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Kentucky's 'strippers' make significant contribution to U.S. energy mix

Rudy Vo­gt saw it was time for a change. It was 2005, and the shale re­volu­tion was get­ting un­der way. Massive num­bers of new nat­ur­al gas wells were be­ing drilled in places like Pennsylvania’s Mar­cel­lus Shale, which have dra­mat­ic­ally in­creased do­mest­ic sup­plies and helped to drive con­sumer costs to his­tor­ic lows.

For Vo­gt and his part­ner, who own a small Ken­tucky-based en­ergy com­pany, Cum­ber­land Val­ley Re­sources, it cre­ated a chal­lenge. Be­cause much of their busi­ness was com­par­at­ively low-volume nat­ur­al gas pro­duc­tion, it got harder to make money when high-pro­du­cing shale plays like the Mar­cel­lus, Eagle Ford and oth­ers came on­line. They de­cided to di­ver­si­fy in­to oil.

“We star­ted see­ing the writ­ing on the wall with gas and thought this might be a good time,” said Vo­gt.

Not long after, the com­pany pur­chased a slew of tiny oil wells across east Ken­tucky, most of which pro­duced just a few bar­rels a day. And just like that, Vo­gt and his part­ner had be­come strip­pers.

Strip­pers are the mom-and-pop op­er­a­tions of the oil in­dustry. Thou­sands of op­er­at­ors run an es­tim­ated 771,000 so-called strip­per wells (oil and nat­ur­al gas) across the U.S., ac­cord­ing to the Na­tion­al Strip­per Well As­so­ci­ation (NSWA).

Defined for tax pur­poses as wells whose max­im­um daily pro­duc­tion doesn’t ex­ceed 15 bar­rels of oil or 90,000 cu­bic feet of gas dur­ing any 12-month con­sec­ut­ive time peri­od, they stand in di­min­ut­ive con­trast to the Shells and Ex­xon­Mobils of the world. Strip­pers typ­ic­ally come in be­hind the big play­ers to tap in­to the reser­voirs left be­hind and ex­tract what oil re­mains.

Ken­tucky is home to more of these wells than most states, rank­ing sixth among the 29 states that have strip­per wells with 26,424, ac­cord­ing to an In­ter­state Oil and Gas Com­pact Com­mis­sion (IOGCC) re­port from 2012, the most re­cent year for which data was avail­able. The U.S. En­ergy In­form­a­tion Agency re­ports pro­duc­tion stat­ist­ics for 31 states.

Across the U.S., strip­pers op­er­ated about 410,000 oil wells pro­du­cing more than 736,000 bar­rels a day in 2012, ac­cord­ing the IOGCC re­port.  That’s as much as the OPEC mem­ber Qatar pro­duces. An­oth­er 361,000 strip­per wells pro­duce nat­ur­al gas.
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