Evening star. [volume] (Washington, D.C.) 1854-1972, 1943-07-14
by CARTER BROOKE JONES.


BY CARTER BROOKE JONES.
When the Navy and the Stand
ard Oil Co. of California, after pro-
longed negotiations in the spring
of 1912, failed to agree on a basis
for exchanging their holdings in the
Elk Hills oil field in California OF
for outright sale of the company's
land to the Government, efforts
were made to reach some other &C
cord which would preserve the in
terests of each.
With the public and private Sec
tons of the rich reserve checker
boarded on one side of the field
and oil which the Navy was trying
to conserve in the ground threat
ened constantly with underground
drainage from new Standard wells
1t was agreed generally that some
plan to protect the Government
must be worked out.
The proposed exchange of sec
tons was intended to line up the
tracts of each owner. But the COM
pany and the Navy could reach nc
understanding on the values in
volved. Similarly. an offer by the
Navy to buy Standards land out
right got nowhere. Standard in
sisted on price which Navy con-
sidered excessive.
Company Draft Rejected.
In the course of the negotia tons
. Rear Admiral H. A. Stuart, di-
rector of naval petroleum reserves
later wrote House subcommittee
officials of Standard .countered with
suggestion that plan be worked
out under which all the lands might
be jointly developed by the com
psny under supervision of the Navy.
The company was asked to submit
such plan.
The first draft of this proposal
Admiral Stuart said, was unaccept-
able because there were no pro.
visions for suspending operation.
''in accordance with the Nays
policy to maintain the lands as ar
underground oil reserve and be-
cause the plan also provided thai
the Government pay to Standard
in addition to its share of costs, ar
overriding sum as a service charge
equal to Is per cent of the Govern.
ment's share of production"
Secretary of the Navy Knox hac
advised President Roosevelt, wher
n o.
way, that efforts to evaluate Stand
ards Elk Hills lands had been ex'
tremely difficult. Estimates of thu
oil content of these holdings variee
from q 100000 to 177120,000 barrels
The company, admitting it had NJ
reliable data on which to estimatt
the value, began drilling test we'll
to develop expert testimony in
tended, according to the Navy, TT
establish the highest possible
values"
No agreement for joint control o
the reservation could be reached
without an accord on at least {
rough estimate of the oil which
each owner had in the ground.
Value Differences Cited.
Admiral Stuart reported: BE
cause of the wide difference il
values obtained, the Government
engineers were invited to consul
with the company's engineers. Con
ferences were held in San Francisco
with the result that it was deter
mined that a meeting of the mind
could only be had after the rela
tionship between the estimated OF
contents of the company's lands ant
the Governments lands had beer
determined.
This led to the development o
new plan whereby the United
States would purchase from Stand
ard it's surface rights and propert,
and then authorize the limited de
veiopment of the lands undo
Nays direction, sharing in produc
ton and expenses, without paymen
of any bonus or service charge tt
Standard, according to the estab
lished relationship of acrefeet 0
producing sands under each party
lands in each producing zone to thu
total acre-feet of each zone"
On this basis, he explained, Nav,
and Standard engineers "analyze'
all available data and estimated tn
proper shares of production which
should go to each party. -
The Nays representatives on tn
Joint Engineering Committee wer
Comdrs. V. E. Wilhelm and H. F
Stolz and Ensign M. c. Eastman
They are Reserve officers. Comdrs
Wilhelm and Stolz came to thu
Navy from the petroleum indus
try, which they served as engineers
Ensign Eastman, at the time h
was commissioned. was a civilian
petroleum engineer attached to tn,
Office of the inspector of naval pc
troleum reserves in California. The.
had the counsel of Ralph w. Rich
ards. geologist with the United
States Geological Survey, borrowed