Evening star., 1924-03-08

president
at is quite evident that the oil
interest of the Navy and that the
government was protected in every
possible manner"
Recalls Daniels SuxEestton.
|. In his report Mr.. DENLY recalled
that Secretary Daniels suggested
that legislation be provided author
izing drilling of wells for protection
against drainage from adjacent lands,
or to supply the government needs,
and that, the wartime Navy Secre-
tary suggested legislation authoriz-
ing him to take possession of all
Such properties within the naval
petroleum preserves as are, or may
become, vested In the United States,
to conserve. develop use and oper-
ate them and to dispose of the oil
and gas products and those from all
royalty oil for the benefit of the
United States.
Secretary DENLY said the language
of the Daniels letters, virtually as
suggested. was enacted into law June
4. 1870. Answering another question.
Mr. DENLY declared 1t to be fact
leasing without public advertisement
by Secretary of the Interior Payne,
and drilling of new wells on naval
oil reserves
Total acreage of the naval oil re-
than $4,000 acres, Secretary Denby
declared, while the Interior Depart
ment now has under lease or permit
more than 17,500,000 acres of such
lands.
Calls Leaves Valuable.
The covarnrop+ ra,a;uoa ,n.-u 49,
100000 premium on royalty oil
from the Salt Creek district in 1923
as a result Of competition promoted
by leasing Of the Teapot Dome naval
reserve, and the Navy received for
the calendar year 1923 Al cents more
a barrel for its royalty oil than the
selling price of all other producers
in the district under it's contract for
the leasing of Teapot Dome, Mr.
DENLY said. He brought out that
had production from the Teapot Dome
reserve reached even the minimum
anticipated S16,O00.00O more than the
daily market price would have been
Of dollars all the cash bonuses ever
received from sale Of government
leases in the entire Salt Creek field.
The total amount received as bo-
muses. from leases in the entire Salt
Creek field is $1,6S7. 900. Mr.. DENLY
said, according to records of the In
terror Department Average royalty
from the Teapot Dome lease to date
has been about II per cent, he con-
tinued. adding that on this basis the
royalty of 4,250,000 barrels Applying
the premium Of IL cents per barrel
received to date, the excess amount
the government would receive would
be $1.742,500. exceeding the total bo-
nus received thus far from the Salt
Creek district.
Royalties fixed in the Teapot Dome
lease are on what is known as the
sliding scale basis. the royalty rate
increasing if wells of large produc-
tion are obtained.
Cites Bonus Received.
Mr.. DENLY said had the average
production of wells in Teapot Dome
been as anticipated at the time Of
the lease, royalties would have been
rate in the Salt Creek district, and
the Teapot Dome royalty was obtain
ed on territory a large part of which
was improved. The Secretary pointed
out that the Navy received a large
bonus from the lease in the California
reserve in the form Of high royalties,
free storage for its royalty oil, free
pipe line transportation, advance sup
ply of fuel oil in storage. option. to
purchase at a discount, construction
of storage facilities, and other con-
siderations which, he contended, great
ly exceed any cash bonus which
might have been obtained at the time
or could be expected.
Contracts with the Doheny compa-
nies specifically exempt from drill
ing, except by consent of the gov
ernment, nearly all OF reserve No /,
lying west of the range line between
ranges % and "a. Secretary DENLY,
within month after the first leases
and agreements with the Mammoth
Oil Company and the Pan-American
Petroleum and Transport Company,
and long before the latter company s
lease, dated December IL, 1922, told a
had been made.
Secs Resources Conserved.
Leases referred to undoubtedly have
underground. Mr.. DENLY said, because
operators on nelghboring privately
owned lands know that any move to
drill wells that might drain naval
petroleum reserves will be met by an
adequate offsetting campaign, vigor-
ously prosecuted.
The sum of s5,617.130.s2, up to July
1, 1928, has been turned into the
Treasury from royalties received
from the naval Oil reserves, Mr.. DENLY
added.
Secretary DENLY denied that any
officer Of the Navy had been retired
or ordered away from Washington be-
cause of opposition to his petroleum
policy, submitting list of officers
who had retired or been transferred,
who were alleged to have been sent
away because of such disagreement
He added that none of the officers ever
on duty in connection with the naval
petroleum reserves had any prior
training or experience in connection
with the oil nrnductinn industry