Marginal Wells Presentation

Presented by a member of the Marginal Well Commission

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.

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.

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

What is the Marginal Well Commission? (Cont.)

The current Commissioners are as follows:

Charles Chuck Davis Attorney-at-Law Bill Gifford DCP Midstream, LP Hearne Williford II, Secretary Williford Resources, LLC Stan Noble Noble Resources, Inc. James Beyl Perkins Energy Company David K. Moore, Chairman Latigo Drilling Corp. Thomas F. Dunlap Tripledee Drilling Paul Bruce Amvest Osage, Inc. David Guest, Vice Chairman Guest Petroleum, Inc. Represents: Oklahoma Mineral Owners Association Represents: Mid-Continent Oil and Gas Association Represents: Oklahoma Independent Petroleum Association Represents: Oklahoma Corporation Commission District #1 Represents: Oklahoma Corporation Commission District #2 Represents: Oklahoma Corporation Commission District #3 Represents: Oklahoma Corporation Commission District #4 Represents: Osage County Represents: National Association of Royalty Owners

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: (405) 604-0460 (OKC Metro) 1-800-390-0460 Fax: (405) 604-0461

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.

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

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

Technology Trade Expos

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

Workshops
# of Workshops # of Attendees Cities Utilized 279 9450 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

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

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

Why is the industry important to Oklahoma?

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

GPT Oil Revenues

Ap ortion en of Gross Prod ction Oil Reven es for p m t u u Fiscal y ear 2006 (Estim ated )

$1 ,1 0 2 8 4 ,0 4 $1 ,1 0 2 8 4 ,0 4

$1 ,8 3 5 0 7 ,8 2

$1 ,8 3 5 0 7 ,8 2 $6 ,3 4 3 5 4 ,7 6

$6 ,3 4 3 5 4 ,7 6

$6 ,3 4 3 5 4 ,7 6

Com onEdTe n l Fu d m ch ica n Retu e toCou ties f or Hig w ys rn d n h a

Hig er EdCap Fu d h ital n O klah aW om ater Resou rces Bo ard

O kla. Tu itionS ola ipFu d ch rsh n Cou tyBrid ean RoadFu d n g d n

ToS ool D ch istricts

GPT Gas Revenues

Apportionm ent of Gross Production Gas Revenues for Fiscal Year 2006 (Estim ated)

$57,984,700

$57,984,700

$696,141,245

General RevenueFund

ReturnedtoCounties f or Highw ays

ToSchool Districts

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

Why is the industry important to America?

Petroleum
Antihistamines Antiseptics Artificial Aspirin Audiocassettes Baby

Products
Golf

Credit

Hearts

Strollers Balloons Bandages Blenders Cameras Candles CD Players CDs Clothing Computers Containers Crayons

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

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 Photographs Roller

Film

Blades Roofing Safety Glass Shampoo Shaving Cream Shower Curtains Soft Contact Lenses Sunglasses Surfboards Surgical Equipment Syringes Telephones Toothpaste And Many More

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 gallons of oil and 250 cubic feet of gas per day 70% of nations oil comes from foreign sources $53 During peacetime, it costs the U.S. Military approximately $33 billion a year to protect shipments of oil exported from the middle east

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

Why should we care?

1. 2. 3. 4. 5.

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

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.

Crude Oil & Natural Gas Sources for the U.S.

Data is from the Monthly

Energy Review, Energy Information Administration and American Petroleum Institute