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Strippers pose dilemma for oil industry

Nicole Friedman | Wall Street Journal

Steve Plants, vice president of Plants & Goodwin Inc. in Shinglehouse, Pa., still pumps crude oil from wells drilled in the 1890s.

But with the price of crude below $50 a barrel, some of those low-producing wells, known as stripper wells, don’t turn a profit. Plants has permanently closed 10 wells, he says, and plans to plug another 10 by the end of the year.

“We’re losing money every day,” said Plants, who operates about 200 wells in Pennsylvania and New York. “If we were pumping wells every day, we might be pumping them once a week now,” to save on costs.

Plants, and thousands of individual operators like him, could turn out to be a key element in ending the oil-price rout, rather than a large producing country like Saudi Arabia or a big public company. A sharp drop in stripper-well output, currently estimated at a million barrels a day, or 11% of total U.S. production, would be nearly impossible to observe as it happens, but it could still shrink the glut that continues to weigh on prices, surprising the market, analysts say. Full Story