How much does it cost to decommission an oil well?

In this analysis, we provide new estimates of the costs of decommissioning oil and gas wells and the key drivers of those costs. We analyze data from up to 19,500 wells and find that median decommissioning costs are roughly $20,000 for plugging only, and $76,000 for plugging and surface reclamation.

What is a well plug?

When a well is no longer economically producing oil and natural gas, the well is evaluated for retirement and will undergo a process called ‘plug and abandonment,’ or P&A as it is often called. Cement is pumped into the well to cover and isolate the zones that produce oil and natural gas.

What is the average life of a natural gas well?

The average life span of an oil or natural gas well is 20 to 30 years. However, new technologies are being developed to find new ways to extend the life span. The life span of a well is based on the active years the well is in production.

How much does it cost to plug and abandon a well?

The median cost of plugging a well without restoring the surface is about $20,000. Plugging and reclaiming the surface around the well—which may be done for aesthetic, environmental, or job creation reasons—increases the median cost to $76,000. Each additional 1,000 feet of well depth increases costs by 20 percent.

How much does it cost to plug and abandon an oil well?

For plugging only, costs average roughly $20,000, while full decommissioning (i.e., plugging and remediation) costs average $76,000 across states. In rare cases, costs are on the order of $1,000 per well, while in others, they exceed $1 million per well.

How long does it take to plug and abandon a well?

A well is plugged by setting mechanical or cement plugs in the wellbore at specific intervals to prevent fluid flow. The plugging process usually requires a workover rig and cement pumped into the wellbore. The plugging process can take two days to a week, depending on the number of plugs to be set in the well.

How much does a gas well produce per day?

Lower yield wells produce one to two million cubic feet per day. Many wells yield between three and five million cubic feet per day, but gigantic wells could produce as much as twenty million cubic feet per day. The more the well yields in the first month, the more valuable it generally will be over time.

How are natural gas royalties taxed?

Royalty Income Tax Rates Oil & gas mineral royalties are treated as ordinary income and are taxed at your marginal (highest) tax rate. The income is in addition to your hard earned pay checks, so prepare to pay a larger percentage than you pay out of your monthly salary.

How do you plug a gas well?

Who is responsible for orphan wells?

Under existing law, the current operator, or the previous operator, as provided, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well or the decommissioning of …

How much does it cost to plug a well?

How deep is a natural gas well?

Drilling continues vertically, creating a well approximately 6,000 feet (~1,828 m) deep. The depth of the well will vary by region and formation. In the Marcellus Shale the well is then drilled horizontally an average of 10,000 more feet (~3,048 meters).