Mr. CHANTLAND. Yes; I think they have rather complete statistics showing the pressure decrease and the amount taken out; they have collected quite a little bit of data on that.

Mr. COLE. Rather complete statistics on the very thing this bill would cover; is that right?

Mr. CHANTLAND. Well, I do not know

Mr. COLE. That is what it does, is it not; because I understand the Federal Power Commission is permitted to set up the necessary number of experts to determine what this bill requires in order to establish rates and to establish some, at least, of the information that is now available in the Bureau of Mines.

Mr. CHANTLAND. Some of the figures we had were secured from the Bureau of Mines, and I do not assume that any of their work would be lost; wherever necessary the Power Commission would make use of the Bureau of Mines' figures.

Mr. COLE. You have made use of the Bureau of Mines' figures, you say?

Mr. CHANTLAND. We have taken figures from them.

Mr. COLE. I mean have you used their personnel; you did not use their personnel?

Mr. CHANTLAND. No; because we went into the accounts. Many of these questions are not those of our investigation. You appreciate that I am a lawyer. You are taking me quite widely into the engineering field, and I am just doing the best I can.

And there are stated principles that go into ratable taking, and all of those things must be taken into consideration in dealing with these companies. It must be an equitable matter.

Mr. LEA. And I would assume that the body set up with the responsibility of administering the law, if it had the facts available from a reliable source, would have common sense enough to avail itself of those facts, and of the experience of men in other departments in getting that information.

Mr. CHANTLAND. I would assume so.

Mr. LEA. There is one problem that suggested itself to me this morning in the startling figures about the extent of gas production and its great development as carried on in recent years, and that is as to what would happen if this supply should be rapidly depleted with so many industries and perhaps homes depending on it.

Mr. CHANTLAND. Is that not just stating one more powerful reason why the whole problem should be taken hold of immediately?

Mr. LEA. Well, I think that is true. But what is the protection of these communities that are depending upon gas supply for fuel? Last year I was out in the Central West where a little community some years back developed a natural-gas supply which lasted for a few years but was suddenly exhausted. That community became a pitiful specter for quite a number of years until another fuel was developed, and I am wondering how far it is possible to guard against that?

Mr. CHANTLAND. I think it is a very serious thing to let this gas go to waste as it is, where each is trying to take his biggest immediate profit. There is no allocation or proration among them, and it is much more serious than it would be if you were to take hold of it and substantially limit it. It would result in conservation, and in the end the owners would realize more than otherwise. They could be dealt with

fairly, and I think would be satisfied, if they realized they were receiving their equitable return.

Mr. LEA. Based on the figures you gave us this morning as to the estimate of waste that has been occurring, how does that waste compare with the amount of gas that is actually consumed?

Mr. CHANTLAND. The comparison which I have already stated to you is the only one I can make. The waste equals the domestic consumption and commercial use of natural gas in the entire country. The domestic use is about 16 percent and the commercial use is about 10 percent. In other words, that is, taking the total of the two, around 25 percent of all.

Mr. LEA. Yes. So far as you have been able to ascertain, what is the reason why these States in which these wells are located have not been able to more effectively and actively restrain this useless waste? Mr. CHANTLAND. Well, Mr. Chairman, remember, this whole thing is new. Texas made one effort and was set back. Louisiana has a good law. I do not think it has gone to the higher courts, but apparently it will not need to, if the testimony before the Commission, even by people in the industry, representatives of the Standard Oil Co. of Louisiana, and of the Mississippi River Fuel Co., I think it was, who said that they could work satisfactorily with that law. It seems to work out pretty well as a conservation statute.

Regarding the Oklahoma situation I am not familiar with it. Since this new Kansas field has come in, that is the Hugeton field, they are getting some market, but there is some waste at the present time.

Mr. LEA. I thought the gas out there was being conserved.

Mr. CHANTLAND. I think if there was some allocation between the States there would not be much difficulty in working it out. Mr. LEA. You are a lawyer?

Mr. CHANTLAND. Yes.

Mr. LEA. What limitation of power do you think the Federal Government has in regard to conserving gas in the States and in its production?

