, 1922-05-13
Misunderstanding Claimed IN
Regard to Details of De-
velopment Program.
= BY +. ID. TOUGH.
Supervisor. Oh and Gas Operations,
Burcau Of Mines

cup1NEo. Ou AAu o1S OICI L-AoA1-f
Bureau Of Mines
The-e has been a great dcal OF mis-
understanding relative to contracts re-
csntiy made By the government for Its
royalty crude OIL from naval petroleum
reserves one n two in California.
and especially n Teapot reserve No
; In Wyoming. The facts relative to
these contracts are rs follows:
The est Of congress. approved June
=. 1890. directed tho secretary OF navy
to conserve. develop. use and operate
directly or by contract. ease. or other
wise unappropriated lands in tho naval
reserves
BY presidential proclamation, the
ADMINISTRATION and conservation OF all
oil and gas bearing and in naval pc
-troieum reserves one and two in Cali
fornta- and number three in Wyoming,
and naval shaie reserve in Colorado
and Utah were committed to the secre-
ta-y OF the interior. subject to the
supervision OF the president. This
proclamation stipulated that no geuer-
al policy as TO drilling and reserving
lands locnted in naval reserves SHOULD
b changed or adopted except upon
consultation and in cooperation with
h secretary. or acting secretary OF
n navy.
The present policy of the =avy de-
partment is to trade its crude oil for
steel storage facilities filled with fuel
-ol and situated as specified by the
navy. Since the loss of fuel oil by
evaporation is only about ITO per cent
per year aud probably less than this
after = few years in storage. such n
policy is entirely practicable Thus.
the reaerves OF naval petroleum is 70
be taken from the sands, proceSsed.
and placed In steel storage without
cash outlay by the government.
After a years study and investiga-
ton. the secretary of the interior In
cooperation with the navy depart
ment. developed plans for this trans
action that were satisfactory to the
navy. Not less than fou- prominent
OF companies were consulted and given
an opportunity to make offers to the
government for handling these con-
tracts. In Teapot Reserve No. 81
there were old mining claims which
were given consideration. just as has
been the policy of the government in
the California naval reserves and un'
der the leasing act OF Feb. %. 1920.
1t 70 happened that the Teapot con
tract was signed in the carly part OF
April. 1872. and the California contract
was not concluded until the latter part
of the same month. AS the interior
and navy departments wished TO an
nourfce these two contracts simultan
eousIy, the Teapot contract was not
made public until a little moro thar
two weeks after it has been signed
when rumors OF the Teapot contrao
1commenced to circulate and wer'
neither confirmed nor denied by de
partment officials, many conjecture'
were made as to the reasons for sc
crecy. The only reason for the temp
orary secrecy relative to the Teapo
contract was the desire for simultan
eous announcement of the two con
tracts, as stated. This is borne out b!
tho fact that both contracts were an
nounced Immediately upon the compile
ton of the second
In conclusion. I wish to can atten
ton to a couple of the ~eatures of tn
Teapot contract in which the people o
Wyoming are particularly interested
First-If the Teapot structure prove
to be reasonable productive, n pipelin
connecting 1t with trunk lines of tn
liz Continent will be built, thus put
ting the oil industry of the state in d
rect contact with the large center
of petroleum consumption. OF .coursC
ssome of US wish to see all the crud
soil from Wyoming refined within 1t
boundaries, Just as we might like I
see its wool woven into cloth within
THE state, and its cattle slaughtere
here, its hides tanned here. and her
made into shoes-but the economl
structure of our nation is not col
structed along these lines. 1t hs
been found expedient in most indu
tries TO transport raw material to cel
tiers of consumption where it is man,
featured and whence the manufacture
products can be economically distri
uted- In no industry is this advantat
greater than in the petroleum industr
as crude on lends itself SO readily
comparatively cheap transportation
pipelines
Second-This contract makes Il
pipeline to the III -Contfnent a COZ
mon carrier and provides that the go
eminent royalty oil from Teapot w
be purchased at Mid-Continent price
or the Salt Greek price in case tn
price shoul be higher than Mid-Co
tinent price; and that any governme
oil shall have a prior right throui
this line, being given preference ev
to b oil produced by the owners
the pipeline. 1t further provides tn