Evening star., 1927-10-25

continued from First PageJ
to the Pioneer and Belgo companies
5000, 900 in Is months from the date
OF the agreement; a promissory note
for that amount was given bearing
interest of per cent from the date
Of the agreement and the Mammoth
Co. agreed to pay the value OF one
third of the gross production or on
from the Teapot Dome lease to the
two companies until the sum of $780,
900 has been reached.
Evidence Decision Deferred.
Justice Siddons' decision on the ad'
instability as evidence in the present
trial of statements made by Sinclair
before the Senate's oil investigating
committee remained unannounced
when court reconvened at 10 O'Clock
pending an agreement between coun
sci as to whether the oil operator had
been subpoenaed before that body
The attorneys agree that he was
under oath when this testimony was
given and have about come to the
mutual conclusion that Sinclair was
requested" or invited to appear.
Chief interest centered this morning
on the expected court ruling. but JUS
tice Siddons gave no indication when
he would announce it.
Statements concerning the possibil.
ity Of drainage in Teapot Dome. re
garded as important to the defense
case, were drawn by George d. Hoover
from Arthur w. Ambrose, the one
time petroleum technologist in the
Interior Department. who is a Gov
ernment witness. During his cross
examination of the witness, which was
resumed the first thing this morning
Mr. Hoover brought out the infornla
ton that development Of leases made
in the adjoining Salt Greek field would
cause serious drainage later in Teapot
Dome.
The witness was questioned closely
regarding conferences he had with
Fall in October, 1921, and January OF
1922, VIII 1 the question of drainage
was discussed. After going into nu
merous technical questions bearing on
oil development, Hoover asked the
witness if he had discussed with Fall
the advisability or the inadvisability
of strip leasing.
Strip Leasing Discussed.
Ambrose stated that the question Of
strip leasing first came up at the time
Of the Heald report on November 81
Of that year, and was considered II
a general sort of way at another con
ference with Fall the latter part OF
January, 1922. He was asked If he
recalled j. Foster Balm, director OF
the Bureau of Mines, saying any
thing about the subject of drainage
at that time.
Witness replied that Balm had men
toned that strip leasing would not
be adequate to protect the naval re
serve from drainage.
Ambrose testified that he had re
ceived reports from time to time or
drainage from a Mr.. Tut technolo
gist in charge of field work. who haC
been investigating conditions on Salt
Creek field.
Did you know, on June Is, 1921
the Government had auctioned of
6,40O acres on Salt Creek" he was
asked. YES he replied "Did you
know that these leases required de
velopment of oil?" he was asked again
Roberts objected to this line OF ques
tioning and was sustained by the
court.
Restricted to questions relating to
what the witness had told Fall, the
defense attorney asked him whether
he had discussed the subject of drilling
on these 6,400 acres.
II pointed out to Mr.. Fall that when
developments took place there would
be serious drainage" Ambrose replied
Going further into the subject OF
drainage Ambrose stated that I'VE be.
lieved then and advised Mr.. ran tnat
those leases were causing no imme.
fin, Tnnrnt Dnrnn1 Rllf
as time went on in all probability
drainage would extend considerable
distance into the reserve"
At that time,- however, the witness
added, the subject of drainage was
not the subject of immediate question.
did not you tell Fall as soon as
production started on those leases
drainage would begin?" asked Hoover.
Yes, I told that to FALL" the wit
ness said. He added that in his opin-
ion the shift of the saddle made drain
age in Teapot Dome more serious
and so advised the Secretary.
With regard to the drilling of the
double row Of wells to offset drainage,
the witness stated that it would have
been only temporary" protection.
Taking up the lease between the
and the Mammoth Oil
Co., Hoover questioned Ambrose on
that section relating to the exchange
of royalty crude oil fof fuel oil. He
framed an Interpretation of the tech
nical wording of that section to show
that for every 100 barrels of royalty
crude oil due the Government under
the lease .a5 barrels of fuel oil could
be obtained for the Navy. This ex-
change was based on tthe prices in the
mid continent field, Ambrose declared,
and had the arrangement been made
on the basis Of Wyoming prices the
Navy would have gotten much less
fuel oil for its royalty crude oil.
Under further questioning BY
Hoover, Ambrose testified that Fall
insisted upon an increase in the
Navy's fuel oil so that it got 100
barrels Of fuel oil for 100 barrels of
crude oil. Ambrose said Fall gave
him instructions while preparing the
lease to use the midcontinent prices
as a basis. Furthermore, at Falls
request, both the Wyoming and con-
tinent scales were inserted in order