With the price of oil reaching new lows daily, the nation’s smallest oil producers are considering shutting in their wells and potentially losing their mineral rights. First Titan Corp. (OTCQB: FTTN) believes these producers would make ideal candidates for the enhanced oil recovery (EOR) business the company is currently studying.
Operators of marginal wells – older, declining wells that produce relatively small amounts of crude per day – are struggling in this low-price environment. Their wells frequently don’t produce enough to justify their expense in the current environment. So the operators shut down production to save money, but that comes at a risk. In many states, an operator can only idle their well for up to 90 days before losing mineral rights.
“We want to offer these operators a low-cost, affordable EOR service,” said FTTN CEO Sydney Jim. “This could help them increase output to make the well cost-effective to remain in production and preserve their mineral rights. This concept represents an underserved market with little competition that could help us generate additional revenues.”
There are more than 400,000 such wells in the U.S. – 10 percent of the nation’s total oil production. In 2012, lost production from idled wells totaled more than $620 million.
Meanwhile, a recent report forecasted the EOR market to grow at a robust 16.9 percent rate by 2019.