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Oil & Natural Gas Supply


SMALL PRODUCERS

Small Producers make up the majority of Independents, which are non-integrated companies that received nearly all of their revenue from production at the well head. Independents or small to medium sized nonmajors oil and gas producers in the United States have been increasing on the rise since the fall of oil prices in the 1980’s. According to statistics kept by DOE’s Energy Information Agency (EIA) small to medium independents produced an average of 300 to 10,000 barrels of oil per day in 1992. By 2009 independents, often small family businesses produced 85% of the natural gas in the lower 48 states, and 60% of the oil. Since the mid 1990’s DOE has sponsored four programs to assist small oil and gas producers; Independents Program (1995-2003), Microhole Technology (2004-2008), Stripper Well Consortium (2000 – ongoing), and Research Partnership to Secure Energy for America (RPSEA Small Producers program 2007- ongoing).  These programs have focused on assisting small independents to increase oil and gas production through development of new technologies, increased efficiency and cost-savings, and teaming partnerships with universities and research groups to provide technical expertise.

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Shale Oil and Gas Impact on Independents

An editorial by John Dizard says, "US shale oil and gas producers are victims of their own success." Oil and gas independents have "saved America's industrial future and global strategic position." However, the abundance of oil and gas has caused a decrease in share prices. Range Resources shares declined 18% in the past year and Cabot Oil and Gas shares have declined 17%. Chesapeake shares are down 7%. Dizard notes that "E&P revenues (are) squeezed by oversupply while investors in pipelines profit." The global oil prices have remained weak, but not sufficiently for E&P companies to make deep cuts in the directional drilling budgets. The associated gas from oil share production has offset the decline in conventional gas production and from older shale gas fields. Production of natural gas and liquids off the existing pipeline system and large volumes from new plays has resulted in extensive pipeline planning and expansion to reverse the transportation trend from the southwest to northeast. Independent producers are scrambling to transport the abundant oil and gas to the market, resulting in sales at deep discounts.

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