WORLDWIDE

PRODUCTION
REVIEW

A Review of 1960 Domestic Production

RAYMOND W. MILLER
NORTHERN NA ruRAL GAS CO.
VICE·CHAIRMAN (DOMESTIC)
BIlliNGS, MONT.
SPE PRODUCTION REVIEW COMMITTEE

Editor's Note: The following two articles are con- CRUDE OIL AND NATURAL-GAS LIQUIDS

densations of papers presented at the 91st Annual AIME II

Meeting held Feb. 26-March 2, 1961, in St. Louis. The = SHUT-IN CAPACITY
complete texts of both will appear in Vol. 14 of Interna- IO---IS3CRUDE OIL PROD_
tional Oil and Gas Development Covering 1960. _ NAT. GAS LlQ. PROD.

9
The General Picture
Totaling the score on the oil industry for 1960 gives a
sobering picture. Demands for petroleum products were
up 2 per cent for the year. This was on the plus side but
was a lot less than industry is accustomed to when con-
trasted with increases of about 4 per cent for 1959 and
5 per cent per year in the earlier postwar years.
Crude-oil production was about 0.5 per cent below 1959,
with an increase of about 7 per cent in the production of
natural-gas liquids. Crude-oil stocks were down 9.6 per
cent from the previous year, which was the lowest year-
end crude-stock figure in more than a decade. On the other
hand, gasoline and kerosene stocks were up substantially,
while distillate and residual fuel oils were a little lower
than a year ago.
It is important to note that much of the so-called stocks
are actually in pipelines and are working stocks rather
than readily available. With the increased use of pipelines
for products, a higher per cent of the products are now
working stocks. Over-all, at least one-half of the total stocks
are not readily available for use.

Production and Productive Capacity

Fig. 1 shows the production of crude oil and natural-
gas liquids and the estimated total productive capacity of
existing wells in barrels per day. Although these estimates
are made from reliable data, perhaps additional productive
capacity should be used with some reservations.
Productive capacity, as used in this report, is defined as
the average rate of production from existing wells that
could be maintained for a period of from 6 to 12 months
without further development and with no significant loss in
ultimate recovery. This definition assumes no substantial
modification of producing facilities or operating methods.
Surely Texas, with an allowable for only 104 producing
days in 1960 and 122 producing days in 1959, has a sub-
stantial additional productive capacity. Several other states
have definitely curtailed maximum production by fixing
well allowable~. An example, however, as to why some Fig. 2-United States energy production as
caution should be exercised comes from experience in per cent of total production.

APRIL, 1961 SPE 11 319

Northwest New Mexico. In Sept., 1960, the pre-well allow-
abIes were raised from 50 to 70 bbl, a 40 per cent increase.
The result was only a 5.6 per cent increase in production
for the month; 970 of the 1,236 total wells are now con-
sidered marginal. No doubt there were those who were
aware of this situation; but, if similar results were obtained
elsewhere in an emergency, this might be disastrous. Per-
haps it might be well to re-evaluate the estimated total
productive capacity of existing wells.
Imports of crude oil and refined products were up 2.7
per cent, while exports were down 2.2 per cent.
Crude-oil runs to refineries were up 1 per cent, with
refineries utilizing about 80 per cent of capacity.
New well completions were the lowest since 1952, and
nearly 8 per cent below 1959. A tendency toward wider
spacing, competition from imported oil, curtailed produc-
tion rates and increased exploration and production costs
relative to the selling price of raw materials produced, all
influenced new well completions.
Natural-gas production was up about 7.6 per cent. Aver-
age wellhead gas prices increased 0.7¢/Mcf over the prev-
ious year. Approval was obtained to import additional
natural gas from Canada, primarily for California markets.
Fig. 2 is a chart showing the relative per cent of the
total U. S. energy supplied from different sources. The
petroleum industry supplies nearly 70 per cent of the total.
Natural gas continues to supply an increasing per cent of
the total.
Local re-adjustments in crude-oil prices accounted for a
slight over-all change in the price of crude. Progress made
by companies in improving their over-all operating efficien-
cies helped hold the line on the price of products to con-
sumers - despite high costs, taxes and the general con-
sumer-price-index rise in 1960.
Conclusion
A review of the industry's 1960 over-all performance
does not look bad, though not so good as many may have
hoped. In many respects, however, the industry got off to
a favorable start on this, a new century for petroleum.
With a little hard-headed realism and more economic belt-
tightening, we in the industry should be able to determine
"where we are going". ***