Introduction The East Texas field is now over 30 years old, having been discovered Sept. 3, 1930. This field is important because of its contribution to the law of oil proration in Texas, as well as its economic importance to Texas and to the United States. It is the largest known oil field in the U.S. by any method of comparison number of wells, area, reserves and production to date. Geographical and Structural Location The field is located on the western slope of the Sabine Uplift and the eastern side of the East Texas basin, approximately 125 miles east of Dallas. Originally it pro duoed in five Texas counties Gregg, Rusk, Cherokee, Smith and Upshur. The Smith and Cherokee wells are abandoned and production is now confined to Gregg, Rusk and Upshur Counties. Production is obtained from the Woodbine sand, Upper Cretaceous age, which is overlain unconformably by the Austin chalk except for a small area on the western side where the Eagleford shale is present. The accumulation is controlled by pinchout of the sand to the east and the occurrence of water in the Woodbine sand down dip. See Fig. 1.Maximum structural closure in approximately 230 ft from the highest structural position in the Ximines and Daniel Clark surveys, Rusk County, to the original oil-water contact of approximately 3,325-ft subsea. The Woodbine sand thickens westward to a maximum of approximately 1,000 ft in eastern Van Zandt, eastern Henderson, western Smith, and southern Wood Counties, near the center of the basin. The maximum productive thickness occurs at the line of contact of the base of the sand with the original water level, which bisects the field from north to south, with the greatest gross thickness of about 125 ft located in the northern part of the field. Source of the sediments is believed to be to the northeast, and the sand is generally finer-grained to the south. The per cent of shale in the gross section increases from approximately 15 per cent in the north to approximately 33 per cent in the south, with a weighted average of approximately 20 per cent. Development History Woodbine oil had previously been discovered along the Mexia-Powell fault zone on the Boggy Creek salt dome, and in 1929 Pure Oil Co. discovered the fabulous Van field in Van Zandt County. Although geologists knew that the Woodbine did not extend over the Sabine Uplift and strand lines were being sought in South Texas, they could not envision a field of the magnitude of East Texas. Major companies held acreage on a small surface indication of closure in the London, Tex., area and on a broad nosing east of Gladewater, Tex. The discovery well, Joiner-Daisy Bradford No. 3, was brought in on Sept. 3, 1930, after Wells 1 and 2 had failed in 1928 for mechanical reasons. The discovery' well was located in the Juan Ximines survey near the eastern edge of the field, and found the top of the Woodbine sand at a depth of 3,536 ft. On Dec. 28, 1930, the Bateman No. 1 L. D. Crim well, 10 miles to the north of the discovery, came in for 22,000 BOPD, and on Jan. 26, 1931, the Moncrief No. 1 Lathrop well 25 miles north of the discovery came in for 18,000 BOPD. All of East Texas went wild! By the end of 1931, there were 3,612 producing wells, as shown in Fig. 2. At the end of 1933 there were 11,875 producing wells owned by 1,715 different operators. In 1940 there were 971 different operators, with more than one-half having only one lease. Contrast this to Jan. 1, 1961, when there were 688 operators. The maximum number of producing wells came at the end of 1939 when 25,976 were on schedule. JPT P. 577^

Over the past ten years, the natural gas industry has engaged in an open debate concerning the existence of a natural gas "bubble". The definition of the gas "bubble" can be different and confusing to most producer and consumer groups. Major oil companies, independent producers, pipelines, gas marketers, industrial users, electric utilities and local distribution companies (LDCS) must collectively understand the present supply and demand dynamics of the natural gas industry. While certain industry. groups proclaim a gas supply "bubble", others are concerned about the end of the deliverability "bubble". Even though the domestic resource base of natural gas is enormous, the proved reserves represent only a very small fraction of the resource base. Moreover, the proved reserves of natural gas have been declining since 1970. In 1970, the proved natural gas reserves were 290.7 trillion cubic feet and at year end 1991 they had declined to 167.1 trillion cubic feet. Natural gas consumption peaked in 1973 at 21.7 trillion cubic feet and declined to 163 trillion cubic feet by 1986. The decline in gas consumption was a response to various regulatory actions and economic events. This decline in consumption was the primary cause of the deliverability "bubble". Since 1986, natural gas consumption has shown a steady increase. There exists a considerable body of evidence which can be interpreted to show that a deliverability shortfall in natural gas supply is imminent and the "bubble" will soon burst. Introduction A considerable amount of publicity has been generated by supply studies, including a soon to be published report from the National Petroleum Council which concludes that the United States has a resource base