Published in Petroleum Transactions, AIME, Volume 52, 1916, pages 587–610. What becomes of the water which must have filled the oil and gas sands at the time of deposition, has long puzzled students of oil and gas and has found expression in Munn's well-known article on the hydraulic theory. Both Munn and Clapp have pointed out that in the Appalachian field the deeper sands carry increasingly less proportionate amounts of water. It seems to me probable that the principal source of oil and gas has been in the shales in proximity to the sands which now contain these products. The sand spits which mark off the lagoons from the sea comply particularly with the requirements of a limited sand imbedded in shales rich in organic matter. Cunningham Craig has objected to this view that the rich organic muds of lagoons are found only at the surface. That such muds do extend to considerable depth I am assured by Prof. Douglas W. Johnson, who has made an extensive study of the Atlantic Coast marshes. As any particular sand body becomes weighted by a heavier and heavier overburden, the result of increasing deposition, a part of the very large percentage of water in the uncompacted sand and mud is forced out. The water percentage of freshly settled mud is vastly higher than that of the resultant shales, or even of a very porous sand. If beds of less compressible material meet or underlie the shales in question, there will frequently be a lateral motion along such beds to some point where the upward movement will be resumed. We find in our laboratory work here that oil, gas, and water have extremely slight capacity for gravitational sorting while in a state of rest, but when moving the gravitational sorting is readily accomplished. As the oil, gas, and water pass a body of larger pores, the gas, owing to its lack of capillary attraction, is retained in the large pores. This has been predicted by Washburne, Blatchley and others on the ground that the water has a higher capillarity and grips the finer pores in such a way that there will be a greater proportion of oil and gas in the large pores. T.P. 051–39