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Wringing high-grade oil from rock

By Staff writer of The Christian Science Monitor / October 12, 1988

Greeley, Colo.

Blasting through six-inch-deep mud in his pickup truck, Mike Vance works his way up a soggy little farm road near Greeley toward a lonely oil well. Mr. Vance knows well the price of booms and busts that have historically tossed little companies like the one he now works for. While Saudi Arabia contemplates whether to pump a few million barrels more or less, small oil producers grit their teeth and hang on for a rough ride.

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Sliding his pickup to a stop here among seven-foot cornstalks, Vance is showing a visitor one of the finest jewels in the modest crown of Conquest Oil Company. The jewel is this slowly nodding ``pump jack,'' which pulls about 60 barrels of sweet Colorado crude oil daily from a pool about 3,800 feet below the surface.

Sixty barrels is a lot of oil for Conquest. Most of the company's 21 wells are drilled deeper into solid, oil-bearing rock that must be fractured with hydraulic pressure. Most of these are called ``stripper wells,'' because they produce 10 barrels or less of oil per day during 10- to 15-year lifetimes.

Here in Weld County, Colo., the trickles of thousands of ``stripper wells'' combine to produce a steady stream of high-grade oil. Dotting the rolling plains northeast of Denver, such wells are a far cry from mega-dollar offshore rigs or bulging Middle East oil fields. ``Dallas'' or ``Dynasty'' it definitely is not.

Small companies running small-volume oil wells are the staple in this part of the country. But with oil prices very weak today - because of Saudi Arabia's recent decision to teach fellow oil nations a lesson - producers here are concerned.

``We're about as low as we think we can go and still make money,'' Bruce White, president of Conquest, said last month when the price of oil was at about $14 a barrel. As prices dropped even lower in recent weeks, Mr. White said he would try to hang tight by cutting production to limit any further losses.

Even with the threat of lower prices, many companies have weathered hard times already, and it will take a sustained price drop to put them out of business.

Despite their tiny output, stripper wells and the companies that keep them running make up an important segment of United States production capacity in oil - about 15 percent of total US oil output of 3 billion barrels annually, according to the Interstate Oil Compact Commission, based in Oklahoma City.

``The United States is the only oil-producing country in the world that nurtures its marginal wells,'' says Robert Cooper, associate director of the commission. ``Any other country would have shut them long ago. We need the oil.''

But the profit on many small pumping operations has all but disappeared, with many operators just barely breaking even. Others have continued plugging wells with concrete, because they are losing money on every barrel of oil pumped. From 1986 through 1987, there was a doubling of stripper well abandonments across the US. Some 9,000 wells were plugged in '86, says Mr. Cooper; last year 18,000 were plugged.

Many of the abandonments were in Oklahoma, which has the second-highest number of stripper wells after Texas. The number of abandonments in Colorado has been much lower, state officials say. They attribute this to widespread belief that the Saudis will slow production before long.