Bulletin 177 The Decline and Ultimate Production of Oil Wells, With Noes on the Valuation of Oil Porperties

The oil industry in the United States is further advanced than in any other country, because of American initiative and the development of industries dependent in some way on petroleum or its products. For this reason the output has constantly increased (fig. 1), and as a result this country has produced more than half of the total output of the world. Trw total past output of the world is approximately 7,000,000,000 barrels of 42 gallons each; of this the United States produced about 4,000,000,000 barrels, or about 57 per cent. The limit of production in this country is being approached, however, and although new fields undoubtedly await discovery, the yearly outpnt must inevitably decline, because the maintenance of a given output each year necessitates the drilling of an increasing number of wells. Such an increase becomes impossible after a certain point is reached, not only because of a lack of acreage to be drilled, but because of the great number of wells that will ultimately have to be drilled. According to figure 1, the daily production per well each year has increased during the last few years. However, this increase is abnormal, being caused by the new pools brought in. Although such a condition may continue for several years, the average production per well will finally begin to decrease on account of the lack of new pools to make up for the normal decline in production of the old ones.