Abstract

The recent Middle East crisis provided an opportunity to observe the U. S. oil industry's ability to respond to a sharp buildup in crude oil demand. The industry was called on to quickly provide oil to replace that no longer available as a result of the Suez Canal blockage during and immediately after the 6-day Arab-Israeli war in June, 1967. This requirement for a rapid boost in production and domestic shipping came after nearly 10 years of heavy proration in Texas, Louisiana, and several of the adjoining states.

Texas prorated wells have been held to less than ball of their assigned yardstick allowables or MER since the 1956–57 Suez Canal closure. Oil producers in Texas went through a 6-year period (1960–1965) in which the proration factor was constantly below 30 percent. The necessity for this extended period of heavy proration was beginning to raise questions and concern as to where restrictions and "bottle-necks" may have developed in the State's production and transportation system.

This paper-summarizes the 10 years of history prior to the 1967 Middle East crisis and reviews crude oil production performance during the crisis months. An estimate of the crude oil producing capability at 100 percent proration is stated based on observations during the sharp allowable buildup period of 1960. Recent history and current developments give some insight into the future for the Texas oil business, and the author's opinions regarding the next two to eight years are discussed.

Introduction

For some time, there has been a need for accurate information on the U.S. oil industry's ability to produce oil during an emergency. As economic and employment conditions stabilized after World War II, crude oil producing capacity in the world and in the U.S. increased rapidly. Market demand proration has been a way of life in Texas since 1948. Not since that year when crude oil production from the State averaged 2.46 million bbl daily have we had a true measure of producing capability. The National Petroleum Council has taken an active role in preparing producing capacity estimates. The first NPC report on productive capacity of crude oil was published in May 1961. Their most recent report, "Estimated Productive Capacity of Crude Oil, Natural Gas, and Natural Gas Liquids in the United States", was published in July, 1966. NPC figures represent wellhead capacities unrestricted by downstream lease equipment or gathering and transportation equipment. this work was subdivided geographically by Petroleum Administration for Defense Districts and estimates are not published for Texas. The Railroad Commission has periodically estimated the reserve producing capability of Texas by districts simply by extending its factor and applying increasing incapability corrections to the resulting figure, starting from known historical under production bases.

The API presently is gathering crude oil producing capability estimates and plans call for reporting this information in the 1967 "blue book" on reserves that will be published in the summer of 1968. The API capacity figures are designed to reflect U.S. crude oil capability after 90 days under maximum demand conditions. Unlike prior NPC projections, the API capacities will consider wellbore and lease facility restrictions.

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