The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1921-03-27
In the Oil Fields
attention, Producers!
IN HARRY H. sMlTH.

q.
f.ld. In these trying times when
general economic conditions are very
much unsettled we have with us
two classes of business men iaterest-
"a In the oil Industry The one class
consists of people who. with the
coming OF the warm sunshine OF
sprurtime, feel that conditions are
bound to improve and who accord
.rrIy cannot resist the impulse to
ret busy with the drill and prepare
for the time when, according 10
tu.Ir estimate, there viii be a mar
Iei for an the oil produced. These
psupIc are honest and admirable and
Il d. not my purpose to offer any
,luelsm whatever. But on the 9TH
al hand there is another class which
f.uprrs optimism with conservative
business judgment and who analyZe
tG. situation In q slightly different
MANNER These operators realize
that there Is "A proba bility that gem
,ril conditions may not improve as
quickly or as rapidly az we all fondly
hope they Will. They therefore,
mem. field because this field is the
Importance OF going slpmly with new
development work in the midconti-
stop 90 contemplate and analyae the
most important factor I'm the United
states. II produced ~ 2-10 per
cen, Of ali the oil produHd in the
United States I'm 1920 and about -
par cent Of the light oil produced
hy this country in that year. with
California eliminated, because IL is
out OF contact with the territory east
Of the Rocky mountains. we find
that the true position OF the mid
continent field IL even more import
ant because Of all grades OF oil pro-
duacd east OF the Rocky mountains,
we furnished 73 per cent. Therefore.
the position OF the midcontlnont
producer is all-powerful. lie may
bring on an excess of supply at this
time by active drilling and bringing
IN OF wells or ne may refrain from
development work until he actually
sees that conditions warrant the pro-
duotiOn ot more oil, In other words.
until the public demands and can use
more oil and that 1t will not be
wasted or allowed to deterOrate in
carthon or other storage.
While 1t may be true, as has been
recently said, that the known avail
able supply Of crude oil will not be
sufficient "a take care OF the world
needs under normal conditions, who
knows when normal conditions will
again prevail2 European affairs
are still demoraliZed. General busi-
ness In this country cannot attain
its full momentum until Europe does
revive. Since the oil industry de-
pends on a revival Of general condi-
tons In this country and in Europe,
Il might be that II we now become
too optimistic and indulge in indis-
crimnate drilling that we would
make the oVerproducuon In the mid
continent field even worse in the
tf ho
In the Immediate past. in this con-
nection l viii call attention to some
figures given out by MIR. Welch of
the American Petroleum institute in
which he shows that the excess of
production and imports over con-
sumption and exports was at the an
nual rate of 95,000,000 barrels in
November, 1920, and at the annual
rate Of 100000 barrels in Janu-
ary 1921. He also makes tho fol
lowing statement with reference to
available tankage for crude oil:
There are no official figures
showing the amount OF available
empty crude storage. The best es-
timates seem to be that in the terri
tory under consideration the amount
did not, on March !, 1921, exceed
100000 to 100000 barrels.
Even were one to assume that this
storage were all placed in the pTg-
else spot wheCe IL ought TO haVN
been with transportation facilities
available, and proportionately dis
trlbuted among the purchasing COM
panles in accordance with their pre-
Vious runs, 1t would have taken only
a few months at the November rate
20 have filled every barrel of it, Tn
der the commercial conditions exist
ing with an open winter which did
not retard drilling, 1t seems obvi-
Gus that In three or four months,
even the largest companies would
have been in distress for storage
space"
Supplementing this Information It
Is generally known locally that sew
eral purchasing companies have
about reached the limit of their ca
paclty for storing crude OIL Others
are credited with considerable
empty storage as of December first,
uut II must be remembered that oil
has been going to storage rapidly in
the last four months and that a
great d2al OF the Old tankage, has de-
terlOrated and ruSted out so that ii
Will not hold crude oil today. Al
READY one or two purchasing com
panicS In the midcontinont field
nave found II necessary TO begin the
erection OF new tanks. Looking for
4 moment at the known existing con-
uIuons and assuming that the de-
mand may not revive as rapidly as
some people anticipate, what will be
mo effect upon the Independent
producer IL the large purchasers of
OIL having filled their available
tanks, find 1t necessary TO go to the
expense OF building new tankage?
II WouI undoubtedly cause further
generalization in the marketing sit
ual'on and more accumulation Of oil
W temporary private storage with
lhe consequent waste as defined by
inc laws Of Oklahoma.
IL would not be for the best in
terrsis of the country nor Of the
producer for anything 10 happen
winch would cause further demor-
"'la'.on because it would mean the
doH' donmeut of a large number of
o,u'r oil wells which are still capa-
pIe or producing, in the aggregate,
itfEe amount of oil, but which can
nor %" operated profltably under
present conditions. Operating costs
un numerous leases in Oklahoma
"NNr the production has settled to
one or two barrels per day per well.
nov range from Sl,sl per barrel to
S-',' per barrel, thus showing a
u''Iy loss. Unless conditions i'm
J. owe these wells will he a abandoned