Well Life Cycle
A well is ‘retired”, aka Plugged and Abandoned (P&A) when it is no longer economic for the oil company. A P&A will be executed either because of low production, complicated wellbore challenges, or repairs are too expensive to economically justify. The P&A procedure requires the production zone to be isolated with a mechanical and cement barrier, the wellhead to be cut off, and the well capped with a steel plate. The vintage of the well, as well as technology and practices used in drilling of the well, can greatly impact the P&A process and cost. Wellbore integrity also decreases over time, which creates more challenges. P&A programs are executed by oil companies routinely. However, the level of oil and gas development activity in the area can greatly impact the speed at which wells are retired.
Well Vintages
In August 1859, the first commercial oil well in the United States was drilled in Titusville, PA. The first horizontal well was drilled in 1929, in Texas. Currently, the United States is the third largest oil producer in the world, reaching a record of over 10 Million barrels per day earlier this year (source EIA). There are literally hundreds of thousands of wells, of every vintage, throughout the country. The oldest producing well, the McClintock, is over 150 years old and is still producing today in PA. Of course, not all wells produce for over 100 years, 15-30 years is more common today.
Well Life Cycle
The stages of life for a well, from conception to retirement, commonly look like:
- 1-12 months Planning the well
- 2-6 weeks Drilling the well
- 1-2 weeks Completing the well
- 15-30 years Producing the well
- 1-3 weeks Plug and Abandoning the well
An operator will continue to produce a well until the it is no longer generating enough revenue to cover the costs to maintain the well and generate profit.
Industry Innovation
Like all industries, with investment and time, innovation occurs, and new technology is introduced. Wellbore construction is one of the areas where the oil industry has improved over the last 100 years. Managing different “vintages” of wells can we challenging. The wells that were drilled in the 1920’s,30’s, and 40’s have a vastly different construction than the wells that were drilled in the 80’s and 90’s.
Common practice today is to have multiple steel casing strings to build wellbore integrity. The steel pipe is secured, and isolated from the rock with cement from surface to the end of the well. Horizontal drilling is common practice in the last 10-15 years, however vertical wellbores were the norm not to long ago. Wellbore construction is not the only thing that has changed. Completion method, downhole equipment, cement mixtures, drilling fluids… you name it, these areas have all been improved. The depth of producing intervals, and production rates, have also changed as the industry has explored.
Increased Industry Activity can Accelerate Well Repair or Retirement
Out with the old and in with the new. The best place to find oil is where oil is already producing. This is what we are seeing now, in a number of basins throughout the US. Operators are putting new wells in fields with old wells. Utilizing new technology (horizontal drilling, and multi-stage fracturing), operators have increased access to the oil and gas reserves, which were not recoverable with older technologies. In some cases, new wells are being drilled within a few hundred feet (surface and subsurface) of older wells.
In the drilling and completing of new wells, pressure operations are being executed on the new well. Therefore, these tight quarters call for the integrity of the old wells to be investigated. If an older well has poor wellbore integrity the pressure or fluids may communicate to the old wellbore. Older wells have lower pressure rated equipment (downhole and surface), therefore accidental pressure communication can have serious implications. Operators are mitigating this risk by reinforcing or retiring these older wells. Reinforcement of the wellbore would include new cement, new downhole tubulars and new surface valves. Retirement, P&A, would be the end of life, including isolation of the well with cement and mechanical isolation barriers. In basins like the DJ and Permian, the new development is actually accelerating the repair and retirement of wells, especially those with wellbore integrity issues.
Decreased Industry Activity can Slow Well Repair or Retirement
In cases where oil and gas activity dramatically slows, operators of wells can actually go bankrupt before they sell or P&A their wells. These wells, which have no owner, are called “orphaned” wells and become the responsibility of the State. The State then has to fund the P&A operations to properly retire the older wells. The issue is further exacerbated when there was a sudden change in commodity price, or regulation, which halted oil and gas development so much that operators either claimed bankruptcy or left the area.
So, where there is steady or increased industry activity those young new wells are usually the party-planners for the older wells retirement. Where the activity has slowed considerably those older wells may not be getting a party any time soon, or if they do, it may be with government support.
