Production -Domestic - Developments in the California Petroleum Industry during 1931 (With Discussion)

The outstanding event in the California petroleum industry during 1931 was the continuance of curtailment of crude oil production, which directly reduced drilling and well repair activities. Although all objectives were not attained, a very close balance between supply and demand was maintained during the period of maximum requirements, but the decline in intercoastal and export shipments caused an overproduction during the last half of the year, which indicated that California production would necessarily suffer further curtailment after the end of the year. A new peak in potential crude oil production of 1,187,600 bbl. per day was reported in August and at the close of the year the California potential was 1,069,000 bbl. per day, the shut-in light oil amounting to practically 425,000 bbl. per day and the shut-in heavy oil amounting to about 150,000 bbl. per day. Fig. 1 depicts these conditions and also shows the production and curtailment situation since the inception of proration in California. The December, 1931, potential figure of 1,069,-000 bbl. per day was arrived at after the most careful deliberation by a number of committees, selected to check the potential of practically every well in the state. Continued overproduction in the first three months of 1931 and the inadvisability of building more storage, together with the inability to obtain the proper amount of curtailment in town-lot fields, such as Long Beach, Santa Fe Springs and Playa del Rey, prompted the major oil companies to inaugurate a price reduction in crude oil. This cut caused prices to reach the lowest levels since 1915, and instigated the formation of an oil sales agency, composed of independent operators, which is known as the Oil Producers Sales Agency. The purpose of this organization is to procure a market for its members at reasonable prices, advise them of market conditions and aid them in controlling the amount of oil available for sale. Marketing of oil produced by members began on June 1 and independents controlling" about 160,000 bbl. per day of production had become members by the end of the month.