Marginal Wells Presentation Presented by a member of the Marginal Well Commission

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Marginal Wells PresentationPresented by a
member of the Marginal Well Commission
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What is the Marginal Well Commission?

• In the 1980s, a group of oil and natural gas
  industry producers formed an association called
  Save Our Strippers.
• In 1992, the Oklahoma Legislature created the
  Commission on Marginally Producing Oil and Gas
  Wells. Senate Bill 684, now Title 52 O.S.
  Section 700.
• Marginal oil or gas is produced from low-volume
  stripper wells defined by the IOGCC as
  producing less than 10 barrels of oil or 60,000
  cubic feet of gas per day.
• The Marginal Well Commission is the only
  organization of its kind in the nation.
• Funded by a voluntary fee of .0035 on each
  barrel of crude oil produced in the state and
  .00015 of every 10,000 cubic feet of natural gas
  produced. Requests for refunds can be made
  during the first 3 months of the calendar year.
  Last year, less than 1 of the budget was
  refunded.

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What is the Marginal Well Commission? (Cont.)

• Mission Statement
• The mission of the Commission on Marginally
  Producing Oil and Gas Wells is to serve the
  Governor, Legislators, oil and gas industry and
  public by defining, identifying, and evaluating
  the economic and operational factors that affect
  marginally producing oil and gas wells, and to
  assure that appropriate efforts are made to
  extend the life of these wells so energy can be
  economically provided to all citizens of the
  State of Oklahoma.

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What is the Marginal Well Commission? (Cont.)

• Nine commissioners appointed by the Governor
• Represent large and small producers, royalty
  owners and the Osage Indian Nation.
• 3 year terms that begin January 1 of the 1st year
  of appointment and end December 31 of the 3rd
  year
• No limit to the number of consecutive terms that
  can be served

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What is the Marginal Well Commission? (Cont.)

• The current Commissioners are as follows
• Charles Chuck Davis Represents Oklahoma
  Mineral Owners Association
• Attorney-at-Law
• Bill Gifford Represents Mid-Continent Oil and
  Gas Association
• DCP Midstream, LP
• Hearne Williford II, Secretary Represents
  Oklahoma Independent Petroleum Association
• Williford Resources, LLC
• Stan Noble Represents Oklahoma Corporation
  Commission District 1
• Noble Resources, Inc.
• James Beyl Represents Oklahoma Corporation
  Commission District 2
• Perkins Energy Company
• David K. Moore, Chairman Represents Oklahoma
  Corporation Commission District 3
• Latigo Drilling Corp.

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What is the Marginal Well Commission? (Cont.)

• Marginal Well Commission Staff
• James M. Revard, Executive Director
• Zhonda Viney, Director of Operations
• Rick Torix, Education Coordinator
• Crystal Townsend, Public Information Officer
  
• Whitney Smith, Administrative Assistant
• Contact Information 421 N. W. 13th, Ste 180
• Oklahoma City, OK 73103
• Phone [phone] (OKC Metro)
• 1-800-390-0460
• Fax [phone]

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What does the Marginal Well Commission do to help?

• Research and collect information on the number,
  location and operational conditions of marginally
  producing oil and gas wells in the state
• Propose legislation, regulatory and operational
  remedies that will extend the life of the
  marginally producing well
• Advisory Council members from many different
  areas of the industry and community come together
  to offer expertise, issues and strategies to the
  Commission. They meet 3 times a year.

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What does the Marginal Well Commission do to
help? (Cont.)

• Provides information
• Workshops held throughout the state to provide
  operators with information on new technology and
  other issues that affect them
• Education Coordinator full time staff member to
  help operators with technical problems.
• Library Over 1,000 items of reference materials
  related to the industry
• Trade Expo brings the operator and service
  sectors face to face

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Website

• www.marginalwells.com
• History Workbooks Videos
• Purpose Surveys Reports
• Quick Facts Feedback
• Opportunities Involvement Library
• Commissioners Contractors Page
• Contact Staff Lease Sales
• Events Pumpers Manual
• Regulations Environment Equipment Sales
• Speakers Bureau Stolen Equipment
• Newsletters Links
• Online Store

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Technology Trade Expos
Oklahoma City November 1996 Tulsa May
1997 Enid December 1997 Ardmore May
1998 Norman October 1998 Ponca City May
1999 Tulsa May 2000 Oklahoma City June
2001 Tulsa June 2002 Oklahoma City May
2003 Oklahoma City October 2004 Oklahoma
City October 2005 Oklahoma City October
2006 Oklahoma City October 2007 Oklahoma
City October 2008 Oklahoma City October 2009