of 1300 trillion cubic feet of natural gas. The general public, including government policy makers, might interpret this conclusion as representing a nearly limitless supply of natural gas. Nothing could be further from the truth. This volume of resource gas includes both proved reserves and unproved quantities of gas. The unproved category includes quantities of gas that are undiscovered, unidentified, except in the broadest of terms, and currently uneconomic to produce. Proved reserves, on the other hand, are quantities of gas that have been discovered, identified and can be produced and marketed at current prices and costs. With this background, is it any wonder there is so much confusion surrounding the much-publicized and long- lasting "bubble"? The term "bubble" has been used to describe the oversupply of natural gas reserves and excess production capacity. The analysis of statistical data in conjunction with regulatory reaction to structural changes can help identify the causes of this "bubble" and forecast its demise. Regulatory changes over the past twenty years have had a profound effect on gas reserves, gas production and gas demand. Before the Natural Gas Policy Act (NGPA) was passed by Congress in 1978, regulators encouraged the industry to create excess deliverability and long-term supplies. Passage of the NGPA spurred a drilling frenzy focused mostly on deep, high cost gas which commanded a higher price. In 1978 Congress passed the Fuel Use Act which prohibited the use of natural gas as a boiler fuel in newly constructed facilities. These events coupled with an economic recession resulted in a decline in demand for natural gas creating an oversupply of gas reserves with excess delivery capacity. P. 63^

This paper discusses methods used in the estimation of natural gas reservesand the general conditions under which the various methods are applicable. Thefactors used in estimating natural gas reserves are reviewed. Errors which havebeen found to occur frequently are listed. Introduction The estimation of natural gas reserves has become of paramount interestbecause of the increasing importance of gas in the nation's economy. Gas is amost desirable fuel, a fact substantiated by the continued rise in the marketdemand. In addition, new uses for gas are being developed by the chemical, plastic, and associated industries, and plants are being built to make gasolinefrom natural gas. These are a few of the factors contributing to the importanceof the nation's natural gas reserves. With the increased importance of gas there is an increase in the need forreliable estimates of the magnitude and availability of natural gas reserves.These estimates are being used currently:to determine which fields containsufficient available reserves to justify the construction of pipe-line outletsto serve particular markets;to design pipe lines necessary to serve thosefields adequately;to determine the location of industrial and chemicalplants;to finance the development of gas properties, and theconstruction of gas pipe lines;to determine fair and adequate depletion allowances anddepreciation rates;to justify applications for gas pipe lines beforevarious regulatory bodies;to determine the number of wells required toexploit the reserves most economically;to aid in establishing values forthe purchase or sale of gas properties, and for purposes of inheritance taxes;to determine equities under unitized operations;to provide a basisfor calculating the economics of gas-cycling operations. History of Estimation of Natural Gas Reserves The natural gas industry in the United States had its beginning during 1826when natural gas was used for lighting the city of Fredonia, N.Y. The firstnatural gas pipe line was a 25-mile wooden line constructed from hollowed logs, connecting West Bloomfield and Rochester, N.Y. There is no record of an attemptto estimate the gas reserve at West Bloomfield but an attempt was made todetermine the capacity of the well by measuring the time required to fill alarge balloon. One of the earlier publications concerning estimation of natural gasreserves is the "Manual for the Oil and Gas Industry," published by theTreasury Department, United States Internal Revenue, in 1919. T.P. 2402

Summary Analysis of performance curves for stripper-oil production before and after the lifting of stripper price ceilings in 1974 indicates production is currently 270,000 B/D higher than the level that would be projected if prices had not increased. By analogy, the deregulation of domestic oil prices should result in over 420,000 B/D of additional lower-tier production by 1985. Introduction The energy crisis has sparked the controversy as to whether the price of oil has any effect on the U.S.'s oil reserve. The nonoil public and, unfortunately, many lawmakers have taken the position that the oil and gas industry is rich and the only function of any price increase is to increase the "obscene" profits. With domestic production exhibiting a declining trend, it remains an uphill battle to educate the public and government that price increases tend to arrest this production decline. Higher prices increase production by allowing the industry to operate marginal wells to lower production levels and by allowing the development of marginally economic reservoirs. Higher