Page 435 - Hydrocarbon Exploration and Production Second Edition

422 Decommissioning Methods

The fiscal treatment of decommissioning costs is a very live issue in many mature
areas where the decommissioning of the early developments has already begun.
Energy or industry departments within governments, in their role as custodian of the
national (hydrocarbon) asset, have a responsibility to ensure that the recovery of oil
and gas is maximised. Operating companies have a responsibility to their share-
holders to generate a competitive return on investment. The preferred point of
decommissioning will therefore be viewed differently by oil company and host
government.
In some areas it is obligatory for the oil company to contribute to a decom-
missioning fund throughout the producing life of the field. The cost of decom-
missioning is usually considered as an operating cost, for which a fiscal allowance is
made. This is typically claimed in the final year of the field life. Complex
arrangements exist for dealing with decommissioning costs which exceed the gross
revenue in the final year of the field life. For instance costs may be expensed and
carried back for a number of years against either revenue, taxation or royalties paid.

18.4. Decommissioning Methods

The basic aim of a decommissioning programme is to render all wells
permanently safe and remove most, if not all, surface (or seabed) signs of production
activity. How completely a site should be returned to its ‘green field’state, is a subject
for discussion between government, operator and the public.

18.4.1. Well abandonment

Whether offshore or on land an effective well abandonment programme should
address the following concerns

isolation of all hydrocarbon bearing intervals
containment of all overpressured zones
protection of overlying aquifers
removal of wellhead equipment.
A traditional abandonment process begins with a well killing operation in which
produced fluids are circulated out of the well, or pushed (bull headed) into the
formation, and replaced by drilling fluids heavy enough to contain any open
formation pressures. Once the well has been killed the Christmas tree is removed
and replaced by a blowout preventer, through which the production tubing can be
removed.
Cement is then placed across the open perforations and partially squeezed into
the formation to seal off all production zones. Depending on the well configuration
it is normal to set a series of cement and wireline plugs in both the liner and
production casing (see Figure 18.2), to a depth level with the top of cement behind
the production casing.