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Workshops

• of Workshops 279
• of Attendees 9450
• Cities Utilized Ada, Ardmore, Burns Flat,
• Drumright, Duncan, Elk City,
• Enid, McAlester, Moore/
• Norman, OKC, Okmulgee,
• Pawhuska, Ponca City,
• Shawnee, Stillwater, Tulsa, Velma,
• Watonga, Wetumka, Wichita KS, Wichita
• Falls TX, Wilburton, and Woodward

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Newsletters

• Quarterly Newsletters
• Circulation of 10,500
• Includes Technology Updates, Legislative
  Regulatory Updates, Workshop News, Historical
  Data, You and the Environment, News on Current
  Issues and Events

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Studies

• FY1994 Survey of Marginal Oil Wells State of
  Oklahoma
• FY1996 Survey of Oklahoma Oil Gas Leases
• FY1996 Well Cost Analysis
• FY1996 Impact of Oil Gas Production
  Drilling on the Oklahoma Economy
• FY1996 Localized Impacts of Oil Gas
  Production Drilling Activity in Oklahoma
• FY1999 The Osage Environmental Audit
• FY2000 Electricity Usage among Oklahoma Oil and
  Gas Producers
• FY2002 The Local Impact of Oil Gas Production
  and Drilling in Oklahoma
• FY2002 The Economic Impact of Oil Gas
  Production Drilling on the Oklahoma
  Economy
• FY2005 Impact of Refineries on Crude Oil
  Production Pricing in Oklahoma
• FY2007 The Local Impact of Oil Gas Production
  and Drilling in Oklahoma
• FY2007 The Economic Impact of Oil Gas
  Production Drilling on the Oklahoma
  Economy
• FY2007 A Demographic and Economic Profile of
  Oklahomas
• Marginal Oil and Gas Well Operators
• FY2009 Breakeven Analysis

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Why is the industry important to Oklahoma?

• Gross Production Tax Revenues
• 1.07 billion in fiscal year 2007 for oil and
  natural gas

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GPT Oil Revenues
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GPT Gas Revenues
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Why is the industry important to Oklahoma? (Cont.)

• Jobs
• 76,000 direct jobs
• 245,800 impacted or supported
• Economic Impact
• 23.8 billion into economy
• 7 of Gross State Product

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Why is the industry important to America?

• Petroleum Products

Antihistamines Antiseptics Artificial Hearts Aspirin Audiocassettes Baby Strollers Balloons Bandages Blenders Cameras Candles CD Players CDs Clothing Computers Containers Crayons Credit Cards Dentures Deodorant Diapers Digital Clocks Dinnerware DVDs Dyes Eyeglass Frames Fertilizers Food Preservatives Food Storage Bags Footballs Foul Weather Gear Furniture Garbage Bags Glue Golf Balls Hair Dryers Hand Gliders Heart Valve Replacements House Paint Infant Seats Ink Insecticides Life Jackets Lipstick Luggage Medical Equipment Nylon Rope Pacemakers Pantyhose Patio Screens Perfumes Photographic Film Photographs Roller Blades Roofing Safety Glass Shampoo Shaving Cream Shower Curtains Soft Contact Lenses Sunglasses Surfboards Surgical Equipment Syringes Telephones Toothpaste And Many More
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Why is the industry important to America?

• 85 of energy use comes from fossil fuels
  (includes, coal, oil and natural gas)
• Each American consumes 3 ½ gallons of oil and
• 250 cubic feet of gas per day
• 70 of nations oil comes from foreign
• sources
• During peacetime, it costs the U.S.
• Military approximately 33 billion a year to
  protect
• shipments of oil exported from the middle east

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Why are marginal wells important?

• Marginal or stripper wells produce 17 of the
  U.S. domestic oil and 65 of the production in
  Oklahoma
• Marginal gas wells produce 9 of the U.S.
  domestic gas and 10 of the production in
  Oklahoma
• There were 65,504 marginally producing wells in
  the state out of a total of 119,255 wells in
  Oklahoma for fiscal year 2006

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Why should we care?

1. ALL wells become marginal at some point
2. ALL domestic production benefits national
   security
3. ALL domestic production benefits national and
   local economies
4. We are dependent on petroleum products
5. More production means less expensive petroleum
   products

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Summary

• Promoting production even from our low-producing
  wells is smart for Oklahoma and for America and
  that is why the Commission on Marginally
  Producing Oil and Gas Wells was created.

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Crude Oil Natural Gas Sources for the U.S.

• Data is from the Monthly Energy Review, Energy
  Information Administration and American Petroleum
  Institute