What is the population of the area surrounding your North Carolina depot at the present time? Secretary HIGGINS. I will have to find that. Mr. ENGLANDER. I don't have that, sir. I will have to get that for you. Sunnypoint Army Terminal, N. C., is situated 6 miles north of South Port, N. C., the population in 1950 was 2,100 persons. In 1958 this population is 2,020 persons. The terminal is 25 miles south of Wilmington, N. C. In 1950 the population was 45,034 persons. The 1957 population was 54,500 persons. Sixty percent of the terminal's personnel strength of 270 employees comes from Wilmington, N. C., and 40 percent from South Port, N. C. Mr. KITCHIN. Is it pretty rapidly being built up, relatively speaking? Mr. ENGLANDER. It is building up. That is the point I wanted to make. The CHAIRMAN. Thank you very much, Mr. Secretary. Secretary HIGGINS. Thank you. The CHAIRMAN. Now, members of the committee, the next matter on the Army bill-that finishes the Army. Mr. KELLEHER. Yes, sir. The CHAIRMAN. Testimony. Then we will turn to the Navy, on page 16 of the bill. Now we will try to get some of these items passed on. We passed over the California items in deference to the fact that there was the primary in California. Navy Shipyard, San Francisco, Calif., operational and training facilities, $766,000. Mr. KELLEHER. Mr. Chairman, the first one is Long Beach, line 16. The CHAIRMAN. Where is it? Mr. KELLEHER. Page 16, line 16. The CHAIRMAN. Oh, yes. Now, the first item-this is very important, now. The first item is Naval Shipyard, Long Beach, Calif., operational and training facilities, $500,000. Now, I don't think there is any dispute about the $500,000, because we all know what the $500,000 is for. It is for the purpose of trying to prevent the subsidence of the premises around there, to fix it so that they could use it and continue to use it. Mr. KELLEHER. To keep the water out, actually. The CHAIRMAN. Now, I understand-last year we had Mr. Doyle and a subcommittee to make a trip out there, and they submitted a report. Mr. Doyle. Mr. DOYLE. Yes, sir, Mr. Chairman. The CHAIRMAN. Mr. Kelleher, will you read the conclusion of Mr. Doyle's report last year, in that memorandum? Here it is, right here. Mr. KELLEHER. I have it, Mr. Chairman. The CHAIRMAN. This is what Mr. Doyle reported. Mr. KELLEHER. This is at the end of the report. Based on the foregoing, it is the recommendation of the subcommittee that until there is full evidence that every possible action is being taken to prevent subsidence in the area of the naval shipyard, the Federal Government should make no further expenditures for remedial work other than that necessary to provide minimum protection to the Government property involved. The CHAIRMAN. Now, Mr. Doyle. Mr. DOYLE. Mr. Chairman, and members of the committee- Mr. DOYLE. Mr Chairman and members of the committee, from Long Beach City are several representatives. However, I think we first should hear from the Honorable Craig Hosmer, the distinguished Representative who represents the district. The CHAIRMAN. All right. Mr. DOYLE. In which the shipyard is located. I have the pleasure of presenting Mr. Hosmer. Mr. NORBLAD. Mr. Chairman, this says "operational and training facilities" Could you clear that up? Mr. KELLEHER. It is a category that the Secretary of Defense imposes on the various facilities. Actually, it is protective works to keep the ocean out. Mr. NORBLAD. On the subsidence problem? Mr. KELLEHER. Yes, sir. The CHAIRMAN. Can you give the committee, Mr. Congressman, any information in regard to this item? Mr. HOSMER. Yes, sir; I have a prepared statement. I would like to briefly summarize it. The CHAIRMAN. Go right ahead. Mr. HOSMER. Because I believe you may wish to hear from others within the time. Mr. Chairman and colleagues, last year this committee put the local community and those profiting from the extraction of oil on the spot. You told them to give concrete evidence they are doing all reasonably possible to correct the subsidence problem. In the intervening 12 months they mobilized a herculean effort to give you that evidence. Within authority of then existing law, they started a $10 million water-injection program to restore pressure and firm up the ground. Already it injects half again the 40,000 barrels being injected last year. By the end of this year, when installations are completed, it will inject 226,700 barrels daily, compared with the 82,000 barrels per day petroleum extraction. In the last 12 months, the California Legislature, in special session, passed a State subsidence control law almost unanimously. The city turned out a record vote to amend its charter to coincide with the new State law. A regiment of engineers and geologists were hired to gather the data needed to develop additional repressuring plans under the new law. Those plans are going forward at top speed with the corporation of oil operators. The latter have signed their written. intent to carry out a $2312 million repressuring program pinpointed at the shipyard area. They will