Oil wells come in a variety of shapes and sizes. When owning an oil well, geographic and technical studies should provide an estimation of how much crude oil is located in the drilling area. From those studies, other extraneous factors will affect the longevity of the well. Some of these factors may include oil spills and rate of oil extraction. Typically, it is estimated a well should last approximately 20 to 30 years.
Although the engineering and construction of any oil well is a carefully managed process, technical malfunctions of the equipment can occur over time. These malfunctions are expected; however, the degree of the malfunction and the engineering team’s ability to control the situation and fix it can result in little to no spillage, versus barrels worth of spillage. When owning an oil well, preparing for these situations is imperative because it affects the supply chain and operations overall.
The second biggest factor in determining how long an oil well will last is the amount of oil extracted on a daily basis. Although a well could have enough oil for a 20-year life cycle, that is an estimated calculation on a threshold of a certain number of barrels of oil each day. As the owner, if you choose to utilize a newer technology, such as horizontal drilling or hydraulic fracturing after the technical studies have been completed, this timeline estimation may be inaccurate. The rationale behind that is simply because these newer technologies increase efficiencies in the oil drilling process, which ultimately can result in a shortening lifespan of the oil well itself as more barrels are produced per day.
Overall, owning an oil well is a highly lucrative investment. How fast you want to see the return on investment is dependent on market fluctuations, as well as in how operations and barrels are managed.
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