Introduction

One of the important but little recognized factors in the economic analysis of any producing petroleum property is the effect of new ideas and techniques. property is the effect of new ideas and techniques. Many of you are well aware in other industries of situations where a new improvement or a new product has made old models or products obsolete. The same situation applies to the petroleum industry.

In the petroleum industry the development of new methods of producing gas reservoirs that are too tight, or oil reservoirs with oil that is too viscous, could radically change the economic values of many prospective oil properties. Also, unless new methods prospective oil properties. Also, unless new methods can be developed to discover new reserves and produce oil at a competitive price, the industry produce oil at a competitive price, the industry stands to lose its market to other energy materials such as coal, oil shale, tar sands, etc. Of course, the petroleum industry is expanding into these other energy fields, but those who are involved in the prediction of present and future worth of oil properties prediction of present and future worth of oil properties would do well to follow closely the progress of research and development in the industry.

The purpose of mis paper is to review some of the developments in past years that have opened new horizons and expanded the frontiers of the petroleum industry and to discuss some of the ideas petroleum industry and to discuss some of the ideas not, under research and development that could have important effects on die future economics of the petroleum industry.

EXAMPLES OF PAST DEVELOPMENTS

A program of research and development, in the broad sense of those words, can result in (1) new understanding as phenomena and of the nature of oil exploration and production problems; (2) new techniques for operating oil properties; and (3) new equipment and apparatus for carrying out new petroleum recovery processes. petroleum recovery processes.

NEW UNDERSTANDING

While we do not often consider new ideas or understanding as important results of research, and we take such results more or less for granted, the fact is that much of the success of the industry has been the result of such understanding.

Consider the problem of the East Texas field, and how the understanding of bottom-water-drive systems led to the orderly production from this field. Consider also, how whose persons who first recognized and understood this natural process were able to obtain leases in favorable locations in the field and thus obtain a much greater financial return than those who had no understanding of the basic oil recovery process active in the field. Those who had locations where the elevation of the reservoir was high not only got the oil under their acreage, but they also got oil driven up from lower portions of the reservoir that were being watered out.

Another example is the understanding of the process of retrograde condensation, and the resulting process of retrograde condensation, and the resulting ability to produce gas condensate reservoirs in such a way as to obtain, in the life of the field, a vastly increased proportion of the hydrocarbons originally in place.

Certainly there are other examples of how a better understanding of natural phenomena has led to better ways to produce and handle oil properties to gain a greater economic return.

NEW TECHNIQUES

In the area of new techniques, one can list secondary recovery methods such as water flooding. An increased understanding of the process of water flooding, and its effectiveness in increasing recovery from reservoirs that had insufficient natural drive, opened a whole new coal in oil production. Fields that were in the depleted category now became producers, with a consequent increase in economic producers, with a consequent increase in economic value.

Another example is the technique of pressure maintenance by repressuring with gas or water. Here the natural drive processes are supplemented to recover a greater portion of the oil from the reservoir.

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