, 1922-04-24

Continued from PAGE onel
the general oil leasing act The prin-
.cfpal problem there was the exchange
of the crude oil, which in its natural
state Is unfit for use by h navy for
fuel oil. in proper and available stor-
age. with respect to the naval re-
serve IN Wyoming. known as the Tea
dome. same was not available for
naval use or for exchange for fuel oil
for the reason that the field lies in the
interior and is not connected by pipe
line with any point On the EAST coast
or with h existing pipeline systems
of tho country. While there are no
wells within the limits OF the reserve.
1t was found. after a careful recent
geological study that the reserve was
being drained from wells on nearby
lands. and in addition tho government
was faced with n number of asserted
claims within the eserve under the
mining law. Moreover. the famou
Salt Creek on field. lying Immediately
contiguous to the Teapot dome. and
which has been leased under the gen
crai leasing act. was without adequate
pipeline and refinery facilities. and in
dependent producers have been unable
to dispose OF more han 40 per cent of
the possible production Of existing
wells. Furthermore. competition was
absent from the field through lack not
only OF pipeline and refining facilities
but Of competing companies. There
fore. after careful consideration. the
secretary OF the interior. with the com
plete concurrence of the secretary Of
tho navy. invited and considered pro-
posals from a number OF prominent
oil companies and individuals for the
development OF the Wyoming nava
reserve. with the accompanying guar
antee of tho construction Of adequate
pipeline facilities from the field to
Atlantic and Gulf Of Mexico points
through connection with existing pipe
lines. It was also desired that pro-
vision be made for the exchange OF the
crude oil produced for fuel oil for nav
al purposes. in such manner and at
such points as might be designated by
the navy. After full consideration of
all the offers submitted, a contract
was approved by the secretary of the
interior and the secretary OF the navy
with the Mammoth Oil company, n
Delaware corporation. II. F.. Sinclair
president The contract is in the
form Of a lease, with graduated royal
ties NJ to so per cent for the entire
area of naval reserve No. . In wyo.
ming.
The contract provides for the drill.
ing of at least 20 wells within a limit
ed time. for the construction of a pipe
line from the field to existing pipeiinef
in Missouri. for the exchange of crud,
for fuel oils. the latter for naval pur
poses. for the delivery OF navy spec
fled bunker A oil at any point name
in the contract from Guantanamo
Cuba to the latter northeast corner OF
the United States. 1t provides for a
line of credit under which exchange
for the crude oil ample storage for all
the product is to be provided without
cash outlay by h government at any
point fixed by the navy department
along the coast described. It provides
that the lessee shall at such or any
other points, at his WI expense, and
without obligation on the part of the
navy, provide gasoline, kerosene, Tub.
ricating and cylinder OIL at market
prices
TT provides prior right of transpor.
tation for all government oils from
not only h Teapot dome but from the
Salt Creek field. even prior to the uses
of the pipeline by tho lessee. 1t makes
tho pipeline when built a common car.
rier for all government oils. The pipe.
lines already constructed. with which
the new pipeline will connect. involve
a present investment OF s115. 900 900,
ad the present contract calls for an In,
vestment on the part OF the lessee OF
not less than s26. ooo. 900 in addition
Furthermore. the contract will bring