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objectives of isolating the well substances within their separate
strata and preventing the leakage of hydrocarbons after well
abandonment.
Exxon’s estimated DRR costs associated with plugging wells
include wages, rental of equipment, supplies, and hauling of
equipment and materials.
We reiterate that in the oil industry well plugging and
related site cleanup are common events. As a general matter and
based on such experience, the costs of such DRR work is
reasonably estimable.
John B. Willis, currently with Halliburton Energy Services,
Inc., a leading oil well service company, prepared Exxon’s plan
for and estimated the cost of plugging the Prudhoe Bay oil wells
in 1970 and 1980 dollars at a total of $131,976 for each of the
645 wells for which an estimate was done (reflecting total PBU
estimated costs for well plugging of $85,124,800 of which Exxon’s
22-percent share would be $18,727,456). Mr. Willis supervised
the drilling and plugging of wells at Prudhoe Bay during the
1970's. We accept Mr. Willis’ estimates of Exxon’s well-plugging
costs for the Prudhoe Bay field.
During the drilling of wells, mud is pumped into the well
bore. Mud and drill “cuttings” move to the surface as the wells
are drilled and must be contained when they exit from the top of
the wells. To accomplish that containment, the PBU owners
constructed “reserve pits” at the drill sites by enclosing a
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