The mission of the Small Producer Program is to extend the life of mature fields in an environmentally sustainable way. The term “small producer” is defined in the 2005 Energy Policy Act (EPAct) as an entity organized under the laws of the United States with production levels of less than 1,000 barrels per day of oil equivalent.
The Small Producer Program is established to benefit small producing companies in technology development for mature oil and gas fields, with the objective of extending the life and ultimate recovery of these fields. This is an important group to overall U.S. production.
The nature of United States domestic petroleum and natural gas production has changed over the years. The role of the independent producer has become far more significant to domestic onshore petroleum production than in the past. Onshore independents account for 65% of total natural gas production (74% of onshore natural gas production) and close to 45% of total oil production (67% of onshore oil and condensate production) in the United States. Furthermore, small independents operate most of America’s marginal wells, which account for about 80% of America’s 800,000 producing wells. (1) Independent producers have been responsible for all of the major onshore discoveries since 1990.
The fundamental uniqueness of independent producers and their role in supplying the nation’s energy must be recognized and addressed. There are thousands of independent oil and natural gas producers across the United States, and according to data from the Energy Information Administration (2006), approximately 15% of the nation’s oil production comes from more than 10,000 small producers; those U.S. companies producing less than or equal to 1,000 BOEPD.
The goal of this program is to carry out research, development and demonstration efforts that will assist small producers in reducing the cost and increasing the efficiency of exploration and production while operating safely and in a manner which does not harm the environment.
The 2005 Energy Policy Act (EPAct) requires that all awards under the Small Producer Program “shall be made to consortia consisting of small producers or organized primarily for the benefit of small producers.” All solicitations issued will require that proposals be submitted by a consortium consisting of two or more entities participating in a proposal through prime contractor-subcontractor or other formalized relationship that ensures joint participation in the execution of the scope of work associated with an award. Consortia are highly encouraged to have a minimum of one small producing company participating with a simple partnering agreement. The primary focus of the program will be technology development in mature oil and gas fields, with the objective of extending the life and ultimate recovery of these fields.