Stabilization - Reservoir Energy: Its Source, Ownership and Utilization in the Production

The oil industry is at the parting of the ways in relating fundamental engineering concepts to legal interpretations and field practices. The old concept, based on an erroneous analogy to wild game, that oil and gas are migratory substances and belong to him who reduces them to possession regardless of their point of origin in the reservoir, has come to be quite generally recognized as the basis of many of the serious ills and extravagances of the industry. The chain of consequences resulting from this erroneous conception has been traced elsewhere and need not be recounted here. The important problem at this stage in the development of the industry, when laws are being revised by legislative action and modified by court decisions; when added powers are being exercised by voluntary committees and official regulatory bodies; and when the need for control of output has forced itself to the forefront, is to see to it that new law and action are based on sound engineering concepts. Reservoir Energy Common Property Since the study of gas instituted by the Marland committee of the American Petroleum Institute in 1927, a great mass of information has accumulated concerning the function of gas in the development and production of oil. This wealth of data leads to the conclusion that every oil pool contains three resources: Oil, gas and reservoir energy. I take it that the central problem of this symposium is the ownership of these three resources and that "source" and "utilization" are involved because of their bearing on ownership through the demands of equity and conservation. In order to facilitate the discussion, permit me to state categorically, that: The oil and gas in a particular tract should belong to the owners of the mineral rights in that particular tract, but the reservoir energy should be common property of all owners of mineral rights in the pool I take it that apportionment of oil and gas among owners according to the relative amounts that exist in place in their respective tracts is