Los Angeles herald., 1910-09-15
ACT OF AGENCY WILL
NOT WORK HARDSHIP
Plan to Move LakevieW Oil Ex-
CIuSiveIy for Month Must
Benefit All

According to the statement of the
agency members, the effect of the de-
cision of the executive committee to
give the Lakeview oil months exclu-
sive use of the Producers Transporta-
tion company's pipeline and storage
facilities, will not be hardship on any
of the independent producers. The
agency members will be compelled to
store their own oil for the next thirty
days, but all of them, it is said, are in
a position to do so, and there need be
no involuntary curtailing of produc-
tion.
AS for the immediate inflow of coin,
that will not be affected. The agency
members, by the terms of the agree
ment with the Lakeview Oil company,
will receive from the proceeds of the
sale of Lakeview oil cash equivalent
to the average returns to each company
during the past three months.
The agency members will also receive
their regular credit for stored oil, these
credits being charged against Lake
view oil also.
Later on, when the oil is run from
the agency members sumps and tanks,
the Lakeview will be credited. The
effect of the transaction will be the
same as the agency members loaned
the Lakeview their storage for thirty
days.
IN DANGER OF Loss
The reason for all this, as the letter
of the executive committee explains, is
the great danger of losing the Lake
view oil now stored in great earthern
reservoirs on the Maricopa fiat. Ex-
ceptional precautions have been taken
to prevent these reservoirs breaking
through the softening of the banks by
the winter rains, and bitches have been
dug to carry away any storm waters
that may come down the ravines and
canyons from the hills 1t is not pos
sible, however to eliminate all this
danger, and those who are responsible
for the Lakeview oil viii feel better
when it is moved to other and safer
storage.
AS much as possible of the Lakeview
oil will be pumped to the seaboard and
sold. More of it will be placed in steel
and concrete storage reservoirs along
the pipeline and at the coast. Lake
view oil also will be pumped to the
500, ,000-barre earthern reservoir which
the agency has rented from the Asso-
ciated in the Kern river field. The
1000, ,000-b barrel reservoir rented from
the Associated is now nearly full of oil
from the Agency companies. In filling
the big pit, however, the sumps of
these companies were we'll emptied, and
so they are now ready to hold the COM
ing months production.
WILL KEEP OBLIGATIONS
The exception noted in the letter of
the executive committee to the produc-
ers to the effect that the Agency will
continue to receive oil which 1T is
Ia
contracts" Is understood to refer
primarily to the Doheny and other big
companies that came to the Agency
last spring under exceptional terms.
These terms require the Agency to
handle a certain amount of oil at a
guaranteed minimum price. In the
light of recent events the bargain on
the face of it appears to have been a
bad one, but Agency members outside
the committee that negotiated it, say
they are satisfied that the situation
now would have been very much worse
than 1t is if the companies referred to
had remained outside. At the worst
the Agency can only lose a certain
fixed amount of money on these con-
tracts. After the specified amount of
oil has been taken care of at the guar
anteed price the newcomers in the
Agency will have to take their chances
BIG STORAGE PROJECT
The second important announcement
in the executive committees letter is
that arrangements are at once to be
made for the construction of 100000
barrels of reinforced concrete storage.
This is by far the most ambitious un-
dertaking in the way of oil storage in
the history of the industry of the coast.
The Standards earthern reservoirs in
the Kern river field have a greater
capacity than 100000 barrels, but
there is a vast difference between
puddled earth and concrete.
Oil in the former is dead capital, be-
sides being subject to constant loss
seepage. Oil in concrete reser- |
Voirs, on the other hand, can be con-
verted in large part into cash through
the medium of storage certificates.
Another point of interest in the an
nouncement is the implied expectation
of the Agency that its demand for
facilities will continue to in
crease, despite the active campaign
for the sale of oil, which the letter an
nounces will be carried on on com
petitive basis. That this expectation
is we'll founded Is the statement of oil
men in a position to speak by the book.
NOT BEING PUMPED
A great many ABeHCy WellS are not
now being pumped, and a still greater
number Of Agency companies could
easily increase their production very
rapidly by further drilling if the condi-
tions warranted 1t. In addition to this,
it is a fact that the Union Oil COM
pany could at any time bring in wells
that are now practically completed,
and which there is every reason to be-
lleVe would be very large producers.
So far as production is concerned, the
Agency, actually and potentially, is in
the best of condition. With the COM
pletion of the storage reservoirs or
dered it will also be in a better posi-
ton than any of its coast competitors
in that respect. With a total storage
of some 20,OOO00O barrels about
half filled with oil, the Agency would
be in an ideal condition to carry on an
active campaign for the sale of oil on a
basis.
AS to just what this latter phrase, !
quoted from the executive committees |
letter to the Agency members, is in |
tended to convey is a matter of some |
speculation. 1t may mean threat, it |
may mean a price war, or it may |
merely mean that the Agency is going |
TO sell it's oil for as much as it can get |