U.S.Independent Oil and Natural Gas Producers

The role of independent oil and gas producers in the United States has increased dramatically over the last twenty years. Independent oil and gas producers are involved in the exploration and production areas of the oil industry. Oil fields outside of Alaska have matured and major petroleum companies have shifted their focus toward offshore United States areas and into foreign countries. These large companies need large producing fields to keep their shareholders happy.

Independents develop 90 percent of the nation's oil wells. According to the Department of Energy, independent producers are responsible for supplying 68 percent of American oil production and 82 percent of overall American natural gas. Independent producers have been responsible for all of the major onshore discoveries in the US since 1990.

Different government agencies and policies offer assistance to independents including attractive tax benefits for investors and technology transfer assistance. Technology transfer is critical to assist companies in exploration in mature fields. In some areas, two barrels of oil have been left in the ground for every barrel extracted. The large oil companies took all the easy to get to oil. The remaining oil is in harder to reach areas that were not economical to extract. The current high price of oil and new technologies make it feasible for independent producers to explore and extract this oil.

There are thousands of independent oil and natural gas production companies, like Western Pipeline Corporation, in the United States. Theirs is a risky business highly susceptible to shifts in the commodity market prices of crude oil and natural gas. They are also very capital intensive. Price instability in the late 90's had an adverse effect on these independent producers. Oil prices were low which forced the closure of unprofitable marginal wells and deep cuts were made in capital investment.

Low oil prices have not been an issue since 2001. In fact, the high price of oil is responsible for increased capital investment by independents over the last six years. It is now economically feasible for them to extract oil and natural gas in marginal wells and in hard to get to oil reserves. New technologies have been created that make it possible to extract oil and natural gas in many previously abandoned areas.

There's little likelihood that the world will see low oil prices again. Peak oil is here at a time when demand continues to increase particularly in China and India. The United States needs a strong independent exploration and production industry to meet as much of its demands today and in the future as possible.


About the Author

Bob Jent is the CEO of Western Pipeline Corporation. Western Pipeline Corp specializes in identifying, acquiring and developing existing, producing reserves on behalf of its individual clients.