Mr. CHANTLAND. I believe that that is best stated in the draft of the bill that has been submitted by the Commission. I think we have worked it out there. We reached the conclusion that that was about the only way it could be done, that is something that would be in the nature of a standing invitation to the States to enter into these compacts with the idea that the Government would have the information and deal fairly, and would have this law on the statute books that would then make shipments of gas produced or attempted to be produced and shipped in violation of the State laws (which would be written into the compact as a part of the contract) would be contraband. I believe that would tend toward conservation. I do not believe there is any other way it can be carried out. I know that Mr. Cole asked several questions along that line yesterday and I believe Mr. De Vane put them back on his side of the net. But we reached the conclusion stated.

Mr. LEA. In other words, you think the Federal Government should ally itself with the State governments in the protection and conservation of its resources?

Mr. CHANTLAND. Yes, and on that line, Mr. Lea, that memorandum which I handed to you, a copy of it, has quite a little bit of study

on both propositions; one that of compacts, that is the extent of the compact, and the other the right of the Government, under law, to ban from interstate commerce of gas that has been produced in violation of the State laws if covered by compact.

Mr. LEA. The Federal Government, I take it, would have no greater power to put a ban on interstate shipments by reason of the compact than it has against any other single State law.

Mr. CHANTLAND. The difference is this, that in this instance it would be in aid of; it would not be taking something away from them, but would be aiding the States, and there the distinction is drawn, which I think is sound.

Mr. LEA. It is your judgment that one State can cooperate with another in a conservation program.

Mr. CHANTLAND. Yes; and I think the more States the better.
Mr. LEA. Why do you think that?

Mr. CHANTLAND. Well, then, there is not left the question of one State feeling that it is going to lose; to use the words that came into existence recently, "chiseled" against-that your next door neighbor is chiseling on something. If they feel they are getting a square deal, and they are getting a reasonable allocation and amount for their supply, why naturally they will do it. But I cannot see how they can hope to fight it out alone.

Mr. LEA. Could the Federal Government make as a condition. precedent for the transmission or transportation of gas in interstate commerce a requirement that pay for the gas must have been contributed jointly to the owners of the sources from which it came?

Mr. CHANTLAND. Yes; I think so, if the State law is there, and that State law is written into the compact; I see no reason why it should not.

Mr. LEA. If there was no State law on that subject, what would happen?

Mr. CHANTLAND. I think it could not be done. I think the Federal law would be good only as an aid to the State law.

Mr. LEA. You spoke about the problem of common carriers by pipe line. What are the reasons for and against providing the obligation of common carrier on pipe lines?

Mr. CHANTLAND. The reasons are perhaps not so much against the idea of making the obligation as they are factual, against the legal situation. The Supreme Court has said, of course, very definitely, that you cannot make a person a common carrier by declaring him to be one. The facts are the things which control. And in the natural-gas pipe-line industry the natural-gas pipe-line company carries to a large extent its own gas, whether it is produced by the company or purchased from others, so that a large number of them are outside of the field of common carriers.

An attempt was made in the bill drafted, which we submitted to you, to put that obligation in the alternative, which we felt might help out, because there are very few pipe-line companies that do not purchase some gas. Then, if they purchase some, they should purchase ratably, and the gas companies that do not want to do that should assume the obligation of common carrier. The alternative is put up to them.

Mr. LEA. You spoke of the number of holding companies engaged in or having ownership in companies engaged in the gas business.

Have you examined to what extent these companies are pyramided? Mr. CHANTLAND. The pyramiding is not so great in the natural gas as in the electrical field. There is some.

Mr. LEA. And as to the distribution of the stock, is it as widely distributed, or is its ownership centralized?

Mr. CHANTLAND. Because of the fact that three or four large ones are the same as in the electric business, of course, there would be an identical problem. The Standard Oil of New Jersey, I think, has been before the public long enough so that your judgment and your knowledge would be as good as mine. I would not undertake to say who owns the stock, but I guess there are some well-known large owners of Standard Oil.

The smaller companies, gas companies-just a moment. It seems [after consulting with Colonel England] that the concentration of stock in the natural-gas industry is pyramided just as much as it is in the electric industry. For instance, take the Electric Bond & Share; they have more pyramiding in gas than in electricity. I had forgotten that.

Mr. LEA. You spoke of sweet gas and sulphur gas. Will you define those terms for the record?

