Abandonment cost

Abandonment costs are costs associated with the abandonment of a business venture. This term traditionally applied to the process of abandoning an under-producing or non-producing oil or gas well. In that context, it means the removal of equipment, plugging of the well with cement, any environmental clean-up, etc. necessary to shut the well down. It is occasionally referred to as "Removal and Abandonment" or R & A. The objective of well abandonment is to ensure that no hydrocarbons leak into surface water or into the atmosphere. The cost of a routine abandonment of a typical well in the United States is about $5000 (~Texas average cost in year 2000). If a well has developed a leak that allows gas to flow up the outside of the well casing, finding and correcting the leak can push the cost of abandonment beyond $100,000. Wells that have been used as injectors or have been subject to fracking operation are more likely to develop leaks because the injected substances can create channels that permit uncontrolled flow outside the casing.