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Jan 1, 1939

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Jan 1, 1945

By AIME AIME

THE Petroleum Division will hold two meetings this fall, one on the Coast at Los Angeles, Sept. 29, with the technical sessions in the assembly room of the California Oil and Gas Association and a banquet Friday evening at the Richfield Cafe atop the Richfield building; the other in the Southwest, at Dallas, Texas, Oct. 6 and 7, with the Baker Hotel as headquarters. Dr. Frederick M. Becket, President of the Institute, and A. B. Parsons, Secretary, will attend both meetings. Arrangements for the meetings are not yet complete but the respective local committees, working in close touch with the officials of the Division are rapidly shaping up the programs and other detail.

Jan 1, 1933

By AIME AIME

THE Petroleum Division will hold its first fall meeting in Tulsa, Okla., Thursday and Friday,' Oct. 2 and 3, preceding the. International Petroleum Exposition that opens there on Oct. 4. Headquarters will be at the Hotel Mayo, and members planning to attend should make reservations promptly because of the large attendance expected at the Exposition. The program for Thursday will feature production engineering problems and that for Friday the unit operation of oil pools. The principal papers planned for the various sessions are as follows:

Jan 1, 1930

By AIME AIME

THE fifth annual fall meeting of the Petroleum Division of the A. 1. M. E. went down into history as being one of the best ever held by this Division and marked progress was made in the concentration of sentiment regarding several matters-particularly the principles of unit control or operation of oil pools. The first day's program was devoted to the discussion of well spacing and many valuable data were assembled and presented and the discussions following the reading of the different papers was interesting and spirited. However, throughout the whole trend of the discussion it was noted that in the background there was the idea of unit control of the pool and if such a condition could be secured the well spacing theories could be applied much better than could be hoped for if each lease in the pool was treated as a separate and individual unit.

Jan 1, 1929

By W. E. Wrather

SERIOUS consideration was given by the Petroleum Division to a wide variety of subjects, during six busy sessions at the Annual Meeting. Beginning with a joint session on engineering research and production engineering, Tuesday afternoon, conducted by E. A. Stephenson and H. C. Fowler, problems of petroleum technology, domestic and foreign production, proved oil re- serves, economics, and stabilization were mooied almost without interruption until nearly everyone was "talked out,' and the meeting was adjourned at the end of the annual Petroleum Division dinner, late Thursday night.

Jan 1, 1933

Jan 1, 1942

Jan 1, 1942

By Joseph E Pogue

Over a period of years the writer has presented a number of studies1 on various aspects of proration, in a progressive attempt to analyze critically and constructively the economic complexities of this interesting institution, which in a decade has revolutionized the economics of oil production in the United States. In the course of the investigations leading to these papers, the changing nature of proration and the principles underlying its evolution have gradually become clear, so that it is now possible to depart from the analytical method and to construct a synthesis of the steps that, if furthered by the industry, should carry proration past the economic hazards that still surround it to the goal of maximizing the value of the petroleum resource to the industry and the public alike. Nature of Proration Proration literally means the allocation of demand among competing producers on a pro rata basis, but the term now carries a much broader significance for it is employed to describe the entire process by which the production of crude oil in the United States is regulated. There is naturally much confusion of thought on the subject, for proration is an evolving system of control based upon principles of conservation and equity and embracing a body of practices that are tending to adjust themselves to the needs of the situation but are subjected to varying and divergent influences in the process. As it is now constituted, proration is a planned production measure designed to prevent waste, insure ratable takings, and balance supply and demand. The procedure is administered by State regulatory bodies through use of the police power of the States under authority of State conservation laws; the practice is supported by a considerable degree of voluntary conformance on the part of operators; and the Federal Government has accorded its cooperation by providing advisory quotas, circumscribing imports, checking movements of hot

Jan 1, 1939

By Joseph E. Pogue

Over a period of years the writer has presented a number of studies1 on various aspects of proration, in a progressive attempt to analyze critically and constructively the economic complexities of this interesting institution, which in a decade has revolutionized the economics of oil production in the United States. In the course of the investigations leading to these papers, the changing nature of proration and the principles underlying its evolution have gradually become clear, so that it is now possible to depart from the analytical method and to construct a synthesis of the steps that, if furthered by the industry, should carry proration past the economic hazards that still surround it to the goal of maximizing the value of the petroleum resource to the industry and the public alike. Nature of Proration Proration literally means the allocation of demand among competing producers on a pro rata basis, but the term now carries a much broader significance for it is employed to describe the entire process by which the production of crude oil in the United States is regulated. There is naturally much confusion of thought on the subject, for proration is an evolving system of control based upon principles of conservation and equity and embracing a body of practices that are tending to adjust themselves to the needs of the situation but are subjected to varying and divergent influences in the process. As it is now constituted, proration is a planned production measure designed to prevent waste, insure ratable takings, and balance supply and demand. The procedure is administered by State regulatory bodies through use of the police power of the States under authority of State conservation laws; the practice is supported by a considerable degree of voluntary conformance on the part of operators; and the Federal Government has accorded its cooperation by providing advisory quotas, circumscribing imports, checking movements of hot

