The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-05-14

OF all contracts affecting the lease
are known 1t will. of course. be i'm
possible to pass full judgment upon
the wisdom OF the contract. but
there are certain features of the
agreement of April which indicate
that tho opening up OF this field at
Thu time will not be beneficial TO the
government of the United States. to
the state OF Wyoming or to the oil
interests OF the state.
The Basis OF Exchange.
at is provided, for example. that
the government shall have the right
to exchange its royalty oil for fuel
oil and that the basis OF this ex-
change for royalty oil that may bo
developed during the year 1924 shall
be one barrel OF fuel oil for each
barrel OF crude royalty oil of "a
degrees Baume or over, and 60 per
cent OF one barrel OF fuel oil for one
barrel of crude royalty oil of less
than % degrees Baume. 1t has been
generally assumed that the crude oil
to be obtained from the Teapot
Dome would contain a large propor-
tion of gasoline. while the fuel oil
which the navy Is to receive will
necessarily be of a much lower or
a much heavier grade. 1t would ap-
pear, therefore, that the government
proposes TO exchange it's high grade
oil for oil of low grade. barrel for
barrel.
Instead OF fuel oil, the govern
ment, IL 1t desires. may. according
TO this contract, exchange Its roy
atty oil for gasoline, kerosene, lubri-
eating oils or other petroleum prod
ucts, but the terms upon which this
exchange shall be made have not
yet been determined, according to
the contract of April Z. IL should
be noted. however, that the Teapot
oil which the government will ex-
change for fuel oil contains a large
percentage OF the gasoline. kerosene,
and lubriCating oils. To obtain this.
II would apparently be necessary for
the government to surrender addi-
tional royalty oil. In other words.
in payment for the fuel oil the gov
ernment, IL would seem. would be
required to surrender the very prod
ucts which II later would buy back
by the surrender OF more royalty
oil.
Again. attention should be called
to the fact that, according to the
terms of this contract, the govern
ment would be required to pay In
oil for the construction OF the steel
tanks in which the fuel oil Is to be
stored. Thus 1t Is that while on the
face OF the contract the royalty to
the government runs from IL 1-2
per cent upon small wells to so per
cent upon large wells, the actual
royalty received by the government
Is greatly reduced by the terms of
the exchange, and II Is difficult to
believe that better terms would not
have been secured IL the lease had
been offered at competitive sale In
stead of privately by the depart
ment. Unless 1t is clearly demon
strated that the Teapot Dome Is
being drained. 1t seems altogether
unwise to withdraw the oil from its
great natural reservoir, where 1t
would be safe against every con-
tingency, in order TO place 1t in arti-
ficial reservoirs, constructed at the
cost OF the government, where IL
would Immediately become subject
to all the hazards incident to that
kind OF storage.
1T has also been intimated by
the department of the interior that
the construction of n pipeline, which
the lessee is to build, would result in
affording a new market to the in
OH OL NyO-
| ming, who are now unable to sell
all their oil, but this is by no means
certain. The contract provides that
the government royalty oil shall
| have a priority and that the pipeline
shall not be built until the Teapot
| Dome is producing 10000 barrels OF
| oil a day. Ii seems obvious. there
fore. that this pipeline would not
afford an outlet for the oil OF inde-
| pendent producers for long time to
come.
Through long experience with the
| department OF the interior under
this and previous administrations,
/ have always found its officials eff
cient, able and loyal In the conduct
OF the public business, and I would
not wish 1t to be understood that
my resolution was intended to sug-
gest that there had been any wrong
/ doing in this matter upon the part
| of any representative OF the gov
| ernment. / entertain a. very high
| opinion OF the ability and character
of Secretary Fall. and 1t would be a
matter of qualification to me II it
Is found that this contract has been
based on wisdom and good Judgment
1t Is particularly unfortunate, how
ever, that the negotiations were not
| NDhNuNANb WIN lAit
| and / sincerely hope that in any
event the government will not fail
to recognize the right of the state
or wyoming to share in the roy
atty"
| Lease a Monumental Document.
The lease of the Teapot Dome
field to the Sinclair interests begins
with n quartet of "whereases." after
which there follows most import
ant therefore" In 10 parts, in which
the words number many thousands
The "whereases" are to the effect
that the government of the United
states is charged with the duty of
securing and storing" a supply of
fuel oil for the navy: that the gov
ernment further desires to avoid in
as far as possible any depletion of
| its reserve fields due to a reduction
| OF gas pressure resulting from the