Unit Operation of Oil Pool - Control of California Oil Curtailment (With Discussion)

The organized curtailment of California oil production is not yet one year old but during its first year it has accomplished so much that it is now firmly established as an agency of economic efficiency. The principle of cooperative curtailment has been adopted by other states and it is safe to say that the principle will continue as long as the demand for petroleum is notably less than the potential production. It' is interesting to note that this same principle of regulating supply to meet demand is now being urged for other industries, such as agriculture and mining. Since Oct. 31, 1929, when curtailment was instituted by the oil producers of Santa Fe Springs and Long Beach in an effort to avert the disaster of ruinously low prices which confronted them, there has been a constant and increasingly effective curtailment program in California. Prior to that time a notable effort toward the restriction of oil production was made under the direction of F. C. Van Deinse during the early summer months of 1929. A considerable reduction of oil output was recorded as the result of this effort, but because of incomplete cooperation and the discovery of still deeper zones at Santa Fe Springs the effort was abandoned; flush field production became unrestrained and prices soon fell to low levels. This initial curtailment movement was educational and experimental. It showed all operators a way out of their overproduction difficulties and developed the principles followed in later curtailment efforts. Thus it was that only a few days after their oil had been reduced to 60 c. per barrel, the operators of Santa Fe Springs got together and agreed to restrict their current production of more than 270,000 bbl. daily to not more than 150,000 bbl. daily. The operators at Long Beach followed the same course a few clays later and agreed to limit their production to not more than 110,000 bbl. daily. The Santa Fe Springs operators chose H. P. Grimm as umpire and director of their proration program. Neal H. Anderson was chosen umpire for Long Beach. Since that time, as the need for curtailment has increased, practically every field of the state has come under the curtailment of these two umpires. Curtailment of the Elwood and