Papers - Unitization - Some Developments and Operating Economies of Unit Operation

At intervals during the past several years the oil industry has been confronted with the problem of forestalling crises in its affairs. These crises have been reduced to periods of depression which, fortunately, the industry has been able to survive. Under the existing competitive practices which control the producing division of the industry it apparently has been proved that the best efforts logically to curtail development and producing operations are inadequate for effecting a true production balance and the consequent stabilization of prices. The industry is awakening to the fact that the situation warrants revolutionary thought and at this time it is looking for a permanent solution of its problem in a general plan for unit development and operation such as the one first proposed by Henry L. Doherty. Mr. Doherty's proposal was designed not only as a means for stabilizing the industry as a whole, but its principles involve very definite potential benefits for the average individual operator and royalty owner as participants in pooled projects. The benefits to these individuals would be derived from maximum recovery, the maximum utilization of natural energies, the minimization of development and operating costs, enhanced values of leases and royalties through improved efficiencies and ultimate yields, improved earnings through stabilized crude oil prices, etc. This plan was revolutionary to the industry's practices and at the time was rejected, but it now appears that the development and operating policies for new properties are continually approaching the ideal of the original plan. Oil companies are constantly extending their efforts to improve all factors that have a bearing on the costs and efficiencies of their operations. These efforts may, in some degree, be a normal outgrowth of the industry's progress, but the forced consideration of market conditions, the growing appreciation of the importance of regulating operations for maximum ultimate economies and the depreciation of the old principle of maximum flush at any cost, come from a new school of thought which has been stimulated by the immediate pressure of overproduction and