Keywords: decommissioning markets, plug and abandonment, cost estimation, performance benchmarking, Gulf of Mexico, hydrocarbon reservoirs, wellbores, hurricane destruction, offshore decommissioning, oil wells
Trends in plug and abandonment cost in the Gulf of Mexico, 2002?2007
Wells are drilled to explore for, delineate and produce hydrocarbon reservoirs. At the end of their useful life, wellbores are permanently abandoned in a process known as Plugging and Abandonment (P&A). The purpose of P&A is to prevent the migration of fluids from the wellbore and establish a permanent barrier to the existing geologic formation. In this paper, we assess trends in P&A costs in the Gulf of Mexico (GOM) over the time period 2002?2007 based on a sample of 1156 wells performed by Tetra Applied Technologies. Descriptive statistics are summarised and the impact of scale economies is investigated. In the aftermath of the widespread hurricane destruction in the GOM in 2005, the cost of P&A dramatically increased with increased demand for support services, but market conditions appear to be reverting, albeit slowly, to prehurricane conditions. Relations that estimate the cost of P&A activities based on the number of wells in a job and the number of days of service is derived.