Economic limit of field production in Louisiana

Abstract

When the operating cost of a well is equal to its income from production, the well is no longer considered an asset and is said to have reached its economic limit. The purpose of this paper is to quantify the economic limit of hydrocarbon field production in Louisiana. We classify 690 fields that terminated production between 1977 and 2007 by product type, location, and year of termination and compute production and adjusted gross revenue near the end of their life cycle. During the last year of production, average oil field revenues varied from $35,000 in North Louisiana to $101,000 in South Louisiana to $227,000 in state waters; gas field revenue thresholds ranged from $57,000 (North Louisiana) to $402,000 (South Louisiana) to $936,000 (offshore). Economic limit statistics are summarized and correlations with price and field size are reviewed. The limitations of the analysis and constraints on interpretation are discussed.