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What is a Commercial Well?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 September 2016
  • Copyright Protected:
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    Conjecture Corporation
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A commercial well is a drilling site that is anticipated to produce enough product for sale that it will recoup all the expenses associated with the operation, and make some amount of profit for the site owners. A well of this type may be situated in an oil field, or at a gas drilling site. Typically, a commercial well is located at a site that has more than three active wells that are producing materials sold for use in the creation of energy or some type of product line.

One characteristic that any type of commercial well will exhibit is the fact that investors are willing to back the operation of the site, and the well in particular. Often, investors are involved in the evaluation of the site before the well is actually sunk, making sure there is a reasonable amount of evidence to indicate the presence of oil or natural gas that can be brought to the surface and sold for various commercial uses. In this scenario, the investors often provide the funding that is used to secure the equipment needed to establish the commercial well, and operate the well until it begins to post a profit. At that point, the investors begin to earn a return on the investment, with that return continuing as long as the well remains in operation.

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A well is generally classified as being commercial as long as it continues to produce. Once the commercial well is not longer able to tap into an underground source of oil or natural gas, it becomes what is known as a non-producing well. At that point, the well is capped and the operation is shut down, freeing resources to locate another area where it is possible to drill and create a new well that is capable of generating revenue from the harvested product.

For the most part, a commercial well is found at a site where there are at least three active wells in operation. There are situations where a single well or even two wells may be considered commercial, if their daily output exceeds a certain range. This is because the operational expenses involved with the site can be more easily absorbed when the same equipment is used to maintain several wells on a common site, and the combined output is enough to cover those expenses and increase the profit margin for the overall operation.

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