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Mr. BLALOCK. I know of fields in the State of Texas that I think have only one pipe line in them, and I will say this: That they are all hoping they get another one just as quickly as they can.

Senator REED. After all, the producer pays the posting price? Mr. BLALOCK. The producer posts a price in the field, and it is usually the same by the various producers within the field. I am glad you asked that question, because the impression may get out that a little independent producer in an oil field, with maybe 1, 2, or 5 wells, maybe 10, wants only a means of transporting his oil from that field and selling it. That producer has to sell that oil on the spot, just as soon as it comes out of the well.

If he does not, he can't operate for more than 2 weeks.

I have a whispering interest myself in 2 or 3 fields in east Texas. They are permitted to produce 14 barrels of oil a day. Two of them. are capable of producing more than 10,000 barrels a day. However, it is the function of the Texas Railroad Commission to prevent the production of more than 14 barrels. When those 14 barrels of oil come out, that amount is put into a field tank. When a few hundred barrels of oil are accumulated, that amount is placed in a gathering line. Suppose all I had was a transportation agency, and I ran it through there railroaded it down to Houston, Tex., or put it somewhere where the market was. Then I would have to build storage tanks at that end and then go out and sell my oil. I would be out of business in 60 days.

You are dealing here with a peculiar commodity the production of which is regulated by law and therefore it must be transported, if the producer is to survive, through the cheapest and most efficient method of transportation, and he must have a market for it in the field.

I do not think if the railroads were to start transporting this oil as a consequence of somebody being denied a permit of convenience and necessity, they would buy this oil in the field.

I am speaking for independent producers; I am not speaking for the pipe lines themselves. I am pleading for the lives-literally the livesof the men who produce oil in this country but who do not transport, refine, and market.

I tell you, gentlemen, we must have these transportation facilities cheap and efficient, and we must have this market which it offers, or else we are out of business. When the independent oil man is eliminated from business in this country, then your reserves are going down, and it is going to be a sad day for America.

Senator JOHNSON of Colorado. Thank you, Mr. Blalock.

The next speaker is Mr. Theodore Gore, of Wichita, Kans. I have here a letter from the Governor of Kansas, the Honorable Payne Ratner, which reads as follows [reading]:

STATE OF KANSAS, OFFICE OF THE GOVERNOR,
Topeka, June 1, 1940.

Re Senate bill No. 3753, Seventy-sixth Congress.
To the CHAIRMAN OF THE SENATE AND HOUSE COMMITTEE,

Washington, D. C.

TO WHOM IT MAY CONCERN: Please be advised that Mr. Theodore Gore, of Wichita, Kans., vice president of the Kansas Independent Petroleum Association, is hereby designated and is duly authorized to represent the State of Kansas in the hearings before your committee.

Mr. Gore will reflect our State's position in relation to this legislation, and I will appreciate any consideration you may show him.

Sincerely,

PAYNE RATNER.

I have also a letter from Mr. Ainsworth, president of the Kansas Independent Oil & Gas Association, which reads as follows:

The CHAIRMAN OF THE INTERSTATE COMMERCE COMMISSION,

JUNE 1, 1940.

Washington, D. C.

DEAR SIR: On May 25, the executive committee of the Kansas Independent Oil & Gas Association passed a resolution opposing the passage of Senate bill 3753. The resolution authorized William L. Ainsworth, as president, to use whatever means he may have at his command to oppose the passage of the bill, insofar as it affects the petroleum industry.

Under such authority the president has appointed Theodore Gore, of Wichita, Kans., vice president of the association, to represent it at the hearings to be held in Washington beginning Monday, June 3, 1940.

Very truly yours,

WILLIAM L. AINSWORTH, President.

KANSAS

STATEMENT OF THEODORE GORE, VICE PRESIDENT, INDEPENDENT OIL & GAS ASSOCIATION, WICHITA, KANS.

Mr. GORE. My name is Theodore Gore. I am representing the Honorable Payne Ratner, Governor of the State of Kansas, and am also authorized to represent the Kansas Independent Oil & Gas Association, in which organization I hold the position of vice president. My residence is Wichita, Kans., and I am an independent oil producer in the States of Kansas and Oklahoma.

The Kansas Independent Oil & Gas Association is composed of over 250 independent oil producers in the State of Kansas, which number constitutes practically all of the independent producers engaged in the production of oil in the State of Kansas. It also embraces in its membership all of the independent refineries in the State of Kansas.

