Surface Machinery and Methods for Oil-Well Pumping Page: 135
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OPERATING COSTS OF OIL WELL.
OPERATING COSTS OF OIL WELLS.
COST OF PRODUCING OIL.
It is difficult to determine a general figure for the total cost of
producing oil, as that cost not only includes the production or oper-
ating cost, of which the lifting cost or direct production cost is a
part, but also includes amortization of capital invested, rents and
royalties, depletion of oil reserves and depreciation of physical equip-
Although many systems are used for classifying production or
operating costs, the system given below is fairly representative:
1. General expense.-General expense includes executive salaries,
clerical expense, legal expense, general office expense, taxes, insurance,
rent, compensation, insurance, damages, and welfare expense.
2. General development expense.-General expenses of the land
and leasing, and the scouting, geological, chemical, research, and en-
gineering departments are included here.
3. Lifting expense.-Lifting expense covers the cost of labor and
materials for the operation and maintenance of pumping or flowing
oil wells; it includes the cost of operation and maintenance of all
equipment directly required for delivering to the stock tanks the oil
4. Treating expense.-Treating expense includes the cost of labor
and materials for the operation and maintenance of plants used for
treating oil that has become emulsified.
5. Development expense.-Under development expense are the
amounts paid as bonus for leases; the cost of drilling wells and of
obtaining new production.
6. Other field expense.-Here are included the cost of labor and
materials for the operation and maintenance of plants for the re-
covery of gasoline from casing-head gas, for operation and main-
tenance of oil-field camps, for repairs to roads, and charges for the
operation and maintenance of other equipment in use at the operat-
ing property which are not included under any of the other headings.
Although lifting expense is only a part of the total cost of pro-
ducing oil, it nevertheless gives a representative figure for purposes
It may range from 20 to 90 per cent of the, total cost of producing
oil, depending on the ratio it bears to production or operating cost,
which in turn varies in relation to total cost.
Table 10 shows the lifting, general, and total costs at an oil-well
property where no development work was done during the period
covered by the figures.
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George, H. C. Surface Machinery and Methods for Oil-Well Pumping, report, 1925; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc12407/m1/170/: accessed July 27, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.