Review of Developments at Kettleman Hills
- R.E. Collom (Continental Oil Co.) | C.P. Watson (Member A.I.M.E.)
- Document ID
- Society of Petroleum Engineers
- Transactions of the AIME
- Publication Date
- December 1937
- Document Type
- Journal Paper
- 195 - 216
- 1937. Original copyright American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. Copyright has expired.
- 1.6 Drilling Operations, 5.2.1 Phase Behavior and PVT Measurements, 3 Production and Well Operations, 5.1.1 Exploration, Development, Structural Geology, 1.10.1 Drill string components and drilling tools (tubulars, jars, subs, stabilisers, reamers, etc), 4.6 Natural Gas
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Various chapters already written in the history of development of the NorthDome of Kettleman Hills are monotonously identical in the one underlying themeof conservation of oil and gas. Discovered on Oct. 4, 1928, by MilhamExploration Co. with its wildcat Elliot No.1, the field has been subjected topractically every modern form of production restraint in the name ofconservation. The record thus far developed shows that conservation was had fora time, at a price; and that unitization must be blessed by single ownership or100 per cent participation to be effective. In fact, incomplete unitizationplaces a heavy handicap upon its participants in the competitive developmentthat follows.
Shut-in Agreement of July 25, 1929
Not long after discovery at Kettleman but after the Continental Oil Co. and theStandard Oil Co. had completed several producing wells in the discovery group,came the so-called Shut-in Agreement negotiated at the instance of theDepartment of the Interior. This agreement became effective July 25, 1929. Thefundamental purpose of the agreement was to prevent bringing on production ofsome 30 wells then being drilled and forestall a flood of Kettleman oil on themarket. A cooperative scheme was developed whereby wells in the discovery groupwould continue to produce. Two of them could not be shut in. Drilling wellswould be completed to a water shutoff in top of Temblor and operationssuspended. Producing wells would contribute the value of 10 to 25 per cent oftheir production to the owners of suspended qualifying wells. The percentagerate of drainage contribution was left to a committee or umpire. Some acreagewas not placed under the agreement. This same acreage later did not come intothe Kettleman Unit Agreement. Several wells on this acreage did not contributeto the drainage fund.
The total amount of oil produced during the 17 months of the shut-in agreement,by Milham, Continental and Standard from wells in the discovery group, was5,297,262.22 bbl. The total amount paid out in "drainage" contributionswas $2,046,048.18, representing sales value of 1,266,044.06 bbl. of oil.
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