Is Mr. J. French Robinson present? He is from the Consolidated Natural Gas Co. Mr. ROBINSON. I would like to make a very brief statement, Mr. Chairman. Senator PURTELL. We would be glad to hear from you, sir. STATEMENT OF J. FRENCH ROBINSON Mr. ROBINSON. Due to the late hour, Mr. Chairman, I will make this very brief. These are some substitutions for what we recommended at the other hearing, and after discussing some of the points with some of our other gas companies there were a few points that need clarification. In order to save time, I request your permission to insert my statement in the record at this point. Senator PURTELL. Without objection, it is so ordered. (The statement is as follows:) SUGGESTED DRAFT OF EXPLANATION FOR THE SUBMISSION OF SUPPLEMENT TO THE STATEMENT IN RE S. 525 The suggested additions to S. 525 contained in our statement made before the subcommittee on March 3, 1954, met with objections from some of the interested parties. They felt that the restrictions placed upon the right of condemnation were too severe and broader in their terms than necessary to protect property owners. Suggestions have been made which would limit the restrictive provisions to the particular stratum which is sought to be acquired for the storage reservoir rather than relating the restrictions to the area of the storage project. The limitation based upon the exhaustion of 80 percent of the original gas reserves has been related to a stratum which contains oil and gas producible in commercial quantities. In order to present a proposal that would be acceptable to all parties, I have made a redraft of any prior suggestions, which is submitted herewith as a supplement to my previous statement. The first proviso which directs that the court's decree shall contain protective provisions was suggested by other interested parties and is included as being a proper way in which to assure that no interference will be had with the operations and the owners of minerals or of oil and gas in other strata. This limits the condemnation to the particular stratum needed for storage. The second proviso contains the revision of the suggestions which I have previously made. It denies the right of eminent domain unless the following conditions are met: (1) If the stratum contains oil and gas producible in commercial quantities, then at least 80 percent of the original recoverable oil and gas reserves must have been depleted or exhausted; and (2) in addition to the requirement just stated, the condemner must have acquired by agreement the right to store gas in at least 75 percent of the particular stratum within the area of the proposed storage project. As in my previous draft, an interest owned by a public utility and used for the present storage of natural gas in the performance of service to its customers, may not be condemned. My revised suggestions provide a sound basis for the protection of the rights of the property owners. Mr. ROBINSON. Substitute revision of S. 525 so as to make section 7 (h) of the Natural Gas Act read as follows: (h) When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property as to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipeline or pipelines for the transportation of natural gas, and the necessary land, or interest in land, or other property, in addition to right of-way, for the storage of gas, or for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipeline or pipelines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts: Provided, That in the case of the acquisition of land or an interest in land for the storage of gas by such exercise of the right of eminent domain, the court's judgment or decree shall contain conditions and restrictions which will reasonably and fully protect the rights of owners of lands lying within the boundaries of the proposed storage area, or of owners of any minerals thereunder, to explore for and produce oil or gas from said lands by any method, and to conduct operations in connection therewith, including the production and disposal of waters and waste matter, all from or into any geological stratum other than the stratum to be condemned for gas storage: And provided further, That the right of eminent domain shall not be exercised to acquire, for the purpose of gas storage, (a) any interest in any geological stratum within the area of the proposed storage project which stratum contains oil or gas producible in commercial quantities through primary production methods either with or without pressure maintenance or secondary recovery methods of any type, in said stratum within such area and from which such stratum within the area of the proposed storage project the original recoverable oil or gas reserves have not been depleted or exhausted by at least 80 per centum, and unless and until the condemnor shall have acquired the right by grant, lease or other agreement, to store gas in at least 75 per centum of the said geological stratum within the area of the proposed storage project, or (b) any interest in any geological stratum within the area of the proposed storage project owned directly or indirectly by a natural-gas company or by a person engaged in the local distribution of natural gas, which interest is being used by such naturalgas company or by such person for present storage of natural gas in the performance of service to customers within its service area. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000. I was asked by the Pennsylvania Natural Gas Men's Association to submit a statement on their behalf. Senator PURTELL. It will be included in the record at this point. (Statement of Pennsylvania Natural Gas Men's Association is as follows:) STATEMENT OF PENNSYVANIA NATURAL GAS MEN'S ASSOCIATION The Pennsylvania Natural Gas Men's Association is an association of producers and distributors of natural gas the object of which is to exchange ideas and promote better gas service to the consuming public. Many of the corporations which are members of the association operate as public utilities and are subject to the rules and regulations of the Public Utility Commission of the State of Pennsylvania. The use of natural gas for house heating in Pennsylvania has increased tremendously during the past few years and this has materially increased the peak demands during the heating season of the year. It is no longer economically feasible to