Not so many years ago the oil industry faced utter collapse and ruin, a situation brought on by operations under legal rules developed in the early days of the industry when knowledge of the physical characteristics of oil and gas and their underground reservoirs was limited as compared with present day knowledge. In the late 1920's and early 1930's discoveries of great new oil fields that were developed and operated under the Rule of Capture and the Offset Drilling Rule caused a flood of oil on a market unable to absorb it. This not only had an adverse effect upon the oil price structure but also the oil and gas reservoirs were punctured with literally thousands of wells representing an enormous drilling investment. The plight of the industry--and of the general public--was so grave that emergency measures were called for and were forthcoming.
A. A. King,
POOLING AND UNITIZATION OF OIL AND GAS LEASES,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol46/iss3/3