The creation of a sealed oil reserve for the United States Navy or for anyone else in the offshore area of the Wilmington field is therefore an impossibility unless the large number of private wells creating the adverse drainage therein are condemned and shut in until future production in the offshore area indicates that a balanced drainage condition has come into existence.

CONSERVATION OF OIL AND GAS IN CALIFORNIA

Among California operators today the thought of gas and oil wastage is abhorrent, despite implied assertions of the opposition to the contrary.

The maintenance of a normal gas-oil ratio, which may be defined as the minimum amount of gas required to bring a barrel of oil to the well mouth, is recognized as a duty to prevent gas wastage and the consequent reduction in the chief propulsive agent necessary to maximum ultimate oil recovery. An effective State law prevents waste of gas among operators who do not maintain optimum conditions in this respect.

Voluntary curtailment of production during periods of slack market conditions and/or opening up of new oil fields has been practiced among California operators for a number of years and the present oil umpire, J. R. Pemberton, is functioning to preserve and extend voluntary curtailment in all fields, but more particularly in the newer areas such as Wilmington. This is a practical conservation measure. It is believed that reasonable curtailment, aside from aiding to maintain a proper balance between market and supply, actually increases the ultimate recovery of oil from a sand through preservation of the propulsive energy of gas.

ESTIMATES OF UNITED STATES PETROLEUM RESERVES

A number of supposedly authoritative estimates of the future petroleum reserves of the United States were made between the years 1908 and 1925 and in each instance the quantity of petroleum actually produced between the date of estimate and January 1, 1939, was far in excess of the supposed reserve. Thus, for example, the 1925 estimate indicated a total reserve of 5,500,000,000 barrels, actually between that year and the end of 1938, more than 13,000,000,000 barrels were produced.

Between 1925 and 1935 no reliable estimates are available, but between the latter year and 1939, 5 well-qualified estimates by both Federal and private agencies have been made. In each instance these indicate increasing reserves, from 10,763,000,000 barrels as of December 31, 1934, to 17,348,146,000 barrels as of January 1, 1939.

These figures are based upon the known evidence of producing fields and their extensions only and do not take into consideration the huge prospective oil areas of the United States.

It is evident that new discoveries year by year are well in advance of oil production, thus insuring a long period of continued use of petroleum and its products for industrial purposes.

LIQUID FUELS OF THE FUTURE

It has been pointed out that vast areas exist within the United States susceptible of containing as yet unknown accumulations of petroleum and gas. The advance in prospecting technique during the past few years and the continued refinement and improvement in these methods constantly enlarge the geologist's search for new oil fields. For example, witness the recent development of a compact, powerful portable core-drilling outfit for the investigation of deeply buried ancient shore lines and "overlaps" which when discovered have already proven highly prolific in many districts.

The application of geophysics to the discovery of otherwise hidden subsurface conditions indicative of oil reservoir conditions is already responsible for many important discoveries both in the Gulf region and in California, but as pointed out, the use of its procedure in deep offshore areas like that of California is laborious, highly expensive, and probably not too satisfactory. Its further refinement will enlarge the scope of the geophysical method and make it applicable to many great areas not yet thus prospected.

It is the undersigned's opinion that the 17,000,000,000 reserve estimate of 1939 will be greatly enlarged during the next 10 years, despite the continued increase in petroleum production.

It is a curious fact that, despite its admitted need for oil reserves and the avowed intention of taking, without compensation, the existing and potential offshore oil

fields, first of California and presumably later those of our Gulf States of Texas, Louisiana, Mississippi and (if geologic trends are to be relief upon) probably those of the tidal areas of Alabama and Florida, the United States Navy appears to have given little serious consideration to the profound investigations and results, both in the United States and elsewhere upon the matter of conversion of coal, oil shale, and various replaceable organic substances, both vegetable and animal into liquid fuels equal in efficiency to present day petroleum fuels.

The rather unsatisfactory rebuttal of the testimony of the undersigned in this matter by Captain Stuart emphasized, on the one hand, the present high cost of hydrogenation and other methods of deriving fuel oil from coal, oil shale, etc., while, on the other, he stated that 10 to 15 years must elapse before these costs could be reduced to a point comparable with that of producing and refining petroleum. The existence today of commercial hydrogenation plants for the production of gasoline from coal in Germany, Great Britain, Japan, France, and Italy appears to have made little impression.

In concluding this reference to hydrogenation, the undersigned must again call attention to the recent authoritative article by Jacque C. Morrell in the March 16, 1939, issue of the Oil and Gas Journal, page 40 et seq. which, because of its importance in the present matter is again quoted as to its concluding paragraphs. "The use of these methods of conversion of coal into hydrocarbons has been estimated by Morrell and Egloff to produce sufficient motor fuel to supply the requirements of the world at our present rate of consumption for over 25,000 years. This is based on an available supply of coal of 7,400 billion tons and does not provide for the normal uses of coal, which if used at the present rate should last over 5,000 years at the present rate of consumption. Hence a division of uses will provide 5,000 years of motor fuel for each 1,000 years of deduction from the use of coal for other purposes. Cracking of tars and oils obtained from coal and oil shales should provide approximately 1,000 years' supply of motor fuel. According to present knowledge the United States has about one-half of these natural resources. Various tars from lignite, peat, wood, as well as from animals and vegetables may be cracked to produce motor fuel. The wood tar vegetable and animal oils represent a replaceable supply."

SUMMARY

The outstanding facts and comments covered in the present brief and testimony of undersigned are presented below in short form:

"(1) Within estimated offshore areas of the California coast aggregating a strip approximately 100 miles long by 1 mile in width, potential submerged invisible commercial oil accumulations may exist, but these will be exceptionally difficult to discover and equally difficult to produce, when and if discovered.