In the dual capacity of my appearance I am authorized to state that Governor Ratner and the entire membership of this association are opposed to the passage of S. 3753 or any similar legislation affecting any branch of the oil industry.

This bill is in no manner sought by the citizens of Kansas or by the oil industry of Kansas. We do not know of any situation in Kansas which calls for the enactment of such legislation.

We have a special situation existing in the State of Kansas. We are at the end of the pipe-line system, and our oil must go into interstate commerce in competition with crude from the States of Oklahoma, Illinois, and Indiana. We are all sharing a joint market. Under the operation of our proration laws, Kansas has been allocated a portion of this market. In Kansas our oil is prorated on a pro-rata basis between pools, with no special privilege or favor accorded any particular pool or any particular group of operators. Each pool is allowed to produce that part of the State's allowable which its potential bears to the potential of the State as a whole. A law such as this could have the effect of discouraging additional pipe-line development in the State, which in turn would cause selective buying of crude from various pools by the different crude-oil purchasers in which they would have special interests.

It would be impossible to force the extension of pipe lines after pools are opened beyond their present limits. In the past 10 years the State of Kansas has seen its oil fields develop 200 miles west of their limits in 1930. It has also seen a great extension of pipe lines more than adequate to serve this entire area. We are witnessing the com

pletion of a pipe line that from the standpoint of moving the State's allowable is unnecessary in connection with present facilities and would not be required to handle the total of the State's allowable production, but unless this line is built many pools in the western part of the State would be unable to move their ratable share of the State's allowable and give these pools their fair share of the State's total market demand.

If such a law as S. 3753 were in existence there would be a conflict of authority between the Corporation Commission of the State of Kansas in allocating crude sales to the various pools and the authority of the Interstate Commerce Commission to authorize the extension or construction of pipe-line facilities. Such a conflict would hamper and delay the construction of the line if permitted at all and would discourage development of additional pools in the western part of the State.

As an independent producer and as a representative of independent producers, we are primarily concerned with the running of our allowable from each of our wells as it is allowed to us. Under the present allowable we are drilling weils on the basis of an investment. We are required to spend large sums of money and under our present allowables we are drilling these wells on a long-term return. It is vitally essential that we know that as we drill these wells we will have a market outlet for our crude and that it will be run and paid for.

Under a bill of the type of S. 3753 it is entirely possible that additional pools can be developed beyond the present facilities of the existing pipe-line systems and that these areas may be served by railroads. It is entirely conceivable that before an extension of a pipe line would be permitted the railroads would cause a hearing to be held before the Interstate Commerce Commission to show the necessity for a certificate of convenience and necessity. It is also possible that such a hearing may be extended over a long period of time with a possible additional complication in the fact that the decision of the Interstate Commerce Commission might even be appealed to the courts. Under such circumstances a producer would find himself looking for a purchaser to buy his crude and also faced with the necessity of paying an extra charge for the transportation by rail or truck of that crude, which would be a penalty for the development of oil fields beyond the existing pipe-line facilities. The result of this would be that the producer would be penalized, and further development stifled. It would also have the effect of raising the price of refined products to the consumer as an additional transportation. charge would have to be borne by the product.

The function of the pipe lines in the State of Kansas, so far as the membership of my association is concerned, is a transportation facility between the producer of crude at the lease and the purchaser of crude at the refinery. There is no distinction between a gathering line and a trunk line. The two are an indivisable unit of transportation.

The State government of Kansas is vitally interested in the effect that S. 3753 might have in discouraging the development or prospective oil lands in the further western part of the State. If a bill of this type were to be passed and the question of further pipe-line extensions becomes a question of convenience and necessity for the Interstate Commerce Commission to interpret, undoubtedly the extension of

wildcatting activity will be seriously curtailed unless the person or persons doing this wildcatting are assured of a transportation facility that will transport the oil at a reasonable price in competition with the crude oil produced in the other parts of the State. The ultimate effect of a bill of this type might cause the releasing of millions of acres of land now under oil lease and on which land lease rentals are greatly in excess of the ad valorem tax levied upon such land.

The large production in recent months in the States of Illinois and Indiana has had a most disturbing influence upon the crude markets of the State of Kansas, and it has only been due to the fact that we had interstate pipe lines able to transport our crude economically that we have been able to compete at all with crude produced in the States of Illinois and Indiana. If this bill were to be passed and we should be forced to use other means of transportation it would be impossible for us to compete in our market with the crude produced in the States of Illinois and Indiana.

