Organization of Petroleum Exporting Countries members and North Sea producers recently have each accused the other of producing too much oil.
A look at industry history shows the arguments are nothing new.
Sixty years ago Oil & Gas journal was concerned about weakness in crude and refined oil markets. This was caused by "hot oil" production volumes beyond government limits by East Texas operators.
"Hot oil production in East Texas is demoralizing the crude and refined oil markets and creating a feeling of such uncertainty as to the future and price structures that it is time the industry faced the condition squarely," said OGJ's Aug. 30, 1934, issue.
The U.S. was by far the world's largest oil producer in those days. OGJ predicted U.S. oil production in 1934 would total 876 million bbl. Russia and Venezuela were the nearest rivals, with 1934 production predicted to reach 157 million bbl and 124 million bbl, respectively.
MAJOR PRODUCERS
The world's other major producers were expected to be Romania with 53 million bbl, Persia 50 million bbl, Dutch East Indies 41 million bbl, Mexico 35 million bbl, Argentina 14 million bbl, Peru 13 million bbl, Colombia 14 million bbl, and Trinidad 10 million bbl.
If U.S. producers held back during 1934, "the effect of the large excess overproduction in 1933, for which the United States was largely responsible, will be overcome and the industry generally will be placed on a healthy basis through a substantial reduction in inventories" OGJ said June 14, 1934.
Thirty years later, OGJ reported world oil prices had hit bottom after tumbling during 1958 61. Arabian American Oil Co. saw average prices for its crude oil fall from $2.75/bbl in 1957 to $2.01 in 1962.
"New production in Venezuela, the Middle East, and elsewhere came into world markets faster than rising world consumption could absorb it," explained OGJ's Jan. 20, 1964, issue.
"It was the period when the government of Venezuela and the big Persian Gulf producing countries, alarmed by failing prices and lower income per barrel of sales, formed the Organization of Petroleum Exporting Countries."
RISING PRODUCTION
In March 1964 OGJ reported production outside the U.S. reached a new peak during December 1963. World production for that month averaged 27 million b/d, of which the U.S. contributed 7.4 million b/d.
U.S. production was highest for any country. Other major producers were the U.S.S.R. 4.3 million b/d, Venezuela 3.3 million b/d, Kuwait 1.9 million b/d, Saudi Arabia 1.7 million b/d, Iran 1.5 million b/d, Iraq 1.4 million b/d, Canada 742,000 b/d, and Libya 663,000 b/d.
In 1964 the North Sea was the exploration hot spot: "Veteran oilmen say they have seen nothing like the rush since the Williston basin play".
Oil companies were scrambling for drilling rights in Dutch waters, while other governments were being pressed to decide offshore boundaries and set continental shelf oil and gas policies.
Exploration plays may wax and wane among world regions, but some things never change.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
