The Washington times., 1916-01-18
CONGRESSMAN
UPSET OSAGE
OIL LAND PLAN
1t Is investigating interior De-
partment's Management of
Oklahoma Field.
BY JUDsoN c. wELLIvER.

ment. by the Interior Department. Of
tho great Oklahoma oil field owned by
the Usage Indian nation.
The department has advertised that
on February Is n great auction sale Will
be held. at which the rights to pro-
duce oil and gas from the holdings OF
the Osages will be sold to the highest
bidders. These rights represent many
millions OF dollars in value. For twenty
years the oil and gas rights have been
worked under subleases dependent on
the original Foster lease" made i'm
1896. That lease, originally covering
ten years and afterwarl extended
another ten years, will expire on March
IT. The question of future control in
this field will be determined by the bid
ding at the forthcoming sale, unless
Congress shall meanwhile interfere.
Taking Case To Congress.
Senator Oliver has introduced a reso-
luton to tie up the whole matter until
Congress shall have chance to legis-
late His resolution has been sent to
the Indian Affairs Committee. to which
Secretary OF the Interior Lane has ad-
dressed letter giving a history of the
long series of transactions involving
this perhaps the greatest government
controlled prize in the oil world.
it is understood that the Oliver reso-
luton represents the interest OF T. n.
Barnsdall, Of Pittsburgh. who is the
most important operator under the Eos
ter lease. The Barnsdall forces have
invested millions in their leases, and
want them renewed in order to protect
their investments. Secretary Lane In
his letter shows that the Barnsdall Oil
Company is dominated by the Standard
oil Company and the Secretary OBJ
n priN-inur tp tho RapnC6aiI intprpgta q
IL renewal of all the privileges heretofore
.held, unless they shall acquire the
rights in the auction bidding. Consid-
cring that this is an injustice, in view
of their large Investments in the field,
the Barnsdall group are taking their
case to Congress, through the Oliver
resolution.
The story of the Foster lease" and
the developments from it is one Of
the romancCs of the oil industry. j..
y. Foster secured the lease to take
oil from $500 acres of the Indian
lands on payment of 10 per cent Of
the value .of the oil to the Indians.
After the lease had run for ten years.
this payment was increased to 12h
per cent: and this, owing to the i'm
mcnse productivity of the field has
made the Osages so prosperous that
they are commonly described as the
richest community in the world,
Would Eliminate Company.
After Foster had secured his origi-
nal lease from the Indian tribal cOun-
Gil and the Government had approved
il. the Indian Territory Illuminating
Oil Company was formed, and took
over the Foster rights. This company
in turn leased out the lands in va"
iious parcels to operators, eXacting
from them 16 20 per cent The diff
terence between this and the amount
paid to the Indians amounted to a
fortune annually and is described by
secretary Lane as "a pure bonus for
having secured the lease from Con-
Eress." 1t has now been determined
To eliminate this Indian Territory IL
Eliminating Oil Company. and to give
the Indians the full 1C 2-3 per cent,
thus adding very largely to the al
ready Immense wealth of the tribe.
The sublessees under the llluminat-
ing Oil CnmpanYs lease numbered
lI3, controlling parcels of from 40 to
over $4,000 acres, while the Barnsda II
OIL Company leased 100000 or half
Of the 6SO,nO0 acres. In addition. the
Eiarnsdall company was a partner in
the ownership of many Of the other
leases, so that il was altogether the
controlling figure in the field.
Secretary Lane describes the tie be-
tween the I3arnsdall and Standard in
terests. After Incorporating his COM
pany. Mr.. Barnsdall borrowed 800
200 from the standard oil Company,
pledginE all his holdings in the COM
pany (S9,50t 300 par value) and many
other securities. The company has
invested in its leases and their de-
Nelopment. by it's own statement, ST.
$4,000; il has paid S9,TO1, 900 in C6vi-
dends, and it still owed the Standard
oil Company on June II last, $5,9l3.-
O0O
All"the oil produced by the Barns
call interest has been sold to the
! rairie Oil and Gas Company. de-
scribed by Secretary Lane as a Stand =
ard concern.
To Be Offered At Auction.
For two or three years. pending the
expiration Of the Foster lease and
consequent termination of all rights
Under il. the Indian Bureau, the De-
pHrtment Of the Interior, and the
pSage council have been investigat-
ing. calculating, considering, planning,
TO determine whether the old lease
should be renewed or how the Usage
field should he handled. 1t was pro-
posed very seriously at one time that
the Government terminate the whole
leasing program, take over and, as
trustee for tho Indians, operate the
whole field, build pipe lines and refin-
cries, market the product and, IN
short, go into the oil products bust
ness itself on a huge scale This
idea was not abandoned until invesi-
cations had proved that IT would re-
quire millions in investment. the
creation of 4 market, the establish
ulent of the Government as a direct
competitor with great business, and
the risks incident TO business opera
lions.
This Government operation having
been abandoned, the question arose
whether the old leases should be con-
tinued. 1t was decided to raise the
royalty to l6 2-3 per cent on quarter
section G60 acre. units that produce
under 400 barrels per day and to 70
per cent on all producing over this
amount: to cancel all the old leases
which were capable OF producing more
than twenty. i've barrels per day &c
the producing we'll; and to make
new leases to the present lessees, OF
their present holdings, up to a maxi
mum acreage of 4,SO0 acres. Al
acreages above 1850 held by a single
lessee should he offered at the auc'
tion. to the highest bidder.
The bidder win be required to pRS
the appraised valuation for improve
nents made by the preceding holder
of the lease
May Offer Bonuses.
II was the 4.SOO-acre maximum of arei
that caused the big protest from th
Bnrnsdall forces. They saw prospect @
having their immens. holding of 5000
acres cut 20 a Daltry 1880. The regula