Abstract: Some mechanical recovery wells in Chengdao Oilfiled produce oil in tubing -casing annular space. The mechanism was analyzed deeply, which was thought that it was caused by the tubing-casing annular space gas lift. The tubing-casing annular space producing oil become possible because of the crude forming multi-phase flow under pump and the pressure of bottom hole being enough high. This made the mechanical recovery well having a misleading appearance of higher producing fluid level (PFL). Although using gas lift producing oil in tubing-casing annular space is a method of enhanced recovery, which enhanced crude oil degasification in formation and production in practice. It is not profit to oil well operation and safety producing. So, it should be done with the tubing-casing annular space only degassing, not producing.