Legal Definitions - casing point

The term "casing point" in the oil and gas industry refers to a critical decision-making stage during the drilling of a well. It is the precise moment when a well has been drilled to its intended depth, and the operators must decide whether to install steel pipe, known as "casing," into the wellbore. This decision is crucial because installing casing is a significant financial investment that commits the company to completing and equipping the well for potential commercial production. Conversely, deciding not to install casing typically means the well will be plugged and abandoned.

Here are some examples illustrating the "casing point":

• Exploratory Well with Moderate Findings:

  An independent oil company, "Frontier Energy," drills an exploratory well in a previously unproven area. After reaching the target depth of 9,500 feet, initial geological logs and fluid samples indicate the presence of natural gas. However, the estimated volume of reserves is lower than initially hoped, and the quality of the reservoir rock is only moderate. Frontier Energy is now at the casing point. Their geologists and engineers must carefully analyze the data to determine if the potential revenue from these moderate reserves justifies the substantial cost of installing casing, cementing it in place, and then completing the well for production. If the economic projections are unfavorable, they might decide to abandon the well instead.

• Development Well in a Proven Field:

  "Global Petroleum Corp." is drilling a new development well within an existing, highly productive oil field that has been in operation for decades. The well successfully reaches its target depth, and the geological data from the drill cuttings and wireline logs strongly confirm that it has intersected the known, high-quality oil-bearing reservoir with excellent permeability. At this casing point, Global Petroleum Corp. will almost certainly decide to install casing. The high probability of successful and profitable production, supported by extensive historical data from nearby wells, makes the decision to complete the well a straightforward business choice.

• Unforeseen Geological Challenges:

  "Deep Earth Drilling" completes a well to its target depth in a remote, challenging offshore environment. While some initial signs of hydrocarbons were encountered during drilling, further detailed analysis at the target depth reveals unexpected formation instability and extremely low reservoir pressure. These conditions suggest that extracting any hydrocarbons would be technically very difficult, require specialized and expensive equipment, and likely be economically unviable. Deep Earth Drilling is at the casing point. Given the significant technical hurdles and poor economic projections, they will likely decide against installing casing and completing the well for production, opting instead to abandon the well to avoid further substantial investment in a non-commercial venture.