Mr. CHANTLAND. Yes; surely, you could not force 22 into a 20capacity line. Mr. COOPER. And there must be a market for the gas also. Mr. CHANTLAND. Yes; but I just told you of an instance where the line was not running more than about 10 or 12 percent of its capacity and they did not want to take on an additional supply; they did not want to fill their line, and yet at the same time communities along that line wanted the gas delivered to them, but they did not have any control over it. Mr. COOPER. You spoke about Texas a moment ago? Mr. CHANTLAND. Yes. Mr. COOPER. As I understand it, they do not have any regulatory law down there, do they? Mr. CHANTLAND. Oh, yes. Mr. COOPER. They do not have any State commission, as I understand. Mr. CHANTLAND. Yes; they have the railroad commission. Mr. COOPER. Do they have a commission in the State of Texas that regulates the sale of electricity, natural gas, and so forth? Mr. COLE. Texas does not have, as you do, a State commission, but the railroad commission has certain jurisdiction over gas and oil conservation, and so forth, but they have had a great deal of difficulty. Mr. COOPER. I gathered, from listening to the hearings before your subcommittee last year, that Texas was powerless to stop some of the things that you were investigating? Mr. COLE. In reference to gas? Mr. COOPER. Yes. Mr. CHANTLAND. They have been set back by the courts, and have started over again. You will find the law set out in this volume, 84-B. Mr. COOPER. I did not want to interrupt Mr. Cole's questions. Mr. CHANTLAND. And I do not want to interrupt either of you. Mr. COLE. Go right ahead. Mr. CHANTLAND. The document which I have handed you, no. 84-B contains a compilation and digest of Federal and State statutes relating to attempts to conserve natural gas. We have set out in full, for instance, the Louisiana law, which is a good law, and is so considered, even by some of the oil people, who say that they are satisfied to go along with it, and that it is working satisfactorily. This volume also contains a compilation of other laws, in other States, and you will find the Texas law set out in full, beginning on page 56, that is the present law. That is the act of May 1, of last Mr. CHANTLAND. Yes; 1935; they have been active in Texas. Mr. CHANTLAND. No. Mr. COOPER. Since 1935. Mr. CHANTLAND. As I said in answer to your other question, some of their acts were invalidated. They realized that natural gas is fugitive and is being exhausted very rapidly, just as was found by Mr. Cole and his committee. As I said, both gas and oil were wasting at a terrific rate. Mr. LEA. Colonel Chantland, I have heard the statement that the latter of the Texas laws was much more effective than the former in dealing with the conservation problem in the prevention of waste. Have you any information as to the present status of that; as to whether or not there has been any improvement? Mr. CHANTLAND. As I recall, someone who appeared at one of our hearings said that the Texas statute was working out very well; that there was some fear about whether it would be invalidated or not; but there has been some improvement. Mr. LEA. Do you recall on what grounds the former law was invalidated? Mr. CHANTLAND. I think it was attacked on several grounds; I do not recall on which specific ground; probably due process was one of them. Mr. COLE. Colonel, have you any idea how the rates to the consumers of natural gas is fixed at Amarillo, which city gets its gas, at least some of it, from the Federal Government plant located there the helium plant? Before you answer, I may say that I may not be entirely correct, but there is a helium plant at Amarillo, and I think the Government owns several thousand acres of land in the gas field where the helium is found, and that is transported by Government-owned pipe line. After extracting the helium, the gas remaining goes into Amarillo and is sold there under a rate which the Government, I think, dictates; at any rate, it is sold to the consumers of that city. Can you tell us how that rate compares with the rates fixed in other cities? Mr. CHANTLAND. No; I could not, because we did not examine that Government plant; we were quite rushed to get on with this whole problem, and that is the reason it was not examined-did not go into that. Mr. COLE. You mean you did not examine it? Mr. CHANTLAND. I mean we did not go into that phase of it. Mr. CHANTLAND. At Amarillo; we did not go into the matter of rates the actual figures; we did go to the plant, but not into that phase of it. The rates of gas, as the reports show clearly, the rates of gas at every stage of the game, except in the field where they get it from the individual land owner, varies very greatly. Mr. COLE. My recollection is that the corporation counsel in the District of Columbia asked us within the last 2 or 3 years to do something about this natural-gas rate at the District line. Now, in