THE gently folded Cretaceous and Tertiary formations that border the Gulf of Mexico and the Caribbean and that recur on the California coast form the most satisfactory inverted bowls in all the world for the capture of that oil and gas which nature through the ages has brewed from the remains of marine organisms and released far beneath the earth's surface. That oil and gas, in seeking to escape, has been forced up into these bowls and other gas-tight traps and held against the coming of tools that man puts on the ends of strings of pipe a mile long and sends down to puncture their upturned bottoms.
Four-fifths of the oil produced in the world to-day is coming from those regions of the western continents. In the Eastern Hemisphere there is another area of folded sedimentary rock, extending from the Indian Ocean north toward Russia. It offers to the world the fields of Persia, Iraq, and Russia. In mountainous Europe and much of America the layers of rock are too broken to provide satisfactory oil traps or are not oil bearing because of the nature of the rock. Africa and other extensive areas are composed chiefly of formations of ancient igneous rock that yields no oil. Australia and Brazil have not been well explored but are not geographically promising. Thus is a rough view of the world given that may give some basis for oil expectancy.
It is estimated that perhaps one-fifth of the oil of the world lies beneath the surface of continental United States. That territory has been more thoroughly explored than any other. To-day it is producing the lion's sharesome 65 per centof the oil used by man. It is producing this oil from a reserve of 20 per cent of all the oil there is.
There is no escaping the fact that if this procedure continues the United States, now so well supplied, will be among the first of the oil-producing nations to be permanently without that utility. When these facts are understood those officials of Government on whom responsibility falls for the conservation of those raw materials with which they have to do are likely to become somewhat perturbed. Responsibility for guidance in this problem rests largely with the Department of the Interior.
There is general agreement that the United States has developed and produced its oil too rapidly. With the translation of the iron age into the oil age, the scramble has been without precedent. For ten years now, despite the increasing multiplicity of its uses, oil has been found faster than it could be consumed. All the time there has been more of it above ground than the market demanded. If during the month of June, 1931, all the wells that were down to oil had been produced to capacity they would have yielded enough of this liquid mineral to last a year.
The presence of too much of any commodity leads inevitably to its waste, and so has it been with oil. The record of all time for the waste of a national resource has been broken in the past decade in the oil fields of the United States.
In California, for example, it is estimated that the loss of natural gas alone has been sufficient to have paid the national debt. Every day for years in that State enough gas has been going off unused into the air to do the work of 25,000 tons of coal. The same sort of gas losses has taken place in Oklahoma, and notably in Texas. And these losses still go on. New fields have been brought in when there was already too much oil above ground. They have been produced when they were not needed. They have depressed the market and hurt the industry. They have been depleted without serving any useful purpose.
The oil industry, in fact, has been at sixes and sevens. It has been chaotic and disorganized. It has been a scramble, a madness. Most of those in it have admitted this. It has not been their fault, and their conduct under the circumstances has been logical and normal. There has been no time to stop, to estimate the situation, to map out a proper course of action.
There is that in the business of producing oil which naturally leads to waste. The procedure has repeated itself scores of times and, though it smacked of madness, it has, until recently, seemed unavoidable. Here is the way it works:
Some wildcatter, pecking away with his drill in your neighborhood or mine, strikes oil. Geological examination or actual drilling shows that there is a dome here that is 2 miles long and half a mile wide. It is a single pocket filled with porous material into which oil and gas have been packed under high pressure. Drilling anywhere in this area is likely to tap the supply. The land is owned by twenty people. The man who gets the most wells down quickest will get the most oil. Everybody begins to drill. The development of this field of necessity becomes a race. He who goes down slowly may find the oil drained from beneath his land before he gets to it.
Experience has shown that one well on 10 acres is likely to be economically sufficient for getting the oil. Economical development would drill on this basis. Under the method of unrestrained competition, however, 10 wells may be put down on 1 acre. The expenditure for well drilling may be a hundred times as great as it should be.
Many wells are brought in quickly. The dome is induced to empty itself with the greatest possible expedition. To be sure, there may be no need of the oil; there may already be overproduction in this region; there may be no arrangement for taking care of the gas that always comes off with the oil.
There is another waste that has come to be well understood that may be greater than all the others. The flow of oil from this field depends on gas pressure. When the pressure is exhausted the oil stops coming up. Of the oil that is in the pool it is believed that not more than 20 per cent is usually recovered by ordinary methods. Much of the rest of this oilperhaps four-fifths of itunder present ordinary methods remains beyond the reach of puny man playing around at the surface.
Obviously any waste of gas hastens the time when the gas pressure will disappear. Think of the waste of a well out of control wildly blowing gas and thus wasting the only lift that can bring up the oil beneath! In the interest of prolonging the life of the field, no gas should be allowed to blow off at random or before its full quota of work has been performed. In the past few years the oil people have learned that the gas which brings up the oil may be captured, pumped back into the pool, and induced to restore the pressure. It may be induced to bring up a second and a third load of oil. Gas which can not otherwise be used obviously should be pumped back into the ground so that the life of the field may be prolonged.
The owners of a dome usually spend much more money on it than they should and receive less returns than they should. The public nearly always gets less benefit than it should because each recurring fragment of a great natural resource is given over to waste.
The sort of competition that takes place as between individuals in a single field goes on as between fields, as between productive regions, States, nations. It should not go on. There is now recognized a principle of conservation which, if applied, would result in oil fields being brought to serve a much greater purpose than they are now serving. Incidentally, they would make much more money for their owners.
The principle might have been applied to hundreds of actual fields in the United States that have been operated and have been depleted so wastefully. Under it, here is what would have been done:
Finding that they owned land over an oil dome, its possessors would have pooled their interests. They would have agreed to develop, the field as a unit and split the returns in proportion to their holdings. Since the gas may inherently be as valuable as the oil, they would have found it to their interest to wait until pipe lines were laid and a market was established before allowing it to produce itself. Since the maintenance of gas pressure underground is vital to oil production, the gas that could not be sold at a fair price under efficient management would have been forced back into the ground. They would naturally have studied the oil market and would have produced when it was favorable and shut down when it was off. They would have secured the maximum recovery of both oil and gas and the maximum financial return.
Last Updated: 20-Jul-2009