AN EXPLORATORY ANALYSIS OF WELL ABANDONMENT DECISION

Abstract

The Oklahoma Corporation Commission Oil and Gas conservation division reports that as of 2012, there have been roughly 500,000 wells drilled in Oklahoma since 1978. 350,000 of those have been plugged and abandoned. The decision to abandon a well mainly depends on its economic viability. Most efficient production rate is one of the critical drivers in the decision to abandon wells. There are however other potentially important factors that can influence the decision such as government regulation, physical properties of the oil field, and most importantly, expected volatility of oil or natural gas prices as well as the trajectory and uncertainly associated with the operating cost as technology changes. Using application of data analytics tools and techniques, we examine the choices made by oil producers in Oklahoma regarding drilling and abandonment and present a study of the interactions and interrelations between a number of well related factors and prices which can potentially influence the well abandonment choice. Well production and well attributes were collected for all wells with completion dates between January 1975 and January 2015. Arkoma basin, with a history of 14,000 wells was chosen for the initial analysis. From our study, we understand that government regulations, well operator, complexity of decommissioning process are some of the factors along with the oil and gas price that influence well abandonment decisions.