"(2) The seven upland California coastal oil fields were all discovered and developed through the application of geologic and well technique to dry-land conditions and the extension of some of these fields into the offshore area has been wholly the result of progressive development from areas of known conditions on land into the hidden offshore areas.

"(3) The total offshore proven area of all such offshore fields is estimated as of January 1, 1938, at 2,128 acres, with an estimated reserve of approximately 137,000,000 barrels, of which 100,000,000 or less barrels are allocated to the Wilmington offshore field near Long Beach, in which area, proponents profess to be alone interested.

"(4) Underground adverse drainage of oil and gas within the sands or other reservoir rocks of an oil field proceeds toward a producing well or group of wells where areas of lowered gas pressure are developing and away from undeveloped portions of the reservoir rocks, thereby progressively lowering the propulsive gas energy and progressively reducing the recoverable oil content of such undeveloped areas. The time element, the distance between wells and groups of wells, together with subsurface geologic and structural conditions, are important factors in determining the degree of adverse drainage acting against any part of a field.

"(5) The offshore portions of the California coastal fields, whether developed by wells or not, have been, are, and will continue to be subject to progressive adverse mass drainage from inshore wells of the same field.

"(6) This is especially true at Wilmington where the mass adverse drainage of 607 wells (March 1, 1939), a number of which are adjacent to the north line of the wholly undeveloped offshore proven area covering about 1,200 acres, has been and will continue to be active. It is estimated that the offshore proven area at Wilmington suffers a daily loss of at least 5,000 barrels from this cause.

Under

"(7) California oil-field operators are wasting neither gas nor petroleum. voluntary curtailment, which fits supply to demand, and under existing State laws prohibiting gas waste, both substances are conserved and their ultimately recoverable amount is believed to have been increased. Where overproduction exists, as is inevitable in new high-pressure fields, excess oil goes into storage against a hoped-for upturn in demand.

"(8) United States proven reserves of petroleum are outstripping even the rapid increase in production and the application of an at present highly developed technique with its future refinements to vast areas of potentially oil-producing formations in the United States will insure future proven reserves progressively higher, year by year, than the present 17,000,000,000 barrel estimate.

"(9) Should the gloomy forebodings of the United States Navy as to the petering out of the available petroleum supplies of our Nation in 15 or 20 years come true, there remains a wholly untouched souce of liquid fuel to be derived from the hydrogenation or other treatment of our vast coal and oil-shale reserves plus other known methods applicable to replaceable organic products, both vegetable and animal.

"When the cost of producing a barrel of petroleum equals the then cost of an equal energy unit of the products of hydrogenation, a substitute for natural petroleum will be automatically provided which will insure the successful carrying forward of the Nation's and of the Navy's business for several thousand years to come.'

Finally, the undersigned must confess himself as at a complete loss, in view of the realities and facts of the situation, to understand how, in order to acquire, without cost to itself, a wasting reserve of not to exceed 100,000,000 barrels in a single field off the California coast, the United States Navy is willing to upset the usage of more than a century with respect to the title of all coastal States of our Nation.

Respectfully,

Mr. TRAMMELL. There is one other picture I should like to show you, Mr. Chairman. I will only take 1 minute. It is shown by the picture better than with many words. I indicate on the picture. All of this area along here is owned by the city of Long Beach. You will notice it extends right up to the upper end of the picture. That is all owned by the city of Long Beach. Nothing down below it. I think that shows what is happening better than it can be shown in any other way.

Senator JOHNSON of California. I have one I have one more witness, Mr. Earl Warren, our attorney general. I think he will be the last witness. Senator HATCH. The committee will be in recess until 10:30 tomorrow morning.

(Thereupon, at 5:15 p. m., Wednesday, March 29, 1939, a recess was taken until 10:30 a. m. the next day, Thursday, March 30, 1939.)

140042-39- -23

TITLE TO SUBMERGED OIL LANDS

THURSDAY, MARCH 30, 1939

UNITED STATES SENATE,

COMMITTEE ON PUBLIC LANDS AND SURVEYS,
Washington, D. C.

The committee met at 10:30 a. m., pursuant to adjournment on yesterday, in room 224, Senate Office Building, Senator Henry F. Ashurst, presiding.

Present: Senators Ashurst (presiding), Murray, Gurney, and Holman.

Present also: Senators Downey and Johnson, of California. Senator ASHURST (presiding). The committee will come to order. Senator Adams, the chairman of the committee, has requested the present occupant of the Chair to proceed for the moment. Senator Johnson, who will you have heard first?

Senator JOHNSON of California. We will call as our last witness Mr. Earl Warren, attorney general of the State of California.

Senator ASHURST (presiding). Mr. Attorney General, you may sit or stand as you choose, and read from manuscripts at any time if you choose.

Mr. WARREN. I thank you.

STATEMENT OF EARL WARREN, ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, SACRAMENTO, CALIF.

Mr. WARREN. Mr. Chairman and members of the committee, I want to thank you for your patience during the past few days in listening to the testimony of the gentlemen from my own State and from the other States who were fighting our cause with us.

If it were not for the fact that the attendance of members of the committee has more or less ebbed and flowed, like the tides we have been discussing in this matter, I do not believe I would have anything to say at this particular time, because the law has been fully developed, it has been very ably argued, particularly by the gentlemen from Texas, to whom the most of the time was accorded.

Those gentlemen were far better prepared than some of the rest of us, because they have been living with this matter now for several years. They have attended all of the hearings held by congressional committees, while some of us, on the other hand, have only come into the problem at a very recent date.

My own connection with this problem came the first of the year, when I assumed my present office; and, of course, I have not had an opportunity to make the exhaustive research which these other gentlemen have made.

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