U.S. Crude Oil Producing Capacity A Measure of Industry Efficiency

Abstract

Abstract Estimates of U. S. crude oil producing capacity have been made routinely since the close of World War II. These estimates are based upon a determination of the physical capability of the domestic petroleum industry to produce crude oil at the maximum efficient rate from existing wells and reservoirs. Productive capacity estimates of potential crude oil producing ability do not make allowance for physical limitations on crude production resulting from storage and transportation bottlenecks, refining ability, etc. They are in tended only to indicate the maximum efficient level of production that could be obtained from existing crude oil wells and reservoirs. As estimates, they provide a means for evaluating industry oil recovery efficiency and determining the overall improvements that have resulted from advances in technology. The oil industry, in setting long-range planning goals and objectives, must take into consideration the results of technological improvements to properly evaluate its ability to meet the nation's energy requirements for petroleum. A review of productive capacity estimates related to API proven reserves offers the best method of evaluating the overall contributions that have been made in the past, and furnishes a guide to expected future increases as well. Introduction Evaluation of the effects of technological improvement is necessary to petroleum resources planning. In view of the current speculation on the adequacy of future U. S. reserves of crude oil to support the levels of production required to meet increasing demands, this becomes even more important. Crude petroleum production efficiencies resulting from improved production practices and methods tend to be cumulative. Industry acceptance of new methods and processes usually results in widespread use and application. For example, the development and utilization of formation fracturing techniques has gained full acceptance by the industry and its use will continue to be a factor in future productivity increases. This cumulative or multiplier effect requires that past increases in productivity be reviewed to determine anticipated future increases in efficiency. Crude oil production and recovery efficiency results from the combined efforts of all segments of our industry. Some of the major contributions that have been made in the recent past are: improved finding methods including better geological and geophysical interpretations; better drilling equipment, drilling muds, bits, etc. have resulted in faster penetration rates and completion of wells; completion methods have improved tremendously as a result of modern cements, better perforating equipment, and multiple completion techniques; well stimulation methods have also improved to the point where chemical treatment and fracturing techniques are able to coax production from hitherto non-commercial formations; new and improved secondary recovery methods that increase ultimate recoveries; and more efficient gathering and storage facilities are being installed with attendant reduction in storage losses. While it might appear at first glance that certain of these items appear to be unrelated to the recovery process, the direct and/or indirect contribution from all of them results in an over-all ability to recover more oil from petroleum reservoirs. Furthermore, the ability to produce this oil has increased at a faster rate, with a consequent greater increase in productive capacity, than growth in proven reserves. Although it is possible to evaluate some of the major contributive elements to production efficiency on a separate basis, it would be next to impossible to analyze all of them. Statistics simply do not exist. Therefore, we need a method of determining the cumulative effect of all of the contributions expressed in terms of production rate or recovery. Productive capacity estimates of U. S. crude oil producing ability related to proved reserves of crude oil offers an effective measure of total efficiency increases. Furthermore, these are consistent and reliable data which will be available on a continuing basis. Productive Capacity Estimates Generally there are three varying rates of production which are to be considered in any evaluation of crude oil producing capacity. These rates are maximum capacity, MER capacity and curtailed capacity. JPT P. 392ˆ