CHAPTER I. By R. P. MCLAUGHLIN, State Oil and Gas Supervisor. The war has more clearly than ever demonstrated that our national existence demands economy in almost all forms of material and energy. The burden resting upon the petroleum industry does not simply end with the production of more oil; it is equally important that labor and drilling material shall not be uselessly dissipated during the course of production. Furthermore, it is particularly important that the natural underground reservoirs of oil shall not be mutilated and rendered inaccessible through over-hasty and ill-considered drilling. All these necessities will maintain even though peace has been achieved. In order to fully meet these demands, it is a self-evident fact that the most careful and painstaking study must guide operations, and advantage must be taken of all past experiences. Such an orderly and logical utilization of facts is herein referred to as "scientific management" or "engineering methods." Clear recognition must be had of the distinction between the hazard of "wildeat" operations and operations in proved fields. The hazard in the latter is comparatively small, and it is possible to apply many rules and precedents. The State Mining Bureau has, for several years, specially directed its efforts to the encouragement of efficient or scientific oil field development. The law authorizing the Department of Petroleum and Gas is built around and rests primarily upon the idea of applying scientific methods and discoveries. When the department was organized, its first efforts were directed to inquiries determining to what extent modern principles of management were already being utilized by oil producers. It was found that several concerns were so organized and conducted. The details of such organizations were related in our Second Annual Report'. It is gratifying to note that, in direct response to our suggestions, the number of concerns operating by means of scientific methods has been at least doubled. Public opinion eventually controls the methods of all important lines. of business and industry. It may, therefore, be well to point out in passing, that three large oil concerns have not yet adopted modern, scientific methods of directing their drilling work, namely: Standard Oil Company, Union Oil Company of California3, and a portion of the so-called Doheny interests*. Public interest requires further legislation to compel proper operations by such concerns as are not receptive to educational methods of legal administration and still fail to recognize their obligations in the matter of protecting the oil deposits of California. In our previous reports', considerable attention was devoted to explaining and illustrating the elementary features upon which thorough development and protection of the oil fields rest. The present report omits the elementary principles and merely recites the actual work and developments of the past year. Such new principles as we have been able to thoroughly study are also described. It should be particularly noted that a complete list of all operations upon which the department has passed is given in this and previous reports. The facts thus recorded will be found useful to careful investigators. The policy of issuing recommendations to operators, rather than orders, has been continued. This provides elasticity in the system of supervising oil field operations, so that facts or conditions, subsequently discovered, can be informally presented by an operator and a supplementary recommendation issued. The greater portion of our work is carried on informally by consultation between field representatives of the department and the operators. The written records, however, cover all proposals and recommendations. It was necessary to issue only three formal orders: ORDER NO. 4, relative to State Consolidated Oil Company, Lloyd ORDER No. 5, relative to Union Oil Company, International well ORDER NO. 6, relative to Petroleum Midway Company, Ltd., There were, however, many instances in which the department did not approve operations, and the written records have merely been kept clear and complete so as to provide for such future legal action as may be necessary. Some of the operations which were not approved may never cause serious damage, and it is believed that ultimately more good will be accomplished by the past liberal or educational administration of the law than by drastic legal action. Formal orders, in general, have been issued on the following grounds: (1) At the request of the operator; (2) Where great and immediate damage seemed probable; (3) Where it appeared that the operator was defiant of legal restrictions. Legal action was taken in two instances1 only, namely: against Thomas A. Slocum; and against I. W. Fuqua, as president, general manager and agent of the Red Star Petroleum Company. The first action was taken on account of repeated failure to file records and was dismissed when the records were produced. The second action was taken where it appeared that deliberate attempts were being made to conceal information obtained during drilling operations. Conviction was not obtained. A change in the statutory provisions governing the department in such matters is necessary. A marked improvement in field operations has taken place throughout. the state since the enactment of the law, and more care is given by operators to the details necessary to the proper drilling of wells. On the other hand, attention is called to the fact that improvement has not been so widespread that legal supervision is no longer needed. Two new fields (Montebello and Casmalia), developed in the past two years, have already encountered water in menacing quantities. These fields are in the hands of large operators, and the difficulties follow directly upon their failure to co-operate with the department in the matter of careful engineering study and control. As has been repeatedly stated, the department has neither the facilities nor the inclination to originate plans directing, in detail, the operations of any concern. Proposed operations, particularly those of great volume, should be accompanied by carefully compiled data, supporting a well-considered plan. The con cerns above mentioned have greatly retarded and discredited the admin. istration of the law by attempting to shift upon the department the burden of planning operations. Maps of all the oil fields have been completed and are on sale at our various offices at prices which merely cover the cost of blue printing. These maps are revised from time to time to show the latest developments. Such information has not, heretofore, been readily available to the public. Models showing the geological and mechanical conditions have been. constructed and displayed at our various field offices. The number of persons calling for the purpose of inspecting these models, particularly at our Los Angeles office, indicates that the models are useful to the public, besides being necessary in the work of the department. Office buildings were constructed at Coalinga and Taft, which have facilitated our work during the latter part of the year. The building at Taft will have to be enlarged in order to display models, which can now be rapidly assembled and made available for public use. "The Feople of the State of California v. Thomas A. Slocum, p. 315. of the State of California v. I. W. Fuqua, pp. 208 to 211, post. 2Bull. No. 82, Cal. State Min. Bur. p. 64. The People Several public meetings were held for the purpose of discussing details. of certain field operations. A meeting at Los Angeles', for the purpose of considering the use of mud fluid, was well attended, and several interesting, detailed papers were presented, and served as a basis for discussion. However, subsequent field operations demonstrated that the suggestions were not acted upon. A meeting at San Francisco, for the purpose of discussing the subject of proper and economical spacing of wells2, brought out but little definite information beyond that compiled by the department3. Several large concerns were not represented by engineers or others who were prepared to present detailed evidence that the subject had been seriously 'considered. While the subject of the most economical spacing of wells might, at first glance, appear to be abstract and theoretical, it will be found that systematic observations, governed by common sense, will afford valuable information. It has long been recognized that wells drain territory for varying distances, and it is self-evident that, if wells are too closely spaced, some of them are merely a waste of labor and material. The department has made no extended or systematic investigation of the subject, but it has observed some striking instances. One of the best examples coming to our attention is shown by the accompanying diagram (Fig. 1), which shows the production of four wells over a period of nearly four years. It will be noted that, as each new well was completed there was a marked decline in productions of wells already producing. The new well drew much of its production from areas previously supplying adjoining wells. As a matter of fact, one well, or at the utmost two, would have produced as much oil. The article by E. A. Starke (pp. 107 to 109, post), describing a process for the increased utilization of heavy oil, should be of particular interest to many producers. The policy of publishing original articles of public interest was established in our previous reports. Needless expense in oil field operations has repeatedly been mentioned in reports of this department. The special report by R. E. Collom, comparing results obtained from various methods of shutting off water, furnishes data which can be used to reduce present losses to an amount at least equal to the total expenditures by this department. There has been a disposition, in some quarters, to belittle or discount. previous statements as to inefficiency. It would appear unnecessary to do more than merely point out the results obtained by various large producers, as shown in the following table. It will be noted that the per 1Pp. 77 to 106, post. Demonstrations of use of Mud-Laden Fluid in Oil Well Operations. 2Bull. No. 73. Cal. State Min. Bur. pp. 134 to 140. Diagram of International Wells. P. 11. post. *Bull. No. 69, Cal. State Min. Bur. pp. 58-59. "Bull. No. 73, Cal. State Min. Bur. pp. 228-233. Bull. No. 82, Cal. State Min. Bur. p. 81. |