Just as the top lease in a water-drive field produces all of its own oil and 

 some of all the oil in the down-dip lease — conversely, the edge lease produces 

 only part of its own oil and none of anyone else's oil. How much oil an edge- 

 lease owner will produce depends on the allowable production compared with 

 those of up-dip leases. The down-dip lease always shares its oil with the up- 

 dip leases, but a larger allowable sometimes results in the down-dip lease getting 

 a fairer share. Water encroachment is not always regular; frequently water will 

 intrude through the more porous permeable zones to reach the higher wells — 

 this is particularly true if the up-dip wells are pulled hard. In such cases, the 

 edge lease is left to produce its oil long beyond its computed time. Many edge 

 leases which should have gone to water years ago (if the water level evenly 

 moved up proportionately to the oil withdrawn from the reservoir) are yet 

 producing, and still make their allowable every day. 



Big recoveries from the leases high on structure are matters of common 

 knowledge. But enormous recoveries from a lease low on the structure are just 

 as likely if drive is from gas and the dip is steep. Gas drive is like gravity 

 drainage under high pressure — and the edge lease will produce all of its oil and 

 all of the oil that runs down into it, whereas, the top lease will produce only 

 part of its oil and then go to gas. 



The study of who gets the oil is a fascinating combination of subsurface 

 geology, some engineering, and an analysis of various statutes and regulations 

 of oil and gas boards. A change in field rules or in the method of computing 

 allowables can move the recoverable reserve from one lease to other leases. By 

 the rules of oil and gas boards, the Law of Capture can be modified or annulled, 

 and the to-be-produced oil can be moved from one lease to another — just as the 

 President transfers funds from the Justice Department to the Labor Department. 

 Such transfers are not spelled out in the engineering terms of the rule change — - 

 but they are there in between the lines, and they become apparent when one 

 analyzes the value of various leases. This matter does not come up when an entire 

 field is considered — but one company seldom owns an entire field. 



Other scientific factors which contribute to the recovery factor are the 

 gravity of the oil, its viscosity, the amount of dissolved gas (the viscosity goes 

 up as you lose the gas), the porosity, and the relative permeability of the 

 reservoir rock. The rate at which the field will be produced has a bearing on 

 the recovery factor. 



Aside from the engineering angles, the political implications of the situation 

 have some bearing on the recovery factor. An operator's political connections or 

 antipathies may influence his allowables. The brother-in-law of a member of 

 the oil and gas board seldom gets an unfair allowable — that is a positive factor in 

 the recovery under his lease; it could be a negative factor if you are valuing 

 the adjoining lease. 



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