Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-08


Is incomparably the greatest oil pro.
duclng country in the world. Last
year we produced more than six out of
every ten barrels of oil that came out
Of the earth throughout the world.
But there is no certainty at all that
we can continue to produce at this rate
throughout the years to come; no GER
tainty that this rate of production viii
not exhaust our oil resources long be-
fore those of other countries are gone,
leaving us at their mercy from an eco
nomlc standpoint. And so the need
for conservation, and particularly the
need TO prevent waste in production
and use of an asset which we know to
be limited and not inexhaustible.
waste there Is, tremendous, shock
ing, almost criminal waste. There Is
probably not one of us who would not
condemn the man who burned down q
forest or destroyed a dam that stored
water for a great city. Yet waste Is
bad, or worse, is daily being committed
IN the oil fields. And the strangest
part OF the situation is that the waste
is committeed largely because of the
law, and not in defiance of it. The law
recognizes the right to drain from be-
meath the surface the oil which lies in
pools. But when the owner of one linn.
ited area strikes oil and begins to drain
the pool that lies beneath all adjacent
areas, there is a wild scramble on the
part OF those who lease the other areas
to "spud in wells and begin production
before the pool is exhausted And so
hundreds of wells are drilled in when q
score would be sufficient and better for
all concerned. But the law does not
always clearly recognize the rights of
owners or lesSeeS to agree with each
other to limit the number of wells for
the purpose OF conserving the oil pool
and working it as unit, in which all
VIII share proportionately; and, when
1t does, it is no easy matter to negotiate
such voluntary agreement.
Much Gas Is Wasted.
It is to the task of bringing about
unit development and operation that
the Federal Oil Conservation Board
has devoted time and effort. It has
called attention, for instance, to the
record of two wells in California which
IN a snort time turned into pipe lines
nearly S5,000,000 worth of oil and gas
but from which gas and gasoline
vapor worth double that amount
escaped into the air. Wastage of gas
from the discovery well alone amounted
to more than 7000o000 cubic feet a
day, more than enough TO supply all
Northern California.
This agency of the Federal Govern
ment. functioning under the present
administration, has done much more
than call attention to" or view with
alarm" 1t has worked in a practical,
effective way to give the oil producers
OF the country definite knowledge of
the amount of supply and amount of
demand, so that the former can be
made to fit the latter. It has brought
together producers, refiners and others
engaged in the petroleum industry, for
the purpose of cooperative study of q
great national problem. It has sug-
islation which would be helpful to those
engaged in the oil industry.
It has brought home to the Amer
lean oil industry knowledge Of what has
been done in other countries to conserve
petroleum resources and to make all
production profitable. In Persia, for
instance, the company which controls
100000 square miles of oil territory has
been able to produce, economically and
profitably, enough petroleum and its
products to give 1t fifth rank in world
Importance. Yet it has only one-tenth
the capital of hundreds of small COM
panies in some of our oil-producing
States. 1t needs to drill only one well
where, If ownership were divided as in
this country, q score of wells would be
sunk, with consequent waste and busi-
ness disturbance-and absolutely no
benefit to the ultimate consumer Of oil
products.
Unit System Applied.
Here in America we are beginning to
apply the same principle of unit opera
ton, in the public interest as well as, in
the private interest of the owners of
the new day that is dawning in the
American oil industry is found in the
Kettleman Hills oil fields in California.
These lie between San Francisco and
Los Angeles. Part Of the land belongs
to the Federal Government: part to
some of the large oil companies. More
than year ago, a deep test well was
of gas and oil. The product was 30
per cent gasoline: one Of the richest
strikes in oil history.
About one-third of the area was still
in the possession of the National Gov
eminent as public domain. Under the
law. permits for drilling under leases
yielding the Government substantial
royalties, had been granted private in
dividualS. 1t was possible. on the other
hand, for the large oil companies which
held adjoining land to begin an inten-
sive drilling campaign, and wildly race
with the Government permitees in an
effort to obtain the lions share of the
oil and oil-bearing gas in the vast I'M
derground pool. The immediately-con-
structed pipe line, 265 miles long, to
San Francisco, could carry only one
third of the gas of one well. Uncon-
trolled drilling would have resulted in
waste of gas and oil. An
orderly program of development was
needed.
Federal Aid Needed.
The State of California recognized
this need and enacted laws to prevent
the waste of gas and of oil. But to pre-
vent loss and wastage amounting to
possibly billions of dollars. the co-opera-
ton of the Federal Government, exer-
cising sovereignty over the public do
main, was needed.
In my official capacity have advised
Congress during the last month of my
intention to approve, in the public in
tereSt, an agreement for unit develop
ment and operation of this vast Cali
of course, win benefit by receipt Of roy
altieS on the oil produced on land
which it leases to individuals and COM
panieS. But there will be further and
probably greater benefit from the con-
of great natural and ma
tional resource that would otherwise be
wastefully and uneconomically thrown
upon the market to the detriment Of
the public generally, and of oil produc-
ars widely scattered through States
from Pennsylvania TO California. The
individuals to whom the Government
leases the land will cooperate and will
carry on their operations as a unit, for
the benefit of all, and in conjunction
with the owners of the surrounding and
adjacent oil land not controlled by the
An agreement of this kind marks
\ new era in an old industry, so far
Is America is concerned. And it is
lOlicV which Congress fS yfvat1 an IN.