prices also allow enhanced recovery processes to be applied to fields which otherwise would be uneconomical. Higher prices allow higher risk prospects to be drilled without causing the exploring company to face "gambler's ruin" and allow deeper and more costly frontier area prospects to be explored. Without adequate economic return, smaller structures and thinner pay zones will remain undrilled. In addition, higher prices for oil and gas allow competitive energy sources to compete for certain ortions of the market, thus reducing some of the pressures on traditional hydrocarbon supplies. The public, including media reporters, generally is not knowledgeable in petroleum economics, accounting methods, and financial evaluation. It is easy for the uninformed to believe that if a company reports a profit of "X" dollars, it has that amount in hand to either invest in new business or pay out as dividends. It seldom is realized that a large portion of expenditures is for items that must, by law, be capitalized and charged off on a unit-of-production basis, so that the entire expenditure is not subtracted from income until field abandonment. Moreover, the public does not understand that earnings can reflect costs of materials and depreciable assets that are grossly understated compared with their replacement cost. Thus, profits alone are not a sufficient indicator of a company's ability to maintain its operations. Analysis of cash flow, rather than book profit, is necessary to determine whether a business is capable of sustaining itself, let alone growing. Cash generation from operations is the underlying determinant of a company's ability to invest in future operations. Cash generation is calculated as the sum of net income and noncash charges (principally depreciation) deducted in determining that net income. Cash-flow analysis relates the generated operating funds to the working capital, the fixed asset requirements of the continuing business, the capital requirements of new business ventures, and financial sources and uses including dividends. Since the flow of funds from operations reflects historical costs, rather than inflated replacement costs, earnings may need to be invested totally just in the maintenance of the current business.

This is the only country in the world in which the mineral rights belong to the surface owner and not to the government or to the King. This paper presents the lawsuits and court rulings that brought this about. Introduction The United States of America is the only country in the world in which the gold, oil or natural gas, and other minerals in the ground belong to the surface owner who owns the land in fee simple. In all other countries these underground minerals belong to the King or to the state. It is my opinion that this has been a great blessing to the USA in that this wealth has flowed through the people and enriched them rather than the state. Great wealth flowing to the state, particularly in less developed countries, tends to lead to corruption of politicians and bureaucrats that are handling the money, resulting in a very wealthy political class often among very poor people. If the royalties go to the landowner, he educates his children. They often become entrepreneurs and may start oil field services and own workover rigs. They then start drilling companies and become independent oil and gas producers. As they prosper, they start businesses so that the entire country prospers. When the royalties go to the government none of these good things result. Let us begin with Texas because it is a state with great mineral wealth. Texas under Spanish and Mexican rule owned all the minerals under 27 million acres, more or less, and retained this wealth in 1836, after the battle of San Jacinto. Texas originally continued to operate under Spanish law; however, in 1840, Texas adopted English common law relative to property rights. The first dispute over mineral properties in Texas arose over salt. In early Texas caravans of wagon trains came to El Sal del Rey Lake in Hidalgo County and transported the salt to market in Mexico. In 1862, during the war between the states, a joint resolution of the legislature ordered the governor to take possession of the salt deposit. In 1866, the constitutional convention undertook to return the salt rights to the surface owners. The resolution reads:"Resolved, That the state of Texas hereby releases to the owner of the soil all mines and mineral substances that may be on same, subject to such uniform rights of taxation as the legislature may impose. " This ordinance was brought forward in the constitutions of 1869 and 1879. In 1912, the Texas Supreme Court ruled that this relinquishment was retroactive. The effect was to release minerals which the State had granted in prior years. In 1907, the first statutes providing for the surface to be sold and mineral rights reserved were enacted. The second salt war involved a man named Charles H. Howard, who filed claims on salt lakes in El Paso County, Texas, some 90 miles northeast of the town of Elizario. Villagers had for years taken the salt free. Howard charged a fee for the salt which enraged the people and resulted in Howard, together with John McBride and John Atkinson, being shot to death before an adobe wall in 1877.