Oil and Gas exploration of East Texas in the 30's made huge waves in terms of solidifying the landscape and economy of Texas. Wildcatters, someone who drills for the sake of exploration - these days known to be a risky maneuver - had been drilling on a whim because of the abundance of resources that were being discovered underground. This rapid-fire drilling lead to an unregulated amount of resources being produced and wasted.
Due to huge amounts of price fluctuation caused by The Boom and a lack of state regulations, the Texas Railroad Commission began to regulate the oil and gas industry by setting limits on how much a single well could produce. This was referred to as the "allowable", with the main goal being to keep oil prices high and to therefore stabilize the economy.
With the industry now stabilized, and the economy in a safe place, times were good for Texas Oil. Resources were abundant and drilling a Wildcat Well was a safe bet.
Jumping forward to 1956, M. King Hubbert, a geologist from Houston, predicted the inevitable collapse of the Oil and Gas Industry - being that fossil fuels are a finite resource. His theory, known as Hubbert's Peak Theory, predicted a huge upswing in discovery which would undoubtedly reach its maximum and then decline. He predicted that the industry would peak in 1971; history shows us that it peaked in 1972. Following the peak, Texas was never able to sustain those production levels, and by 2005 the industry was panicking.
Immediately following Texas's historic peak, politics from outside the U.S. were about to make things interesting for the Texas Oil industry. The 1973 Oil Crisis was a product of an Arabian Oil Embargo, due to the U.S.A.'s decision to side with Israel during war time. The U.S. had been outsourcing their oil in order to keep up with rising demand, as well as taking advantage of the low cost of production in the Middle East. The Embargo shut down shipments of oil to the U.S. and left the Texas Oil Industry scrambling to meet demand. With the industry now on a steady decline, this caused a widespread panic across the state. By 2006, Texas oil production was only one fourth of the amount produced at its peak in 1972.
From 1972 into the early 2000's the industry never recovered, and the depletion of our finite resources was fast approaching.
The industry standard of measurement for crude oil is in MBBL which means thousands of barrels. The standard unit for natural gas is measured in MCF - thousands of cubic feet. One barrel is equivalent to 42 gallons. Measuring MCF is a little more difficult to understand, imagine a 10 x 10 x 10 foot. clear glass cube containing vapor.
Fossil fuels are formed by heat, pressure, and time. Organic material, which had been buried in ancient sea beds and packed under pressure, formed over millions of years and resides in the earth's shales. Geologists have always known that these resources come from the shale but historically had never been able to access most of it. Drilling a well was simply drilling down into the earths crust and extracting what they could from a vertical drill. Geologists have always known that more resources existed in the horizontal shale formations but were never able to produce it due to the technology of the era.
In 2005, 33 years from the historic peak of production, and at the historic low, horizontal shale drilling was introduced. This process essentially saved the industry and is what keeps production levels high and rising every year. Texas now produces more oil than the 1972 peak from "conventional" reservoirs. This is due to the development of using an "unconventional" process of horizontal drilling and fracking of shale reservoirs.
Horizontal drilling utilizes the process of fracking a well - fracking is the process of horizontal drilling into a shale formation, using man-made micro explosions by pumping high pressure fluid into the formation, it creates fissures in the petroleum bearing shale. Then the fissures are injected with sand and saltwater to keep these new features propped open in order to be able to extract crude oil and natural gas.
The number of wells drilled in the early days of exploration remained relatively low. Oil was abundant and new wells were not drilled as frequently. Going on in time, more and more wells were being drilled in an effort to keep up with demand. But remember Hubbert's Theory - there is only so much of this finite resource. No matter how many wells were being drilled, the industry was never able to keep up in terms of what an individual well was able to produce. Collectively, they produced massive amounts of oil, but on an individual basis these wells were hemorrhaging dollars.
Following peak production in 1972, the early 80's were a time of high oil prices, when everyone decided to take their shot at drilling Wildcat wells. Wildcatters were drilling all over the state in an effort to hit it big and keep those numbers steady. With now more wells than ever, and even less production, the industry continued on its track to the inevitable collapse.
In relation to today's well count to production ratio, the average production per well is increasing high while well count has stayed steady.
History shows that there were four peaks. First during the development of the giant East Texas Field, then the World War II years, another in the 1970's and now with "unconventional" horizontal drilling and fracking, a new peak in 2018. This production by well trend shows that no matter what the industry did, they could not stop the decline from the peak in the early 1970's until about the year 2010 with the advent of new horizontal drilling and fracking technology.
Select one for the oil production data above or below average. The average of all crude oil producing wells was 4,914 barrels annually per well.
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