Jan 1, 1939

Since production curtailment for other than engineering reasons is gradually disappearing, and more and more wells are now producing at capacity and showing declining production rates, it was considered timely to present a brief review of the development of decline-curve analysis during the past three or four decades. Several of the commoner types of decline curves were discussed in detail and the mathematical relationships between production rate, time, cumulative production and decline percentage for each case were studied. The well-known loss-ratio method was found to be an extremely valuable tool for statistical analysis and extrapolation of various types of curves. A tentative classification of decline curves, based on their loss ratios, was suggested. Some new graphical methods were introduced to facilitate estimation of the future life and the future production of producing properties where curves are plotted on semilogarithmic paper. To facilitate graphical extrapolation of hyperbolic-type decline curves, a series of decline charts was proposed, which will make straight-line extrapolation of both rate-time and rate-cumulative curves possible. Introduction During the period of severe production curtailment, which is now behind us, production-decline curves lost most of their usefulness and popularity in prorated areas because the production rates of all wells, except those in the stripper class, were constant or almost constant. While production-decline curves were thus losing in importance for estimating reserves, an increasing reservoir consciousness and a better understanding of reservoir performance developed among petroleum engineers. This fact, together with intelligent interpretation and use of electric logs, core-analysis data, bottom-hole pressure behavior and physical characteristics of reservoir fluids, eliminated a considerable part of the guesswork in previous volumetric methods and put reserve estimates, based on this method, on a sound scientific basis' At the same time, a number of ingenious substitutes were developed for the regular production-decline curve, which made it possible to obtain an independent check on volumetric estimates in appraisal work, even though the production rates were constant. with the now steadily increasing demand for oil to supply the huge requirements of this global war, proration for reasons of than prevention of underground waste is gradually disappearing. More and more wells are, or will be, producing at capacity or at their optimum rates, as determined by sound engineering practice. With this trend, the character of producing wells seems to regain, more or less, its "individuality," and the old and familiar decline curve appears to have had a comeback as a valuable tool in the hands of the petroleum engineer. It may be timely, therefore, to retrace the development of decline-curve analysis in the past by presenting a brief chronological review of bulletins and papers published during the past three or four decades, which have

Jan 1, 1945

By J. E. Pogue, F. G. Coqueron

This paper describes the sources of funds required by the petroleum industry to finance capital expenditures and also presents a discussion of the effect of rising construction costs on these expenditures. The petroleum industry obtains its capital funds from several sources: (I) internal, from retained cash earnings; and (2) external, from borrowings and the sale of securities to the public. The upward trend of capital expenditures of the petroleum industry is caused in the main by the influence of two powerful factors: (I) the physical growth in the demand for oils; and (2) the rising cost of drilling wells and constructing refineries, pipe lines, and other facilities. The segregation of these factors is accomplished by deflating the actual capital expenditures so that they are shown in terms of 1939 costs and then subtracting the adjusted series from the actual figures to yield a set of data representing the expenditures made on account of higher costs. Rising costs affect prices and the portion attributable to this factor had to be generated from the cash earnings of the industry, which called for higher oil prices. Introduction Capital may be defined as "wealth employed in or available for production." All production requires capital. Expanding industries require more capital than static ones, and technological industries employ more capital than. those in which little equipment is needed. The petroleum industry is both rapidly growing and highly technological, and, being a large industry, its capital requirements are prodigious, amounting to about one-seventh of the total of all American business, excluding agriculture.* Capital formation may be defined as the method by which the wealth or capital needed in the productive processes is created. There are various ways in which capital funds may be obtained but there is only one way in which capital can be created—out of production in excess of consumption, that is, savings. The physical realities are simple, but the monetary concepts are complicated because the mechanism of credit can draw upon future savings. Source of Capital Funds An industry, such as the petroleum industry, can obtain its capital funds from

Jan 1, 1949

By H. J. Wasson

Published literature regarding the nation's oil reserve has been largely concerned with the estimated quantities in sight in known producing fields. This proved reserve has never been large in relation to demand. It has been the practice to consider the total future reserve (beyond that in sight within known fields) in the light of the broad potentialities of vast areas of partially explored sedimentary rocks, which are regarded as possible oil territory. Until recently, but little attention has been given to the rate at which the unexplored potentialities may be. converted into the proved reserve classification. To a certain extent, therefore, our contemporary viewpoint on the subject of national oil reserves is characterized by a pronounced contradiction. On the one hand, we measure known reserves as sufficient for only a few years of consumption—i.e., relative scarcity; on the other hand, we are confident that millions of unexplored acres will yield many new oil fields and that countless deeper productive formations underlie many of our known productive fields—i.e., infinite abundance. Of greater significance than the quantitative measure of either of these reserve classifications is the rate at which reserve replenishment must be accomplished in order to maintain an adequate time supply of proved oil reserves. The accumulation of geological data covering broad areas supports the belief that the remaining undiscovered oil reserve is exceedingly large. The distribution of oil in sedimentary formations of practically all ages, from Cambrian to Recent, is suggestive of almost unlimited possibilities; and the relatively small proportion of these possible areas that has been intensively explored in this country is a further index of the probable magnitude of the undiscovered future reserve. The implication that may reasonably be drawn from these observations is that oil, though distributed with less regularity and concentration than its related hydrocarbon, coal, nevertheless is a relatively abundant natural commodity of which the exhaustion appears remote. Final exhaustion of our oil reserve, if not infinitely remote, is a future contin-

Jan 1, 1937

By Sidney A. Swensrud

This paper reviews the subject of gasoline margins, discusses some of the more current marketing problems, and gives some consideration to the main urges to marketing expansion, or overexpansion, in the oil industry. Margins In an earlier paper1, some comparisons were shown for the years 1929, 1930 and 1931, of the margin between the refinery cost of gasoline in Oklahoma, the market price in Oklahoma, and the average retail price in 50 representative cities of the United States. These figures indicated a small margin for the refiner in 1929 between his gasoline cost and the wholesale price, which, however, had turned into a loss by 1931. The margin between either refinery costs or wholesale prices and the retail price in the 50 cities showed a continuous decline during the three years. We have now worked out these figures on a similar basis for a longer period—from 1928 through 1936. The figures for refinery gasoline cost are slightly different from those in the earlier study, owing to the use of

Jan 1, 1937