Evening star., 1924-01-06
BY G. GOULD LINCOLN.


mated as naval oil reserve No.
3, Wyoming-has been more
or less in the limelight since
Its lease by former Secretary Fall Of
the Interior, Department to the NAM
mouth Oil Company, Of which H. r.
Sinclair is president, in the spring Of
1922. 1t is particularly in the public
eye today because Of the investiga-
tion of that lease by the Senate COM
mittee on public lands, which began
October % and is still continuing.
Tho supporters Of the lease insist
that the controversy over the lease is
all a tempest in a teapot. They say
that the lease is designed to give the
navy an oil reserve in tankage on the
Atlantic and Pacific coasts, where 1t
can be obtained quickly when it is
most needed. They say, too, that IL
the Teapot Dome oil area was not
developed under lease, with the Navy
sharing In the development, eventu-
ally a great part of the oil would
be drained away by wells on terri
tory contiguous to the naval re-
serve;, that the gas pressure would
be so reduced as to mako IL tmpossi-
BILE to obtain the oil, etc.
Contrary View Taken.
The contrary view is taken, how
ever, by the critics of the lease.
These critics contend that the great
oil reserve set aside for the use of
the Navy when 1t needs fuel oil,
| gasoline and lubricants in the future,
| and particularly in case Of future
wars, are being depleted without an
| adequate supply of oil being pro-
of Teapot Dome-as we'll as the
| leases of the naval oil reserves Nos.
! and 2 in Colifornia-is in the in
| terests of the oil producing COM
| panies and not Of the Navy.
The controversy, therefore, in
wolves question Of policy, in which
geological questions are involved.
| Expert testimony has been given on
| both sides. Should the government
have undertaken to conserve it's
| naval oil reserves underground; !;
| should it have undertaken to develop
the oil reserves itself. building the
necessary tankage and pipe lines
| where necessary, or should 1t have
| leased the Oil reserves-as it has
done-on a royalty basis, the govern
ment paying for storage facilities out
| of the oil 1t received?
| Teapot Dome, or naval oil reserve
No. 8, contains approximately $500
acres. 1t has been variously estimated
q
| 100000 barrels OF crude oil in the re-
serve. The figure 100000 has been
generally used in recent weeks as the
probable amount. Under the lease to
the Mammoth Oil Company. the gov
ernment receives royalties on oil pro-
duced ranging from 12h per cent of
production to so per cent, according &
to the average daily production per
well for the calendar month. The
about II per cent OF the oil produced
as royalties. The critics of the lease
figure that the Navy is going to have
a very small oil reserve when all is
said and done.
U. 9. to Get 5yOOO,O00 Barrels.
FOR example, tuey bdy tndt the teS-
timony brought out in the hearing
now under way shows that the cost Of
tank construction to the government
is about So per barrel; that the crude
oil issuing from the wells in Teapot
Dome is worth about 81 per barrel
the present rate is something less
than that-and that It will require
two barrels of oil to provide one bar
rel of tankage Estimating the oil
content of the reserve at 25.000,0o0
barrels and the royalty the govern
ment will receive from the Mammoth
Company at 20 per cent. which is 3
per cent more than 1t has been re-
ceiving, then the government will get
out Of the reserve 100000 barrels of
oil. II two-thirds Of this amount is
used to pay for the tankage. then the
total amount that the Navy will have
stored out of the total possible pro-
duction of 25,ooo,0o0 barrels will be
1864 900 barrels.
Tho. naval oil reserves were set
aside, 1t is contended, to provide an