Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1938-02-19
AGAINST PROBATION

OF conservation. as the Board states. and,
II so, / am In agreement in recommending
that that method should be followed.
In fact. my whole concern here - Win
prevention Of waste and conservation OF
resources, however It may be accomplish
I'd II plugging wells viii do IL, / am
In favor Of IT, If building more rerlner-
les will do It, ! am in favor OF thal.
will do It. / am for that. II lower
freight rates will do II, / am also IN
favor of that, and If pr0ratiOn will DO
it. I am for that
/ do not think some Of the findings
Of the majority OF the Board are sup
ported by the evidence furnished at the
hearing, and after ali ] feel. that we
must be bound by the evidence. II was
shown there, and IT was uncontradicted.
that prOration does not prevent or delay
further development of potential oil lands.
No drilling restrictions are IN erect IN
New Mexico, according TO the testimony
the only expert witness on prOration,
and under the system OF prOration IN
force there there is no necessary Tor
restricting drilling. II was also demon
gtrated by his testimony that pror1tlOn
would not prevent the drilling Of Wild
cat test wells on geologic structures II
showed that since New Mexico ADOPTED
some form Of PROBATION great rumber
of the oil fields in That state have been
prospected, discovered. and developed.
The same witness stated that PROBATION
would not prevent the construction OF
new refineries nor the enhancement q
refineries now In operation. Ihree new
refineries have been constructed IN New
Mexico under prOration. II. {. Bret
schneider Also testified that prora-
ton was no bar to refinery expansion.
The statement is made by the ma ma,
jority of the Board that prOration VII
tend to effect and pernetuate monopoly
by the larger companies. There Is no
evidence to support such a statement
In view of the fact tnaI the laws
prohibit mOnopolies, i 40 not nina
ton On the contrary, in my opinion,
proration will be the salvation OF the
Little Independent, who IS wiS10Nt a
market tO-day, and whom me boaF9 !.
should not fear will ever erect OF
perpetuate a monopoly
Cne argument which the BOARD ad.
vai.ces against prOration Is that II
viii handicap Montana producers ana
refIners in competition with nelgh-
boring states. This can refer Only
TO wyoming since Wyoming Is the
only neighborng oil producing state,
OF course, it is idle to Suggest thas
PROBATION will permit importation o.
wyoming products because wyoming
products have been imported into Mon
tana time out of memory, when there mas
been no PROBATION. and VIII proOaDly
continue to be with or without pTyhat
tion II is fantastic notion wnich
fathers the belief that a refinery a snort
distance on the Montana side of the Wv
Oming lire should buy crude oil from
northern Montana when crude Supply
is Immediately at hand in wyoming:
Unless a tariff barrier can be erected
10 tax the importation of crude OIL
and it's products into Montana II Is
economically unsonnd and impraeucai 20 20
exDect to keep Wyoming crude out OF
southern Montana. It is common know
ledge that such a trade barrier cannot
be erected by one state against anotner,
The majority finds that an amer. ordeF TOT OF
proration would in effect nullify term
contracts for the purchase and sale OF
crnde oil from the oil fields in question.
The Oil Conservation Act was passed
by the legislature, and apIpnro9SVed py t the
Attorney General of the state, IN an
opinion to the Board, has held the law
constitutional.
contract made for the purchase and sale
of crude was made with knowledge, on
the part of the contracting parties that
to the provisions Of the Act, ana that
the production of crude oil was subject
the Board had power and authority 70
order proratron OF production, and conse-
ouently that such contracts would be SUD
ject TO any order Of prOratlon maze Dg
with the right on the part of the board
To prOrate became a part OF eacn OF
such contracts TO the same extent as II
the law had been incorporated therein.
and sellers Of crude oil a right denled
them by the express terms Of the OH
Conservation law Such contracts are not
above the law. and / feel we should
regard the law under which the Board
acts. -,
estimated crude oil production in Mon
tana is actually sufficient to supply
coRsumption. or to supply the require
ments Of all refineries the evidence shows
that there is an excess Of actual ana p0-
tential over-market requirements in the
Kelvin Sunburst and Cut Bank fields as
of November /, 1887. Practically all
producers testified that their potenuals
we're greater than the estimates furnished
by expert witnesses.
Proration, as ! have said before, VIII
not operate in any way to prevent the
marketing of any of this excess p0ten-
! tial production PROBATION is flexible
instrument to adjust production to the
market demand and whenever the marker
| is large enough to absorb all or the
crudp there will be no necessity for pro-
ration. and consequently none. Until
that time the small independent pro
ducer must have some measure OF pro,
lection against the inequitable market
| emphatically agree with the Board