ⓘ Abandonment cost

Abandonment cost

ⓘ Abandonment cost

Abandonment costs or Abandonment expenditure are costs associated with the abandonment of a business venture.

Abandonment costs traditionally applied to the process of abandoning an under-producing or non-producing oil or gas well. In that context, it means the removal of equipment, plugging of the well with cement, any environmental clean-up, etc. necessary to shut the well down. It is occasionally referred to as "Removal and Abandonment" or R & A. The objective of well abandonment is to ensure that no hydrocarbons leak into surface water or into the atmosphere. The cost of a routine abandonment of a typical well in the United States is about $5.000 ~Texas average cost in year 2000. If a well has developed a leak that allows gas to flow up the outside of the well casing, finding and correcting the leak can push the cost of abandonment beyond $100.000. Wells that have been used as injectors or have been subject to fracking operation are more likely to develop leaks because the injected substances can create channels that permit uncontrolled flow outside the casing.

The terms application has been broadened from its original context to apply to the abandonment of other business ventures, primarily in manufacturing. It is often used in a cost-benefit analysis to determine if a marginal venture should be continued or if it is more financially beneficial to abandon the venture and plow the remaining money into something else in an attempt to recoup the losses. For example, General Motors had some abandonment costs from shutting down the Pontiac and Saturn brands. The existence of abandonment costs in an industry implies that there is no free exit from that industry.

  • will do before permanent abandonment Often, lease provisions and governmental regulations usually require quick abandonment liability and tax concerns
  • Canada Greyhound Lines List of defunct airlines of Canada Greyhound abandons low - cost air service 1997 - 09 - 10. Retrieved 2013 - 10 - 19.
  • filed a Notice of Exemption with the Surface Transportation Board for abandonment of the line. Though the Macon County Commission was granted a public
  • some items without the potential for cost recovery until disposition or abandonment of the asset to which the capitalized costs relate. This is often the
  • suggests it is costing below Average Variable Costs, and the case of United Brands suggests it is simply when the difference in cost between the cost of manufacturing
  • network proposal. A contract for the tunnel s abandonment was awarded to AMCO - Giffen in August 2018 at a cost of 3.57 million comprising 550, 000 for
  • its state of disrepair, the courthouse survived almost forty years of abandonment and was restored in the 1970s to function as a local history museum.
  • areas such as Bear Island and other small communities, as well as the abandonment of a Canadian National Railway line and numerous local roads and small
  • when the economic base of the settlement collapsed, leading to its abandonment Qullissat was not a traditional Inuit settlement, but was founded in
  • request of Japanese Prime Minister Shinzō Abe, and when asked about the abandonment Minister for the Olympics Toshiaki Endo stated that, Air conditioners
  • last saw passenger service in the 1960s with many sections saved from abandonment by the Oklahoma Department of Transportation and operated by short - line

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