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Abstract
As oil and gas wells age, they become unproductive. Proper abandonment of wells is an important process for
both public safety and environmental health. However, well abandonment represents an opportunity cost to resource
companies, as abandoned wells are more expensive to apply new production techniques to than unabandoned wells.
In the early 1980’s, the government body overseeing the oil and gas industry in Alberta, Canada, observed a buildup
in the numbers of unproductive, unabandoned wells in the province. From 1986 onward, a number of policies were
implemented to attempt to reduce the potential government liability associated with these wells. This paper
examines the influence of these different regulatory regimes on both the total number of oil and gas wells abandoned
and the time lag between a well’s last production year and its actual abandonment year. The analysis is completed
on a dataset of Alberta wells licensed between 1947-2011. The data is analyzed using an OLS regression. Dummy
variables are used for the different policy regimes. While the different regimes generally increased the number of
wells abandoned, some of the policies appear to have disincentived companies to abandon wells that had been
inactive for long periods of time.