meet these peak demands by the construction of more and larger pipelines without the use of facilities for the underground storage of natural gas. It is also necessary, in order to be effective in meeting peak demands, that such storage facilities be located as closely as possible to the points of greatest demand. The State of Pennsylvania has many densely populated areas and large industrial centers which are important to the economy of the entire United States and especially are they important in thinking of national defense. Natural gas has been produced, transported and marketed in the western half of Pennsylvania for the past 70 years and a great deal of the business and economic life of the population is dependent upon the continued use of natural gas. Due to the geological structure of the earth in the Appalachian area, gasbearing strata and commercial coal seams occur in the same localities. It is impossible to store gas unless the necessary sand conditions exist. It, therefore, becomes necessary to store gas where such sand is found and this may be under or in the vicinity of coal measures. Since wells for the production of natural gas have been drilled through the coal measures, and coal has been mined in the vicinity of gas wells during the past 70 years, it seems rather inconsistent to attempt to limit gas storage areas to those where there are no existing coal measures. The necessity of storing gas in formations overlain by coal measures has been a recognized fact for some time as is evidenced by a statement of the Bureau of Mines in Information Circular 7654, published by the United States Department of the Interior, December 1952, which said, in part: "The storage of natural gas underground in coal-mining areas is necessary if the inhabitants of those areas are to enjoy continued use of natural gas in their homes. However, storage fields must be developed with due consideration of the rights and safety of the coal industry. "The authors believe that the only satisfactory solution is complete cooperation between the two industries and their mutual enlightenment through free exchange of information." We are heartily in sympathy with the ideas set forth by the Department of the Interior as quoted above; however, we do feel that it would be a serious mistake to amend the proposed legislation, known as S. 525 (83d Cong.), to limit the right of the use of eminent domain for the storage of natural gas to areas where coal measures are nonexistent, as recommended in a recent communication to your committee from the Assistant Secretary of Interior, Mr. F. E. Wormser. We, therefore, recommend that the Congress, in approving the right of eminent domain for the purpose of underground gas storage, allow said right to be exercised in storage areas whether or not such areas are overlain with coal measures or in the vicinity of active underground mining areas. Respectfully submitted. PENNSYLVANIA NATURAL GAS MEN'S ASSOCIATION, By GEORGE DOYING, Executive Secretary. Senator PURTELL. Do you have anything you wish to add, Mr. Robinson? Mr. ROBINSON. I think that is sufficient, sir. Senator PURTELL. We have completed the witnesses who asked to be heard this morning, and so we will adjourn. This record will stay open for 7 days to receive the statements from other parties and from other members of Congress who may be interested. Thank you very much, gentlemen. (Whereupon, at 12:59 p. m., the subcommittee adjourned.) (The following letter and enclosure were subsequently received from Senator Lyndon B. Johnson :) Hon. JOHN W. BRICKER, UNITED STATES SENATE, OFFICE OF THE DEMOCRATIC LEADER, Chairman, Interstate and Foreign Commerce Committee, United States Senate, Washington, D. C. DEAR SENATOR: For the consideration of yourself and the other members of the committee, I enclose a letter from Mr. Jack Woodward, president of the Texas Independent Producers & Royalty Owners Association, relative to proposed legislation to provide enlarged underground storage of natural gas, such as S. 525. You will observe the association has initiated a study on this subject which they suggest will not be ready to present until early in 1955. Sincerely, LYNDON B. JOHNSON. TEXAS INDEPENDENT PRODUCERS & ROYALTY OWNERS ASSOCIATION, Senator LYNDON B. JOHNSON, Senate Office Building, Washington, D. C. DEAR SENATOR JOHNSON: Under mandate given me as president of this association by the membership in convention April 6, I am requesting that bills to give further encouragement to enlarged underground storage of natural gas be withheld pending a study of the degree to which such projects result from artificially depressed wellhead prices in Texas. Gas pipeline companies have proposed this legislation (S. 525) on grounds that it is necessary to accommodate peak-load requirements at points distant from producing areas. We feel it is important to the gas indusry and the Nation that any other possible reasons for support of such Federal legislation be determined in advance of its passage. Without benefit of this additional legislation, the industry since the war has developed more than 150 major storage fields and increased storage capacity Amore than 1,000 percent. There is reason to inquire as to the extent such projects are made economically feasible only because a combination of forces have prevented wellhead gas prices in Texas from reaching normal competitive levels. Where there is a clear public interest in giving gas pipelines the right of eminent domain in the acquisition of underground storage rights, States may provide it, and the Federal Power Commission already has reasonable powers covering these rights. It may be that clarification of FPC powers and additional Federal legislation is warranted, insofar as the principle itself appears sound, but in any case some quantity limitation on a percent of annual-usage basis is clearly required. We have initiated a study of the subject, and anticipate that we will be prepared to lay before the appropriate committees of Congress our full report early in 1955. In the meantime, we shall appreciate your attention to this matter and your best efforts to delay final approval until all aspects have been given the fullest possible consideration. Respectfully yours, JACK WOODWARD, President. (The following letter and enclosure was received from the Jones & Laughlin Steel Corp. :) JONES & LAUGHLIN STEEL CORP., Hon. WILLIAM A. PURTELL, Chairman, Subcommittee on Business and Consumer Interests, Committee on Interstate and Foreign Commerce, Washington, D. C. DEAR SENATOR PURTELL: I am writing to withdraw my request in my letter to you of March 22 that I be permitted to testify in the hearing to be held on S. 525 by your subcommittee on Friday, April 2, 1954. As stated in my letter to you, Jones & Laughlin Steel Corp., is not a member of any of the coal organizations named in your letter to me of March 17. However, since writing you I have ascertained that the witnesses who will appear on behalf of the coal industry at the hearing on April 2 will explain fully the need for preventing gas-storage pools from endangering the safety of coal-mining operations. Since we know that your subcommittee wishes to avoid a prolonged hearing on April 2, we have decided that it is not appropriate for a witness on behalf of Jones & Laughlin Steel Corp. to take the time of the subcommittee to give cumulative testimony. There is one additional point which I would like to mention. It is that under no circumstances should the right of eminent domain, whether Federal or State, be available for the condemnation of our metallurgical coal reserves in the Pittsburgh district for the purpose of creating a gas-storage pool or for any other purpose. If such condemnation occurred, it would not be possible for us to obtain an adequate supply of the essential high volatile metallurgical coking coal elsewhere in the Pittsburgh district. It would then become necessary for us to obtain such coal at a much greater distance from Pittsburgh which would involve a substantial increase in our delivered cost for that kind of coal. I wish to take this opportunity to express my appreciation of the courtesies of you and Mr. L'Heureux in connection with my request for permission to testify with respect to S. 525. Respectfully, H. PARKER SHARP. GREENSBURG-CONNELLSVILLE COAL & COKE Co., SENATOR WILLIAM A. PURTELL, Chairman, Subcommittee on Business and Consumer Interests, Washington, D. C. DEAR SENATOR PURTELL: I regret that it will be impossible for me to attend the hearing on S. 525 scheduled by your subcommittee for Friday, April 2. As president of Greensburg-Connellsville Coal & Coke Co., which operates the Hubbard mine, a large shaft coal mine located in Allegheny County near McKeesport, Pa., and as vice president of the Western Pennsylvania Coal Operators' Association, I wish to file this statement in opposition to S. 525 now pending before your subcommittee. I also concur with the position which will be taken at that hearing by the Western Pennsylvania Coal Operators' Association, since I believe, from my study of and familiarity with the problems involved, that unregulated gas storage in the vicinity of coal mines should not be sanctioned in the manner permitted in this bill. It is my firm belief that if eminent domain is granted to gas companies for storage purposes, it should be done only in such a manner as not to involve condemnation of mineral strata and only upon condition that the proper regulation of the establishment and maintenance of gas storage reservoirs is at the same time provided for by adequate State laws. In addition to being an officer of the aforesaid coal company and coal operators' association, I am also a registered professional engineer in the State of Pennsylvania and own the firm of George S. Baton & Co. This firm have been active mining engineers since 1903, and both in my capacity in that firm and as a mine operator, I have had many years' experience in the operation and safety problems in a great many bituminous coal mines located in western Pennsylvania and northern West Virginia. The Hubbard mine has had two gas storage pools located under it in recent years. One of these storage pools has recently been depressured and the gas removed, but the other is still located under the mine and is in active operation. Consequently, I have had considerable actual experience with the operation of a coal mine located over gas-storage reservoirs. The Hubbard mine was opened in the upper Freeport seam of coal in 1924, and mining has been continuous since that time. In the actual operating territory of this mine, a total of 73 charted and uncharted gas wells have been located to date. Since 1938 we have worked with our own engineers and with the engineers of gas companies and have investigated all known records of gas wells in an effort to locate all wells which pass through our mine. Despite this most careful survey, we have cut into 13 uncharted wells in our mining operations, none of which showed any evidence on the surface or were recorded in any manner. This indicated that in this particular area about 16% percent of the wells which we have discovered only by accidentally cutting into them have been uncharted, unknown wells. From our past experience, we have found that we can anticipate the hazard of cutting into an uncharted well in each 100 acres of coal which we mine. Fortunately, none of the uncharted wells which we have encountered to date were located over gas storage pools so as to connect the pools with our mine workings at the time we cut into them. However, some wells which we cut into in the past are over areas which have subsequently been pressured for gas storage, and the most recent uncharted well which we cut into was very close to an area where gas had been stored but where the gas had been removed a short time prior to our cutting into this well. Of the 13 uncharted wells which we have already cut into, 9 showed gas and in each case caused a temporary shutdown of operations until the well could be sealed and grouted. However, we were able to plug these wells only because the gas pressure encountered was only a very few pounds per square inch, and not the terrifically high pressures at which gas is usually stored underground. For example, over 2 years ago, we cut into an uncharted and uncased well which was outside the storage area under our mine. However, this well did show gas. We shut down the mine immediately and tried to locate the well on the surface. It was eventually found in the backyard of a residence property owned by a Mr. Palmer. We dug down three feet beside this property owner's garage and located a wooden casing. Mr. Palmer had lived in the neighborhood for 30 years and |