Here's something grim for you John.....
Thursday February 4, 3:12 pm Eastern Time
Note: there is a subsequent correction for this article.
Company Press Release
SOURCE: Independent Petroleum Association of America
Just How Bad Is It? IPAA Reports Shattering Oil Survey Results
WASHINGTON, Feb. 4 /PRNewswire/ -- PRESS BRIEFING VIA TELECONFERENCE SCHEDULED FOR 3:30 EST: IPAA
will provide a press briefing opportunity on the following news release. To participate, phone in to 703/736-7357 and ask to be connected to conference number
#1310561 or moderator Paula Barnett. The operator will connect you with the teleconference press briefing. IPAA President Gil Thurm, IPAA Vice President of
Economics Scott Espenshade, and IPAA Vice President of Government Relations Lee Fuller will be available to answer questions.
''The cumulative loss of 41,000 jobs in the oil and natural gas industry and the shut-down of more than 136,000 oil wells and 57,000 natural gas wells since oil prices
crashed in November of 1997, should send shock waves through the halls of the Congress and the Clinton Administration,'' declared Independent Petroleum Association
of America (IPAA) President Gil Thurm. ''America's oil and natural gas production base is eroding. And if action is not taken immediately, the Y2K computer problem
predicted in 2000 will look like a stroll in the park compared to what America will face without a functioning domestic oil and gas industry.''
The newly-released statistics are based on an industry-wide survey that IPAA conducted in early January of this year. It should be noted that IPAA's figures are based
on 573,504 producing oil wells with an associated production of 6.4 million barrels of oil per day during 1997; and 303,724 producing natural gas wells with an associated
production of 18.9 trillion cubic feet of natural gas per day during 1997.
''The numbers are staggering. Even if oil prices were to increase to levels averaging $14 a barrel for another six months, we can expect an additional loss of 17,000 jobs
and more than half of the oil and natural gas wells in the lower-48 portion of the United States will be shut down,'' Thurm said. In 1998, the average price of crude oil
received at the wellhead was approximately $11.25 per barrel.
IPAA estimates the number of oil and natural gas wells shut-in to date represent an economic loss of $25 billion. Sustained low oil prices have also resulted in more than
$1.8 billion in lost royalties and severance taxes to America's 33 oil and natural gas producing states and the federal government. This is money that is used to fund local
schools, universities, colleges, hospitals and other municipal activities and programs.
''These numbers are significant not only in terms of economic impact and employment, but also because once these wells are abandoned, access to the resource base
tapped by these wells is gone forever,'' Thurm added.
''IPAA is getting flooded with calls from American men and women of this industry who keep asking what the heck is Washington doing about this problem. While I'm
pleased to report Senator Kay Bailey Hutchison (R-Texas) has introduced a comprehensive tax incentives package and House members Wes Watkins (R-Okla.), Bill
Thomas (R-Calif.), Mac Thornberry (R-Texas), and Lamar Smith (R-Texas) have also introduced various relief measures, more must be done and acted upon now.
They can't carry the water alone. Even with strong endorsement by fellow colleagues of other oil producing states, nothing will be gained without overt and public
support from the White House.''
''The future of the most strategic industry in America hangs in the balance. IPAA urges the entire U.S. government to take immediate and meaningful emergency action
to deal with this crisis.''
IPAA Survey: Findings and Conclusions
In early January, IPAA sent a survey to its membership and its 40 cooperating associations around the country. IPAA received 720 responses.
The respondents operate more than 68,000 (11.9 percent) of America's crude oil producing wells out of an estimated 573,000, and more than 43,000 (14.2 percent)
natural gas wells out of an estimated 303,000.
Actual Survey Results
* 16,147 crude oil producing wells (23.7 percent) were reported shut-in by survey respondents.
* 8,226 natural gas producing wells (19.1 percent) were reported shut-in by survey respondents.
* Reported production lost for crude oil was 7.2 million barrels (18,000 bpd) and 13.1 Bcf of natural gas.
* In 1997, survey respondents drilled an average of 9.1 new wells. In 1998, drilling plans for survey respondents declined almost 25 percent to 6.8 new wells. In
1999, IPAA estimates the average number of new wells slated for drilling to decline by almost 30 percent or just under five wells per respondent.
* 3,093 jobs have been lost based on the 720 responses from oil and natural gas producers.
IPAA Estimates
* IPAA estimates that since November 1997 when the price of oil began to decline, 136,132 crude oil producing wells have been shut-in.
* IPAA estimates that since November 1997 when the price of oil began to decline, 57,958 natural gas producing wells have been shut-in.
* IPAA estimates that even if oil prices remain at levels averaging $14 per barrel for another six months, an additional 184,432 crude oil wells will be shut-in.
* IPAA estimates that if low oil prices remain at levels averaging $14 for another six months, an additional 23,490 natural gas wells will be shut-in.
* Survey results indicate 360,000 barrels of crude oil per day have been lost since November of 1998. Correlating with the 1994 Marginal Well Report by the
National Petroleum Council, it appears 2 million barrels per day of crude oil is at risk.
* IPAA estimates that 24,415 jobs have been lost since the price decline began in November of 1997. Based on the survey, IPAA estimates that if low oil prices
remain at levels averaging $14 per barrel for another six months, an additional 17,279 jobs will be lost.
* Based on a RIMS II Economic Multiplier from the Bureau of Economic Analysis, IPAA estimates that more than 68,000 oil and natural gas jobs (20 percent)
out of an estimated 338,600 total industry employment could be lost.
NOTE: IPAA's estimates were made assuming a representative sample of the survey results. Estimates were calculated to be representative of the relevant industry
totals.
SOURCE: Independent Petroleum Association of America |
