Evening star., 1943-06-22

assume that the Navy Department
had first submitted it. but Mr. Mot
said that in matters such as "Teapo
Dome and Elk Hills, you are dealin,
with historically hot stuff, and il
was up to the President to have OBJ
tained an opinion from the Justice
Department"
Mr.. O'Connor insisted again tina
that was the responsibility of thu
Navy Departmental stand in which
Mr.. Littell concurred. Meanwhile
Representative Boykin, Democrat
of Alabama said the public land
and other committees would hav,
to get together to decide the ques
ton OF jurisdiction in the investi
CATION because I'VE don't want to b.
stumbling over each other"
Chairman Peterson said he un
derstood a House Naval Affair
Subcommittee intends to visit tn,
Elk Hills site TO investigate circum
stances leading up to signing Of tn,
contract and methods necessary x
preserve the Nays oil interest!
there.
Firm Agrees to Termination.
Mr.. Knox in his letter said tht
contract rs being terminated with
the company's consent
II can assure you, Mr.. Chairman,
he wrote. that the Navy has no
altered its determination to settle
this veXatious matter permanently
nor will it under any circumstance!
surrender willingly to the pressure
or intrigue of any one, public Of
private, who seeks to exploit and dis.
sipate this vital weapon of the Navy
| Perhaps in the circumstances The
best alternative is condemnation"
The Navy had been trying for sew
eral years, Mr. Knox said to provide
for conservation of the Elk Hill'
Field, where it owns 43800 acre!
and Standard owns $500. The prob.
| lem, he added, was to obtain con-
troll of Standards holdings in order
| to prevent an estimated 100000 ,00(
to 100000 barrels of oil from
being drawn away by the private
company. In March of last year
the Secretary wrote, Mr.. Roosevelt
expressed the view that the lands
should be acquired quickly because
of the great value of the oil to the
Navy and that it was unWise tc
encounter the delay which would be
| involved in making extensive test
drills to determine the relative value
of Standards and the Navy's hold
tngs exactly.
Estimated Relative Interests.
He recommended acquisition by
| negotiation if possible and payment
of the consideration, in excess of a
minimum value, in oil, or, if neces-
sary, by condemnation proceedings,
Mr.. Knox wrote.
AS result he said Navy engi-
neers, assisted by Ralph w. Rich
ards of the United States Geolog-
ical Survey. and Standard engineers
estimated the relative interests OF
the two owners in the field at Sd
per cent Navy and "a per cent
Standard.
Thereupon the arrangement
worked out provided that Standard
should receive cash payment OF
$l,740,4 ,408 and that Navy should get
"a per cent of the oil and Standard
36 per cent from that portion of the
field in which both had holdings
Production of 27,5OO 900 barrels dur
ing the first five years. 'or less than
10 per cent Of the estimated oil in
the shallow sands alone" was also
provided for. with Standard to re-
ceive both its own and the Navy's
share of this initial production
Standard. however, was required to
repay the Navy for its share by oil
allotments from production after the
f1ve-year period
II felt and still do that this was
a satisfactory disposition of this
difficult problem" Mr.. Knox said
Our anxiety of many years-to
eliminate the private interest and
secure complete control of the field
was accomplished by payment in
oil, little now when needed and
the balance in the indefinite future
in the Navy's sole discretion.
ut avoided any final determina-
ton now of the value of Standard S
property which can only be deter
mined with any accuracy as the
field is developed beyond the rela-
lively small area which has already
been developed.
Condemnation Demands Cash.
Condemnation would require the
expenditure of large sum in cash
for Standards oil which may not
be used for many years, while under
the proposed arrangement the con-
sideration would be paid in oil and
only as removed from the ground
1T was also fair to Standard The
use of our share of the oil during
the five-year period and the prior
right to purchase our share there
after was the inducsment to Stand
ard to convey its property and forego
the control and exploitation thereof
in its discretion forever"
Mr.. Knox said he believed and
was advised that the deal was au-
thorized by legislation enacted in
June of 1888. However, he added
that since the Justice Department
has ruled that it was not authorized
there were three alternatives:
"(A Abandon any present hope Of
insuring protection of this vital
natural treasure. or tB) ask Con.
gress for adequate authority to make
some such cooperative arrange