In conclusion I wish to call your attention to the fact that neither the oil industry in Kansas nor the State of Kansas has asked for legislation of this type, nor do we see how such legislation could benefit the public in any way. For the reasons enumerated above we respectfully request that it be not passed.

Senator REED. Have you any connection, Mr. Gore, with the Corporation Commission of Kansas?

Mr. GORE. No.

Senator REED. Are you familiar with the various oil pools in Kansas?

Mr. GORE. Yes.

Senator REED. How many of those oil pools, especially up in Rooks County, and also some of those new pools that have been discovered south of Phillipsburg, have pipe lines?

Mr. GORE. In Rooks County there is not very much oil.
Senator REED. There is some, is there not?

Mr. GORE. In Phillips County there is production of a very low grade of crude that will not run through the pipe lines except in the summertime. You can almost ship it out on flat cars, it is so heavy. It has no gasoline content and has practically no value as crude.

Senator REED. Has there not been built recently a refinery?

Mr. GORE. A refinery has been built at Phillipsburg. The pipeline system has been extended but it has been found that the oil in existence and available for connection in Rooks County is not suitable as a whole for the operation of that refinery.

Senator REED. Who owns that pipe line?

Mr. GORE. Which pipe line?

Senator REED. The one that you referred to as being built from Phillipsburg down into Rooks County.

Mr. GORE. The Cooperative Refinery at Phillipsburg. Stanolind has a pipe line in Russell County. Kaw has a pipe line.

Senator REED. Does the Stanolind pipe line serve both counties? Mr. GORE. Yes; it serves quite a number of counties. So does the Kaw. As far as my recollection goes, I think there is one pool with two wells in it—and they also have heavy oil-in Ellis County that are unconnected.

Senator REED. How many of the smaller pools in Kansas have only one buyer?

Mr. GORE. In western Kansas practically all the pools have more than one buyer. I don't recall any pool, unless it would be a pool of three or four or five wells-something of that sort-that does not have more than one purchaser.

Senator REED. Who have built those pipe lines into western Kansas? Mr. GORE. Skelley has a line; Sinclair-Prairie has a line; Continental has a line; Stanolind has a line; Phillips has one; the Texas Co. has one; Cities Service has a line.

no.

Senator REED. How far out do they go?

Mr. GORE. They extend clear out to Ellis County-not all of them;

Senator REED. I was going to ask if all those companies you named were connected.

Mr. GORE. They all extend into Russell County, however. I think Sinclair-Prairie's stops in Barton County, which is the county adjacent to Russell.

Senator REED. Does any of them go west of there?

Mr. GORE. West of Ellis County?

Senator REED. Yes.

Mr. GORE. There is no production west of Ellis County except in and around Scott City, which has a local refinery, and they have a peculiar type of crude there.

There is also some production in Graham County, which has one company for revenue oil which is being taken to the Shallow Water Refinery; and there is a small amount of production in Ness County. Senator REED. Who serves Ness County?

Mr. GORE. Continental-Texas does. It has also its own oil. I don't know disposition they are making of it, but the results so far from the weils that have been drilled are very disappointing.

Senator REED. I think that is all, Mr. Chairman.

Senator JOHNSON of Colorado (presiding). Thank you very much, Mr. Gore.

We shall now hear from Mr. D. G. Powell.

STATEMENT OF D. G. POWELL, EXECUTIVE MANAGER, OKLAHOMA STRIPPER WELL ASSOCIATION, TULSA, OKLA.

Mr. POWELL. Mr. Chairman and gentlemen: I am here for the purpose of opposing S. 3753 for the Oklahoma Stripper Well Association operating solely in the State of Oklahoma. The Oklahoma Stripper Well Association is an organization of independent oil companies and individuals engaged in the production of crude petroleum. The members of our association, approximately 1,000 in number, own and operate the greater part of Oklahoma's 48,000 stripper wells which are still producing more than 50,000 barrels of oil per day and represent a reserve of many millions of barrels of oil still in the ground, for it is an established fact that by means of waterflooding the old stripper leases can be made to produce as much more oil as they have produced to date. This suggests a tremendous reserve in Oklahoma for the State has been producing oil for about 40 years.

Senator REED. What is a stripper well, according to your definition? Mr. POWELL. Senator Reed, the stripper well, to me, is a relative statement. In one area it might be 1 barrel, in a desolate area; in

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