Feeling old? Not producing like when you were young? That could describe Utah's oil fields. Most were discovered 40 to 50 years ago. As a group, they now produce less than half of the crude oil that they did back in the mid-1980s.
That doesn't help local gasoline prices. In fact, Utah oil wells now supply less than a quarter of all crude used by Utah refineries down from a high of 55 percent in the mid-1980s. So more must be shipped here from outside.
But several signs of improvement are appearing, coming ironically in part because of higher gasoline prices.
Oil prices are now so high that oil companies say they can afford to step up exploration and have found new fields. They also can use new, expensive technology to coax more oil out of old wells. "That technology wasn't economically viable when gas prices were low," said Lee Peacock, president of the Utah Petroleum Association.
With that, local production has increased 46 percent since 2003 when it had hit bottom. But it remains at less than half of the historic production peaks of the 1980s.
State and federal data show Utah crude oil production hit a high of 40.8 million barrels in 1985. Then it slowly dropped every year until it hit bottom in 2003 at just 13.1 million barrels a third of the amount produced just 18 years earlier.
Why the steady decline?Officials list several reasons, including: oil wells produce less as they age; exploration for new fields stalled when oil prices were low; and environmental concerns complicated new exploration and drilling.
Old wells, less oil
"Production from an oil well declines naturally over time," said Tom Chidsey, petroleum section chief for the Utah Geological Survey.
Peacock added, "It is kind of a traditional bell-shaped curve," with production increasing after a well is drilled and begins pumping, it hits a peak, and starts declining until no more can be extracted economically.
And Utah's oil fields are getting old. Utah Geological Survey data for the top 25 oil fields in the state (which produce 96 percent of the state's crude) shows that the typical oil field was discovered 44 years ago.
The oldest among them, the Ashley Valley field in Uintah County, was discovered 79 years ago. Only two of the 25 current top-producing fields were discovered in the 2000s, and none were discovered in the 1990s.
Utah's biggest-producing field, the Greater Aneth in San Juan County, was discovered in 1956. It still produced about 19 percent of the state's total in 2007. But historically, it has produced 34 percent of all oil ever recovered in Utah.
Data from the Utah Geological Survey shows that the average amount that each well in the state produces has declined every year since 1987 as oil fields aged.
In 1987, the average Utah well produced 22,386 barrels. Last year, it produced just 7,238 barrels. Ironically last year, the state had more producing oil wells than ever in its history but overall production was relatively low amid low production per old well.
One reason Utah's oil wells are old as a group is that during the late 1980s and '90s, "There was a lack of drilling because oil prices were so low. ... When prices are low, you don't drill," Chidsey said.Peacock added, "All the easy-to-find oil in Utah has been tapped and drilled." He said exploration and development of remaining fields is expensive. So when prices were low, he said it was tougher for oil companies to come up with money for it.
Peacock said another issue that complicated exploration and drilling was restrictions put on public lands in environmental battles over such things as wilderness protection, preserving threatened species and reduction of pollution.
"It's clearly a big deal. There are vast tracts of land in the eastern part of the state that have been put off limits," Peacock said.
The U.S. Bureau of Land Management last week issued a report saying that 60 percent of all federal lands nationally that potentially contain oil or natural gas are closed to leasing, mostly out of environmental concerns.
Stephen Allred, assistant secretary of the Interior said as he released that report, "If we want to lower the cost of energy, we must be willing to use our own energy resources as part of a balanced and rational energy policy."
But Nada Culver of the Wilderness Society said the Bush administration manipulated data to support the oil industry's desire to open more lands to drilling.
"Drilling in the U.S. is booming: we have nearly 70,000 oil and gas wells and the industry has more than 40 million acres of public land under lease already," she said. "The administration should focus its resources on supporting energy efficiency and renewable energy sources that are economically sound and known to protect the environment."
Sen. Bob Bennett, R-Utah, complained as the report was released that too many in Congress are calling for President Bush "to increase foreign oil production while simultaneously opposing, on environmental grounds, domestic production of energy resources, such as oil shale."
Sen. Orrin Hatch, R-Utah, added, "Oil exploration has been stopped by Congress. Congress is to blame," for caving in to whom he calls environmental extremists.
Hatch especially complains about a federal moratorium on development of oil shale. He says experts say Utah, Wyoming and Colorado have about 1.6 trillion barrels of recoverable oil in oil shale. "If that is true, we then have more oil than the rest of the world combined."Virtually no oil is coming from Utah oil shale or tar sands now. But that doesn't mean Utahns are not enjoying gasoline produced from oil shale. About 16 percent of the crude oil refined here does come from oil shale or tar sands shipped in from Canada.
Amid the declining production from Utah wells for all those reasons, the state began depending more on crude from outside the state.
In 1984, Utah wells provided 55 percent of the crude used in local refineries. That dropped every year until it hit bottom in 2001, when only 8 percent came from Utah wells.
But it improved every year since then until in 2007, 23 percent came from Utah wells. Also, about 40 percent came from wells in Wyoming, 20 percent from Colorado and 16 percent from Canada.
"None of it comes from the Middle East. I think that surprises most Utahns," Chidsey said.But world events such as Middle East wars, restricted production in Third World countries, or high consumption in places like China affect the world pricing of oil as a commodity. World traders of oil set prices based on that, affecting the value and price of oil produced in Utah.
Despite all that gloom, recent improvements in oil production have come in Utah.
Since 2003, production here has increased from 13.1 million barrels in 2003 to 19.1 million barrels in 2007.
"I would say that most of that comes from the discovery of the new Covenant oil field" near Sigurd, Sevier County, by the Wolverine Gas & Oil Corp., Chidsey said. It was discovered in 2003. By 2007, it was producing about 9 percent of all crude in Utah.
Peacock said exploration and drilling which declined when gas prices were low rebounded when prices rose. He said it made the expensive technology needed to explore and drill in difficult areas more affordable. It also made potential finds more lucrative.
Also, Peacock said increased production likely comes in part from oil companies using new technologies to coax more oil out of aging wells something else that became more economically viable as gasoline prices have risen.
Chidsey said that has included flooding wells with water, carbon dioxide or gas to maintain pressure and extract oil.
Peacock said, "With new technologies, there are a lot of ways to squeeze more out of declining wells, with better maintenance and enhanced recovery."
Finally, some conspiracy theorists write letters to the editor or spread rumors that Utah could produce much more oil now, except that oil companies have capped wells to try to keep production low so that prices will remain high. How does Peacock, president of the petroleum association, respond?"If you have an oil well, you have all the incentive in the world to produce as much as humanly possible with the prices right now," he said, scoffing at those theories.
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