Abstract: Based on practice of exploitation in the Shengli oil field,a method of selecting the optimum well spacing of a development object ia presented.Applying the principles of engineering economics of petroleum industry,the effect of such essential elements as rate of production,rate of recovery,projected years of development,production cost,result of investment,net income of production enterprise,oil price,labour productivity etc.on rational well spacing is analyzed.As to the choice of an optimum oil field development plan,the application of value engineering in the quantitative synthesis of geology,oil field development and economic factors is expounded.The paper is concluded with an example of determining the maximum acceptable water cut,the minimum reasonable daily crude output of a single well,the number of years of oil field development and its ultimate recovery.