Production threshold to decide to abandon and plug well?

I am researching wells in my area and curious what the threshold might be to decide to plug and abandon a well rather than produce? IE, if a well is estimated to only produce 1 bbl/day, will they still produce the well? Are there any standards for gas? I am just trying to determine how "dry" they need to be for a driller to walk away?

Bob, I think they will keep producing 1 barrel a month to maintain the lease as long as they think there is still value there in another formation that they could produce in the future or sell your lease to someone who will. I think you could go to court and get a determination that the well is not producing in paying quantities but that might cost $100,000 or more. I have heard of cases where the valve was rusted shut and the company was paying royalty on one barrel of oil per month that was not produced to maintain the lease. I would say that you need a specific paying quantities clause in your lease or addendum such as the Bureau of Indian Afairs used by the government has.

Thanks! I don't have a hole as of yet but just researching data. There is only a hand full of holes that were punched 30-50yrs ago and all records indicate completion and abandon date within a month of each other. I am not sure if this was a totally different deal 50 yrs ago when carbons were cheap? From what I gather from you, if a driller can scrape anything off of it, they will set a production casing and use it? I guess I am simply trying to determine any likelihood at all of much happening in my area based on previous holes. Nothing newer than 30yrs but I would sure like to know what they found when they decided to plug...

Bob, if they drill a poor well, the only way they can make any of that money back is to produce it. You might be surprised how little it costs to produce the well after it is drilled. I think the operator often receives tax incentives to keep the low producing wells in operation because the state makes nothing off of plugged and abandoned wells. I have a cousin whose royalty check adds up to less than $1 per month. When she asked me how long that will continue, I said til the cows come home. She said she didn't have any cows, and I replied, exactly. Better set paying amounts and term limits for shut in or you could wind up in a situation where they sit on you for decades while it pays you little to nothing. Best of luck.

So pretty safe to say that if a hole was drilled 30 yrs ago and was plugged and abandoned immediately, there is strong indication that it was indeed a "duster" and that it is likely still "dusty" today?

Bob, I think operators were more willing to move on back 30 years ago, instead of trying to hang on to a lease, tooth and nail as they do today. There are several P&A wells on some of my spacings in ND. On one spacing in particular they drilled 1 commercially viable producing well with production ending in the late 80's and five more trying to find the right spot between the late 60's to early 70's. The seventh try with a horizontal Bakken well this time in 2007 is the latest commercially viable production from that tight grouping of drilled wells. There may be minerals in produceable quantities in your acres. I think quite a few wells in the past were plugged that would be worthwhile today. I think some wells are drilled today just to protect the investment in leasing the acres by holding the lease long term. If the well will just pay for the drilling it could hold the acres for decades and they may be worth 10 times the cost of the well that held the acres initially. I think the operators today are as much in the acquisition of mineral acres for possible sale later as they are in the O&G or E&P business. I think the lessor is at risk that the operator may drill a well alot poorer than need be because it's job is to hold acreage as cheaply as possible, not achieve maximum production. For instance wells that were proposed as 15 frack stages and when completed they omitted 10 of the 15 frack stages. I have a couple of wells that used 10 frack stages and in the next spacing over they used 18 frack stages and the well in the next spacing produced double what my well did new. What a difference four or five years have made in the best method of gaining production in that area. One of my wells used 10 frack stages after it was common knowledge that more was better in that area, but the operator only held about 60% of the spacing and if one more lease came up for renewal they may not have retained that spacing at all and I suspect the well we got was just enough to get by. It may be that in 30 years that they now know how to make a commercially viable well in your area, in a different zone, or simply with better completion techniques. If I were you I'd study what kind of successful wells have been drilled in your area, and compare them to the well you have. Maybe that duster never had a chance.

From all the records I have found so far, the only stuff I can get as public record is general drill data (depth, producing formation, etc) and the production rates over time in which pretty much all in the area are dry and plugged by now. Closest one to me was 3 miles away so there is a big band of nothingness around me. They are setting up to drill 3 miles from me right now with horizontal drilling. I REALLY wish I could work on that rig and see what happens.

I have no idea what they found 30 yrs ago, how they tried to develop the well, fracking procedures, etc.

The lease I have in front of me I just don't think I want to sign without some minimums and I am also not impressed with their desire to pull out at any time or pluck any amount of mineral acres from the lease that they want. I want them locked into their term.

I don't know a solid rule of thumb but the economic limit is when expenses excess income. Simple as that.

So if a pumper is charging $1000 a month, and you are averaging $200 in electric bill, and oil is $100 a bbl, then it has to average 12 bbl per month + the royalty owner's part to break even. That implies no contingency for major repairs. Gas wells ditto on compression charges and expenses.

I know a 60 year old well where the landowner pumps it himself and it makes no more than 100 MCF per week, but that's about $300..worth his time since he lives within a ½ mile of the wellhead.