Total Economic Value on well abandonment activity

Abstract

Well P&A constitutes a critical stage within the decommissioning process in oil exploration and production projects, reflecting the industry’s commitment to sustainability, environmental protection, and social responsibility. The correct and timely execution of permanent abandonment is essential to prevent adverse environmental impacts, such as hydrocarbon leaks and contamination of underground aquifers, thereby protecting marine and terrestrial ecosystems. According to the IOGP’s Decommissioning Insights Report 2023, well abandonment campaigns can represent 40% to 60% of the total budget for decommissioning programs. Established economic analysis concepts are applied to estimate the impacts of postponing well abandonment for up to five years relative to the schedule set out in Petrobras’ Strategic Planning (2025–2029). To this end, a comparative analysis of Total Economic Value (TEV) is performed across three scheduling scenarios, considering five cost components (all discounted to present value): (i) direct abandonment costs, (ii) regulatory costs associated with non-compliance with SGIP commitments, (iii) expected monetary value (EMV) of well integrity loss/blowout events, (iv) decommissioning obligations costs (non-COGO), and (v) opportunity costs related to revitalization projects. The methodology is applied to a portfolio of 150 interventions, selected based on the availability of well integrity failure probability functions required to compute EMV. The results indicate that performing abandonment at the appropriate time avoids costs significantly higher than the financial disbursement allocated in the Strategic Plan. In conclusion, beyond being environmentally responsible and a concession obligation, well abandonment is decisive for the sustainability of the oil exploration and production business.