Abandoned oil well in MI park- deal killer?

There’s a park in evaluating in Michigan and it has an abandoned oil well in the middle of it.

It’s apparently fairly common it that part of MI, and has been decommissioned and shut down in the appropriate way and if there are future issues (supposedly) company who owned it is liable not owner, but still obviously concerning.

I’m getting a phase one person out there to look at it.

If the phase one person said it was okay and came back as clean phase 1 would you feel comfortable buying it or would you consider this a deal killer?


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So your terminology has technical meaning in the well industry. Is the well abandoned (all pumping equipment pull from well and well cemented from top to bottom). If well was abandoned there should be a record of how it was abandoned which you should have reviewed to make sure it was done correctly. Or does the well still have all or some of the pumping equipment in it and it not in production at the moment, or just a hole in the ground. If it still has equipment onsite and in well you will need to see lease agreement and review to see if company is still solvent and could actually pay to abandon the well should they ever decide to. Lease would hopefully have provision requiring bonding to guarantee well is abandoned and also have provision on when well must be abandoned (after so any months of inactivity). Many wells are orphans i.e. have no existing or clear owner who could be held responsible to abandon well. State law may require owner of lease to abandon well but if well is orphan there is no way to enforce this. Many states have a fund to pay for abandoned orphan well but are decades away from getting to all of them if they ever do (one of the dirty little secrets of the oil and gas business)

If well has been appropriately abandoned then I would be fine with the park. The other issue is the lease still active and a oil company could come and drill more wells any where they want?


Sorry for bad grammar and spelling. Trying to post while doing 3 other things

I went through this in PA, only with a gas well instead. Ended up having to track down the owner. Cut a deal to purchase the well from him and coincidentally had him cap it as well given he was in services side of business. Once Fannie got the state certification they were good to go. Shouldn’t be a deal killer unless Phase I says otherwise.

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Follow up post: We recently purchased a park in Kansas with two old oil wells on property. I found them through state well database prior to phase 1 survey. Both wells were exploration/dry holes and we obtained proper abandonment logs/paper work. Phase 1 was clean and documented abandonment. So complete non issue since everything was documented.


Interesting article on orphan wells