cases like the one we have in the District or in other States, can you give us anything specific as to whether other State commissions or city regulatory bodies have had difficulty in determining, for the purpose of their local rate structure, the proper price of natural gas which goes into blend with artificial gas? Mr. CHANTLAND. The natural-gas cases are not so very common. That has been up, I think, in West Virginia and in the Ohio cases. That was in the Dayton case, I am advised. Those cases, I am informed, are all in the brief that Mr. DeVane handed you yesterday. Mr. COLE. It is your idea that under this act, if you give the Commission the necessary authority to regulate the rates somebody is 62815-36-5 charging at the State or city line, then some of these companies will reduce their rates; that is what you expect to follow? Mr. CHANTLAND. I think so. We have an illustration, if I may give it to you, in the record. along that line. When the Panhandle Eastern Pipe Line Co. first started it came near Kansas City, Mo., and they got hold of a contract that authorized them to go into Kansas City, which would disturb the rates of Mr. Doherty's company, the Cities Service, in Kansas City. Its gate rate was 35 or 40 cents, I think. That was higher than the rate was going to be under the new line's contract, about 10 cents under. And under the circumstances the contract for transporting, the pumping station, and the other things necessary for taking the gas were not provided. Finally, in order to do away with that threat entirely, Cities Service bought the company with which the Panhandle had its contract, and so they maintained the rate, whatever the figure was, around 35 cents, I think. At any rate, that story is fully told in our investigation, by records and testimony in evidence. Mr. COLE. Then it would follow, in view of your findings, that the company controlling the natural-gas transportation lines are not running to capacity, and if they did they would get far more for their product than you believe, under this bill, they would be permitted to charge? Mr. CHANTLAND. I believe so. Mr. COLE. Is the failure to do that because of collusion among these companies? It is hard for me to reconcile your statement that they are getting an exorbitant price for it. Mr. CHANTLAND. And still not take the gas, you mean? Mr. COLE. Yes; still not take gas, when you say that they are not running to capacity. Mr. CHANTLAND. There seems to be an entire reticence on their part to seek new territory or to impinge on anyone else; they have been very slow to take advantage of the opportunity to extend into new territory, and perhaps one of the reasons is that they want to wait until they come into complete control of this other line which they do not completely own, until after the line is so owned. But whatever the idea is, we have a situation that is not so good; that may not account for it, or answer your question. We have also had situations where pipe lines have refused to let cities buy directly from them and have told cities that the entire output is spoken for, and that they must buy from So-and-so, a subsidiary of the pipeline company. The suggestion is made that this is just another way of piling on another profit. The demand at present, I think, is not so much for more pipe lines as for those pipe lines to take more gas, and I am frank to say I do not have a complete answer as to why they do not want to market gas and take more gas into their lines, but they do not. It does seem rather anomolous, does it not? Mr. LEA. Colonel, does the fact that these lines have to carry a peak load have anything to do with that? Mr. CHANTLAND. Well, I am very sure that that would be one of the defenses offered, and to an extent that is true. They have to be prepared to carry a peak load, but that is a thing that could be handled to some extent beyond what the pipe line itself apparently can do, because I have talked with some of the gas-operating people of some of the largest systems, and have discussed, for instance, the Indianapolis situation with them, and it is pretty evident that that peak load can be provided for by the use of the storage facilities of the present manufactured-gas plants, in many places, and in that way they could avoid the overstressing the pipe lines at the peak-load period. Mr. LEA. Well, you have, for instance, seasonal manufacturing, on a large scale, or in a city that consumes large quantities of gas for household purposes, a blizzard hits the city and everybody turns on the gas. Mr. CHANTLAND. Yes. Mr. LEA. It is up to the gas company to try to maintain the necessary pressure to meet that demand. Mr. CHANTLAND. Yes. Mr. LEA. That presents a pretty difficult situation, does it not? Mr. CHANTLAND. That is a difficult problem, yes, and that is the place where the reserve facilities in the old manufactured gas plant, the use of its tanks, could be taken