Appendix 8

"Closeology" in Oil and Gas Exploration and Development

Why did early oil explorers drill close to one another? If you are ready for another analogy, here's one that may explain the principle of "closeology" in the search for oil and gas.

Let's say you go to a lake for a day of fishing. While renting a boat you notice that everyone is fishing in one area but another cove is being ignored. 'Why isn't anybody fishing over there?' you inquire, to be told that 'There aren't any fish in that part of the lake. Nobody ever catches anything there.'

You go over to the ignored part of the lake. The first cast you make into the cove is what in oilfield language would be called an exploratory or wildcat well. Your first cast catches a fish. That cast is a discovery well. You cast again and catch nothing. You've drilled a dry hole. You cast again near where you caught the first fish and catch another. The second and third casts are termed development or field wells and even though you've had a dry hole, chances are that further casting in the vicinity of the first catch will yield fish, or oil. So you cast again and catch another and another and another.

Soon someone in the group of boats where the "lake experts" are fishing notices you are catching fish and comes over to fish near you. Since law and courtesy dictate that he not fish in an area within your casting range (or within so many acres of your well), his fishing attempts are offset somewhat from your fishing area and, unless you have fenced off the entire cove for your own use (usually by leasing the mineral rights), he starts fishing near you. The newcomer catches fish also. Another fishing boat comes over in your vicinity then another and another with everybody catching fish.

Eventually a scout for a commercial fishing company happens on this cadre of successful fishers. This firm, MAJOR moves in, gets licenses and fishing rights, launches a fleet of fishing boats and with their vast resources brings state of the art lures and longer fishing poles. It soon dominates the fishing grounds. Some of the folks in the little boats even go to work for MAJOR. A cannery is opened at the lakeside and a new and bigger bait shop and boat rental opens, a subsidiary of MAJOR called Fish ARound My bOat Under Terms (FARMOUT).

Today for economic, aesthetic and reservoir conservation reasons, wells are "spaced" by state regulators. This maximizes efficiency and production from a reservoir. Michigan's first well spacing was defined by Public Act 61 of 1939 as a minimum of one well per 10 acres. Today in Michigan, well spacing may vary from the minimum 40 acres in shallower fields to 640 acres for the deepest natural gas wells.