ABSTRACT: Are marginal fields worth the effort? An examination of past efforts in incentives and a look forward to future potential

Aldrich, Jeffrey B.¹, and Linda Kinney²
(1) Forest Oil International, Houston, TX 
(2) IHS Energy Group, Houston, TX

Marginal Fields, whether oil or gas, have often been a low priority item for both producers and owners (STATE). Efforts to commercialize a Marginal Field have often focused on corollary issues such as reservoir size, flow rates, Capex or Opex costs. A Marginal Field has much more to do with economics than reserves or production characteristics - from a legislative point of view. A review of several types of Marginal Field legislations and incentives reveals a wide spectrum of styles and methods from tax holidays, reinvestment incentives, sliding scale royalties and the use of an 'R' factor. Each of these programs tried to address specific issues and produces results that can be used by other States to encourage production.

A carefully crafted Marginal Field Legislation can create a win-win situation where both the royalty or tax to the Owner and the cash flow to the producer can both rise. When properly used, marginal field legislation provides increased revenue and opportunities to both the owner and the producer. Analysis of global efforts to commercialize sub-commercial fields are presented with specific examples to illustrate positive and negative aspects of such legislation. Additionally a review of countries with substantial non-producing discoveries shows areas where an increased effort can bring large dividends to the State and producers alike.

AAPG Search and Discovery Article #90913©2000 AAPG International Conference and Exhibition, Bali, Indonesia