UTAH PETROLEUM ASSOCIATION
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OIL & GAS PRODUCTION

Utah is a significant producer of both oil and natural gas with the prospects to play an even bigger role nationwide. Utah ranks 10th nationally in natural gas production and 11th for oil production. Significant investment and new technologies are pushing Utah's production totals consistently higher.

The Completion Process

After a well is drilled a critical decision must be made – whether or not to complete the well. This is the decision that says, yes, we’re pretty sure we’ve got a productive well here, and will move ahead in purchasing casing, tubing, surface equipment, and possibly constructing a pipeline. Or, the alternative, to plug and abandon (P&A) the well, declaring it a dry hole. While sometimes a very simple decision, at other times this can elicit differing judgment calls from reasonable minds. This is one of the most technically important decisions ever made in the life of an oil or gas well. The completion process typically takes from a few weeks to a few months, sometimes longer.

Well completion incorporates the steps taken to transform a drilled well into a producing one. These steps include casing, cementing, perforating, gravel packing and installing a production tree.

Most wells are also hydraulically fractured to increase production capacity. Click here for more information on the hydraulic fracturing process.

After the flurry of activity surrounding drilling, completing, testing and getting the ownership and payment paperwork in order, finally comes what both oil company and mineral owner look forward to – the production phase. Crude oil and natural gas begin to flow. And hopefully they flow in sufficient quantities to recoup the tremendous investment that has gone into drilling and completing the well. The oil and gas industry is one of large risks and rewards. Not all wells are good producers, but the hope is that enough are to make the whole process work.

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Well Completion

source: OERB

How Much Oil and Gas Is Produced in Utah?

Oil and gas have been produced in Utah for over 100 years. The State has become a significant player nationally in oil and gas production and the future potential is tremendous. In 2014, Utah produced nearly 41 million barrels of oil (a barrel of oil contains 42 gallons). The 2014 total was just shy of the State’s all-time high oil production set way back in 1985. 2014 natural gas production saw 453,208,768 mcf (1 mcf = 1000 cubic feet) produced in Utah, down slightly from the State’s all-time high production reached in 2012.

Oil and gas is currently produced in 11 of Utah’s 29 counties with Duchesne county leading the way in oil production and Uintah county on top in natural gas production.

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source: Utah Division of Oil, Gas and Mining

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source: Utah Division of Oil, Gas and Mining

Utah's Unique Crudes

Of note about Utah oil production is the type of oil produced out of the Uinta Basin. More traditional light, sweet crudes are produced in Utah outside of the Basin, but the Black and Yellow Waxy Crudes produced in Duchesne and Uintah Counties are certainly unique. At room temperature, these highly paraffinic crudes solidify much like shoe polish. While the waxy crudes have many highly desirable features, such as being very low in sulfur, their physical characteristics pose numerous logistical challenges for the industry, including transportation constraints. The waxy crudes are difficult to transport via pipeline, so the vast majority of waxy crude production in the Uinta Basin is trucked to Salt Lake refineries.

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How Do We Compare With Other States?

Utah ranks 11th among states in national oil production and 10th in natural gas production. While we produce a lot of oil and gas in Utah, from the graph below you can see that our industry is no where near the size of some other producing states’, such as Texas. While not as large as some states, our production is regionally significant and critical to Utah. The oil and gas produced in Utah powers Utah’s growing economy, keeps our transportation system moving and heats our homes and businesses. It also drives local economies and contributes significantly to the quality of life we enjoy in Utah.

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source: U.S. Energy Information Administration

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source: U.S. Energy Information Administration

Who Benefits from Oil and Gas Production?

The simple answer is “We All Do”. The more detailed answer recognizes that oil and gas production in Utah benefits the oil company, the mineral owners, the local communities through tax revenue, economic development, and high-paying jobs, the state and federal governments through tax revenues, rents, royalties and bonuses, etc. In Utah, the Ute and Navajo tribes benefit from royalties on oil and gas produced on their lands as well as taxes generated from that production.

Of particular interest and importance to the oil and gas industry is the fact that we’re the largest contributing sector into the State’s Permanent School Fund through oil and gas production on the State’s School Trust Lands. In 2014, oil and gas production accounted for $90.4 million of SITLA’s $138.9 million in revenue. Of that money, $40.4 million in interest from the Fund went directly to the State’s public schools and other beneficiaries of the Trust. Every public school in Utah got a check through the Trust Lands Administration, largely funded by oil and gas development. We’re proud of the fact that what we do makes a positive difference in the lives of every Utah citizen.

The oil and gas industry also contributes greatly to local communities through the mineral lease revenues that are generated by production from federally managed lands. Rents, royalties and bonuses from federal oil and gas production are paid to the federal government and then 50% of that money is returned to the state through the mineral lease program. That revenue is then distributed, by a statutory formula to various governmental entities throughout Utah. In 2012, mineral lease revenue back to Utah totaled $164,602,984. That money is used for roads, infrastructure and other community projects throughout the State.

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