utilize 96 inject wells to force an additional 367,000 barrels of water daily to ameliorate subsidence in the area of the shipyard. Under the new law this project will be financed out of public money which is now, this moment, available-so there should be no hitches. Some have criticized this law because it places more emphasis on voluntary repressurization than it does on its compulsory features. It was written this way as a practical matter to get the repressuriza H tion job done swiftly-without lengthy litigation possibilities which are inherent in purely compulsory plans. It was developed out of long negotiation amongst all affected parties. It represents a compromise as does so much good legislation. Because all parties had a part in it, and agreed to it, they are honorbound to make it work. That is fully evidenced by the $232 million agreement I already mentioned. This committee demanded action to correct the subsidence problem and it is getting it from a community and State aroused with a a single-minded determination to do what is required for the safety, preservation, and continued operation of the shipyard, which accounts for one-seventh of the total economy of the area. Let me divert now from the facts and figures and the physical side of this and talk of the human element. High spirit and good morale have accomplished these and other results related to you. There yet remains to be done additional repressurization in other areas of the field to top off this job. I believe that spirit and morale can be maintained and steam kept at peak pressure behind this effort only if this committee now judges. that these remarkable effects are, in fact, concrete evidence that all reasonably possible to correct the subsidence problem is being done. I do not believe that any more action could be crammed into these past 12 months than has been exhibited. Already $7 million has been spent to do 25 percent of the work necessary to completely remedy all present and future estimated subsidence at the installation, which the Navy told you last year is vital to the national defense. The cost is small indeed in relation to the $168,500,000 in tax revenues so far collected by the Federal Government on account of oil operations at the field. It is small indeed in relation to the estimated $170 million replacement cost of the shipyard. In the best interests of getting done what needs to be done in the interest of our Government, in the shortest possible time, I respectfully urge you to place the some $6 million needed this year for subsidence remedial work at the Long Beach Naval Shipyard in your authorization bill. What I have thus far said summarizes my case. With your indulgence I would now like to detail it in both statement and outline form. A year ago this committee cut out $52 million for subsidence remedial work at the Long Beach Naval Shipyard, stating: ***the committee believes that the Federal Government should take no further action until the local community and those profiting from the extraction of oil have given concrete evidence that they are doing all reasonably possible to correct the subsidence problem ** *. Today I ask you to restore these funds because in the intervening year the local community and the oil operators have made herculean efforts which incontrovertibly evidence they are doing all reasonably posible to correct this problem. Correcting it, as you know, requires restoration of subsurface pressures in the oil pools underlying the shipyard. In 12 short months almost unparalleled progress has been made by a community mobilized with a single-minded determination to satisfy your requirements and retain the shipyard which underlies its economy. During the last 24 hours 49,700 barrels of water was injected into this field along with 8,446,000 cubic feet of natural gas. By the end of this month water injection will be at the rate of 61,700 barrels per day. By the end of next year it will be 226,700 barrels per day. This is almost 3 times the some 82,000 barrels per day of petroleum being extracted. This is all being accomplished voluntarily, at a cost of around $10 million, and it is only a prelude to a $232 million crash repressurization program pinpointed at the oil pools underlying the shipyard. It will inject an additional 367,000 barrels of water each day through 96 injection wells to firm up stability of the ground and ameliorate subsidence in the area of the shipyard. This gigantic effort was agreed to last Wednesday in writing by 95.3 percent of the operators in the area who signed their "Memorandum of intent to unitize and repressure fault blocks II and III." Their finalized agreement awaits only last minute geological and engineering data needed to write the exact plan for repressurization. That agreement and plan should be ready by the effective date of California's new subsidence control law next July 24, 90 days from the day it was approved last April by the Governor of California. This repressurization pact pinpointed at the exact area of the shipyard and the