into account, fill those reserve tanks with gas and be able to meet that peak load, and therefore lessen the demand on their pipe line capacity. Mr. COLE. You mean by transferring gas from the tanks? Mr. CHANTLAND. Yes; make gas, or take the gas from the line and put it into the reserve facilities during slack. Mr. COLE. You mean from the natural storage into the artificial storage? Mr. CHANTLAND. They can do that by making use of the present manufactured gas storage equipment; it might present some problem, but they can use the present manufactured storage with some changes, prhaps, by making it tighter, as I understand that natural gas is a little more fugitive in character than the manufactured gas. But they could transfer this natural gas into their storage facilities to protect them against the peak loads. I am not an engineer, but am giving you what has been suggested as a possible way to meet that problem. Mr. LEA: Colonel, what is the estimated period of exhaustion of the present known natural gas supply in the United States? Mr. CHANTLAND. I do not believe anyone has been able to say, or make a prediction of that, because I think it is ever changing. The only figure that I would be able to give you is the one that I stated in my remarks a while ago, based on the testimony from geologists and people on whom we felt we could rely, and those figures, based on the present rate of exhaustion, you might say "ad lib" with no rstrictions, would run anywhere from 10 to 50 years, or better. As I say, these figures are changing. In the eastern fields, the older fields, many wells are down somewhat in supply, but they are having new ones put in all the time, so that I do not believe that any such a figure can be stated with any degree of accuracy. The gas is being used, but it is also being discovered, and wls are being drilled all the time. Mr. LEA. How rapidly does the pressure decline in fields like the Panhandle? Mr. CHANTLAND. I wish that I could recall; we had some very good figures submitted on that. The reduction in pressure has been kept. Very definite figures have been kept within areas in the Panhandle, particularly in the center and outer sections of the field, but I do not feel that I could quote a figure on an important question like that. That is one of the ways they have of fixing compensation to the one they buy from. They determine the pressure and then take that. The better companies take what they call typical wells, and measure the test at the beginning and the end of the year, and determine in that way what the supply is and use that factor in their compensation. They use that decline in pressure as one of the factors. Mr. LEA. Where there are large fields with a considerable number of owners how definitely can the engineers determine the total available supply and its location with reference to different ownerships? Mr. CHANTLAND. That apparently is not so difficult. You are talking now about the problem of ratable taking so as to determine the amount that is to be paid one owner and how much to another, are you? Mr. LEA. I had two things in mind: One was the reliability of the estimates from the standpoint of exhaustion. Mr. CHANTLAND. Yes. Mr. LEA. And also the relative rights of the joint owners in the field. How can that be appraised? Mr. CHANTLAND. They do appraise them, but of course, the first question, for the field-you are talking in very big figures. As I said, the estimate of reserves in the Panhandle field is some thirteen or fourteen trillion cubic feet; and in the Hugoton field, six or seven trillion and higher. Mr. LEA. What is it in the Michigan field? Mr. CHANTLAND. In Michigan-there is very serious controversy over that; it is a newly developed field and naturally, of course, there have been no real or substantial figures arrived at. So perhaps you can minimize that. On the matter of proration, it does not seem so difficult, because they can outline the field very well, and the pressure is more or less constant for similar positions in the field, so they can tell with a certain degree of accuracy. There is not a great deal of trouble in knowing what the man on section 1, or a man on section 2, for instance, should have for their share into a gas line. Mr. LEA. How broad a base of experience have we to determine that question, that is, the duration of the field and the quantity? In other words, what base of experience have we that would enable us to get at the problem more reliably? Mr. CHANTLAND. I am thinking more particularly of the fields where we have the big reserves, than the small fields. Mr. LEA. Yes. Mr. CHANTLAND. I think they have been going long enough out there so that they have determined quite definitely what the rate of decline in pressure is over a period of years. I think the Bureau of Mines has statistics on that. Mr. COLE. Which bureau? Mr. CHANTLAND. The Bureau of Mines. Mr. COLE. The Bureau of Mines? |
