Canadian and OPEC producers – have “dumped” oil in the US market, greatly damaging our member companies and the energy security of America.”
Montana oilman Patrick Montalban is chairman of the NSWA and said asserted that a relatively limited tariff on targeted foreign oil would reassure thousands of oil producers and their employees, as well as millions of mineral owners who count on these economically fragile wells, without a significant impact on energy prices.
Montalban’s letter also was sent to Trump the secretaries for Interior, Energy and the administrator EPA.
The Montana oil producer urged the president to act expediently on the oil tariff plan. “You have demonstrated great courage and foresight in calling for tariffs on imported oil! We fully support you.”
“These low volume “stripper” wells, located in 32 states across all regions of America, represent a vast and reliable strategic petroleum reserve for America’s energy future,” the NSWA letter states.
According to the Oklahoma Energy Resources Board, for tax purposes, a “stripper well” is defined as any well whose maximum daily average oil production does not exceed 15 barrels of oil, or any natural gas well whose maximum daily average gas production does not exceed 90 MCF of gas per day during any 12-month consecutive time period. The term stripper well is often used interchangeably with the term “marginal well,” although they are not the same. (Tax code of the United States Internal Revenue Service, 1986). Stripper wells make up a significant portion of America’s oil and natural gas production. While these wells may produce less oil and natural gas per day, they account for over 7.4% of U.S. oil production and 8.2% of natural gas production. (Energy and Industrial Advisory Partners)
A 2017 report in Oklahoma indicated there were 70,000 wells described as “marginal” or “stripper” wells. Just 13 years earlier, the state’s number of stripper wells was 46,798, according to one published report.
According to the Interstate Oil and Gas Compact Commission as of 2016, the share of all operating wells in the U.S. that are
marginal producers remains quite high. In fact, most wells currently producing in the U.S. are marginal based on their rate of production. The nation’s 396,000 marginal oil wells comprise an
estimated 68.5 percent of all operating oil wells in
the U.S in 2016.
The ranks of the top 10 marginal oil-producing states in 2016 is little changed from prior years although their relative positions continue to shuffle. The top marginal oil states include the traditional oil patch states of Texas, Oklahoma, Kansas, and Louisiana as well as a diverse group of other producing states
including New Mexico, California, North Dakota, Colorado, and Illinois. Utah replaced Ohio as the tenth ranked state following a sharp downturn in Ohio marginal oil output. Jointly, the 308,904 marginal oil wells located in the top ten states produced
261.5 million barrels of oil, or 92 percent of total U.S.
marginal oil production, in 2016.