forerunner of other pacts in contiguous fault blocks illustrates the wisdom of the decision made by the local community in selecting the kind of antisubsidence law to be enacted by the State of California. There were two choices. First, a supertough compulsory law enacted over the opposition of the California oil industry that would have looked good to you, but ended up in court litigation and delayed effective repressurization long past the point where it would help the shipyard situation. The second choice was to get practical legislation acceptable to all major public and private oil operators under which immediate remedial steps could be taken. This was done and today, even before the effective date of the new law, all reasonably possible action to correct the subsidence problem is underway. This law is, in fact, a subsidence control law. It places full weight of State authority and responsibility behind. the program to stop subsidence. It is administered by the State oil and gas supervisor and his technical staff. The law insures that repressuring plans will be adopted on a comprehensive basis and that repressuring operations will be soundly engineered. It spurs quick action, large-scale, voluntary repressurization plans such as the one I have just described. It does so by 1. Eliminating the damage liability issue from repressuring operation; 2. Authorizing use of the power of eminent domain to effectuate voluntary repressuring agreements; 3. Permitting the use of immediately available city and State oil revenues to finance multi-million-dollar repressurization installations. The law also provides for compulsory unitization and repressurization plans in the event that any voluntary ones cannot be agreed upon. The law, although it conforms generally with successful legislation of other States on the same subject, was carefully written to sidestep constitutional and other legal technicalities that might delay its prompt effectiveness. The law also was carefully written to minimize the degree of concurrence needed to initiate voluntary repressurization. That required by the law is, as a practical matter, far less than the percentage of concurring ownership at this oilfield who have committed themselves to join such repressuring plans. This is the exact situation: Under the law 75 percent of the operators must agree before eminent domain can be exercised to initiate a voluntary plan against any nonconsenting operators. The law requires 65 percent of operators to agree to effectuate a compulsory unitization plan. There are six fault blocks in this oilfield. In 5 of the 6 blocks the percentage of operators who have promised their assent to such plans is comfortably above these legal minimums. In fault blocks II and III it is 95.3 percent; in fault block IV, 84.1 percent; in fault block V, 92.9 percent are in agreement, and in fault block VI the figure is 82.9 percent. In fault block I, only one more operator is needed to invoke the compulsory provisions. At the present time and for some months past engineers, geologists, and legal experts of these concurring operators constantly have been engaged in working out repressurization plans for all these fault blocks. To give you an idea of just how fast this work which you have required be done in order to restore appropriations for the shipyard is being carried out, I submit the following time schedule for completion of these complicated and highly technical repressuring plans: For fault blocks II, III, and IV, July 1, 1958, less than a month hence; for fault blocks V and VI, August 1, 1958; for fault block I, September 15, 1958; and for the entire field, October 1, 1958. I respectfully submit that these remarkable steps are concrete evidence you wanted that the local community, and those profiting from the extraction of oil are doing all reasonably possible to correct the subsidence problem. I respectfully submit the condition you attached last year to any further expenditures for remedial work necessary to keep this shipyard operational has been fully met. It is a shipyard that would require $170 million to replace. Its importance in the national defense picture has been detailed to you many times. Its 6,500 employees and $31 million annual payroll account for approximately one-seventh of the economy of the area. Already $15 million of the maximum $30 million cost of doing all the subsidence remedial work ever needed at the naval shipyard has been spent. Six million dollars is needed this year to carry it on. That amount is needed now so the work can be accomplished ahead of the remaining anticipated sinkage. It is a small amount indeed in relation to the some $168,500,000 in tax revenues the Federal Government has received to date from the oil operations in the Wilmington field. I sincerely urge that all possible is now being done to correct the subsidence problem and that the item for the Long Beach Naval Shipyard in the authorization bill you are considering be marked up to permit that Navy yard to continue its important function. |