Mr. CHANTLAND. I tried to define it rather generally, loosely, by saying that sweet gas did not have any sulphur.

Mr. LEA. And what is sour gas?

Mr. CHANTLAND. Sulphur gas is also sometimes called sour gas. Mr. LEA. Gas is divided into those two terms?

Mr. CHANTLAND. Generally speaking.

Mr. LEA. I assume that gas from different fields varies; that there is a difference in the quality of the gas?

Mr. CHANTLAND. Yes; that is true. The B. T. U. content is considered. For instance, some of the Hugeton gas is so much below that of the Amarillo gas field that they do not wish to take both into the same pipe line.

Mr. LEA. What, speaking generally, is the relation of gas to oil from the standpoint of the source of supply?

Mr. CHANTLAND. Sometimes, quite often, you get the one where you get the other; you get the oil and gas at the same place.

Mr. LEA. Can you state about the percentage that ordinarily exists between oil and gas?

Mr. CHANTLAND. No; I cannot state that; it would be pretty hard. The first desire often is to have oil. Oil companies also have some gas left over. This makes for cheap gas in those instances.

Mr. LEA. This morning you referred to large companies engaging in the gas business. What would you say were the main advantages or disadvantages of large capitalization in the gas industry?

Mr. CHANTLAND. Well, we want substantial reserves for one thing; that is to be desired. That takes money.

The distances from the big reserve sources to the large consuming markets are long. Pipe-line construction costs, roughly, from between $20,000 to $30,000 per mile of the sizes usually installed. Mr. MERRITT. For how much?

Mr. CHANTLAND. Per mile. From $20,000 to $30,000 a mile, and you can see how that figures up for a big pipe line, and that does not include, Mr. Merritt, river crossings, pumping stations, and things of that sort.

Now, when you are talking about a pipe line that goes from the Panhandle Field of Texas up to the city of Chicago, that is a distance of almost a thousand miles, and you see that represents a considerable investment to put in a pipe line; considerable money invested in that alone. So that it is necessary to have a substantially sized company. But even that size, I do not suppose, is large when we have been talking about capitalization of the companies, that are in it. To some, that is only a smaller part of their business. To some of them, it is a large part of their business.

Mr. LEA. To what extent is the source of supply necessary so that distribution is assured over a definite period of time? I take it that a company that owns gas facilities, operating in an area, would want to have a supply assured from those who are tied up with other sources.

Mr. CHANTLAND. Pipe lines do not have common termini. That was a question I am glad you raised, because there was a question asked yesterday that seemed to indicate that there could be competition between these pipe lines if they are once established, a good deal like it is with railroads. Of course, that is impossible. They do not run to the same points. They go out from the field in different directions, and no other pipe line comes into that particular territory. Each line, once established, has a monopoly on the territory, and the company that is in there first has that territory. That is true, because they may be from some entirely different source, but that has nothing to do with conservation.

Mr. LEA. I really did not mean conservation, but inquired rather as to the extent and duration of the company. How else could it be able to operate and I was assuming that the company that had several different sources of supply had a greater assurance of business than the company that had tied up with only one or two

sources.

Mr. CHANTLAND. If you mean by sources of supply definite acreage, a definite field, naturally there must be more acreage, and they must have sufficient acreage.

Mr. LEA. Do you have any definite information as to how much of this investment in the gas industry is represented in reserve supply?

Mr. CHANTLAND. Yes; but as I said, that varies very greatly, and more so in the east than in the west. For example, at one time, in the course of the years, the Columbia had something over more than 3,000,000 acres in reserve-whatever the figure may be.

But the following year they canceled nearly 60 percent of that acreage. It is changing continually. The turn-over is very big.

Thus we have had many complaints in the East about the changes in what they pay in royalty or flat leases, in purchases from land owners. A land owner, of course, has only one outlet for his well, and if he is getting $250 for gas off of his farm this year, and they come along next year and offer him $125, naturally he does not like it. Perhaps they are justified, and perhaps not. Maybe they are justified in giving him only $125, or maybe they do not need it that year at all, or maybe they should pay him $250 or even $500, so naturally they complain about it.

Mr. LEA. How does the situation with respect to discovery in the gas field compare with the oil industry?