tities to supply Laramie. They will not be justified by that fact in building a pipeline. That pipeline and distribution system will cost just about a million dollars, just around that figure, just a little more or a little less. It will be necessary to drill at least one more well, and probably two more wells before they can be reasonably sure that there really is a body of gas there.

Now suppose they go ahead and they get their first well completed some time in the middle of next summer, and even get started on their second, and even concede that they do not have any more trouble of any kind, which is taking a rather optimistic view. Those fellows are in danger of finding that just when they are half through with this exploratory work which up to the present time has cost something like $80,000, their permit is gone. And there will not be any authority in anybody to extend it. They will not be able to get a new permit. That is my interpretation of the present act. I feel quite sure that the original permittee can not turn around and get a new permit when his permit has expired, and they will simply be out of luck.

They will not only be out of luck, but the public will be out of luck. That structure stood there waiting for somebody to spend some money on it for two years after the leasing act had been passed, and it is only now and again that you will find a body of people who are willing to take a chance. These particular people are experts in the natural gas business. And the public will be out of luck if there is a commercial body of gas there and nobody attempts to prove it up and build the pipeline.

This proposition, of course, takes more money than a great many companies have who are simply prospecting for oil. They have not only got to drill three wells to establish their supply, but then they have got to dig down to the tune, as I said, of a million dollars more to put in their system.

Senator JONES of New Mexico. How much of an area have you in that lease?

Mr. JONES. That lease comprises 2,560 acres, the limit of a permit, and of that 2,560 acres I think the whole 2,560 acres covers more than the possible producing area of that structure. I don't say probable, I say possible. I think they have everything there, and in all probability the producing area will be less than 2,000 acres.

Senator CAMERON. Is it difficult to properly finance prospecting under the present leasing act for oil or gas on account of the permit covering so short a term of years?

Mr. JONES. Oh, yes. If these people can not make it go and turn it back to the original permittees who have retained a royalty interest in it, those fellows can not induce anybody possibly to do anything with it. Nobody with any business sense will go in there. Now that is my exhibit No. 1.

I have another client which is in this position. A small company with practically nothing but hope behind it. They obtained quite a number of leases on patented land and the Government permit covering a structure over near Duchesne, Utah, in the Uintah Basin. That is 50 miles from the nearest railroad. The road there is over a rugged and very mountainous country. They made a contract with another small company to drill a well on that structure. And the company drilled a well to a depth of 2,865 feet and then ran out

of funds. Now they must have spent there an enormous amount of money in the drilling of that wildcat well, because all oil men know that it costs more to drill any wildcat well than it does to drill a well in an oil field where you have everything at hand. They are continuing at work on the matter of getting enough funds to complete this well. It probably ought to go about 3,500 feet, that is about 750 feet more than the present depth. If they got oil of course they will have practically proved the structure. If they do not get oil they will not have satisfactorily disproved it. There should be another well drilled on that structure. It is very large. Their permit expires I believe some time next summer. They are in a worse position than the first people to whom I referred. And I don't know what they are going to do.

I happen to know of another permit over in the Laramie Basin. I have no connection with it. A well has been drilled to about 1.000 feet, and the people who own it ran out of funds and are now trying to, as you suggested, Senator, finance the further drilling of their permit, and they are right now up against this serious obstacle that people hesitate to go in there and start. They have a 4,000-foot well to drill there. They may get down 1,000 feet, 2,000 feet, have a crooked hole, and after working around there two or three months be compelled to abandon and start over again. They may get down 1,000, 2,000, 3,000, almost 4.000 feet, and have a fishing job consuming several months before they are able to start again. They may get down almost all the way and have a fishing job, which after several months of work must be abandoned entirely, with the idea of just starting all over again.

So that is the situation that a number of people are facing right.

now.

In connection with it I drafted a suggested bill, a copy of which I would like to leave with the committee, having in view only people who had made a considerable expenditure on their lands. This bill is as follows [reading]:

A bill to authorize the Secretary of the Interior, in his discretion, to extend the term of prospecting permits for oil and gas granted under the act of Congress approved February 25, 1920 (46 Stat., p. 437).

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That. in addition to existing law, the Secretary of the Interior be, and he is hereby authorized, in his discretion, to extend, from time to time, the term of any prospecting permit for oil and gas granted under the act of February 25, 1920 (41 Stat., p. 437), whenever the holder of such permit, or his predecessor, shall have drilled at least one well to a depth of 500 feet or more on the land covered by the permit, and the Secretary is satisfied that the applicant is making a bona fide effort to test such land.

Mr. JONES. It appeared to me that that sort of a bill would sufficiently safeguard the interests of the public and at the same time. would sufficiently safeguard the interest of the operator.

Now, it may be urged against this that your average oil lease on private land has a term of only five years, that is, that the average lease is for five years, or as much longer as oil or gas may be produced therefrom. But in the case of a private lease, if you have been doing something, and you come up pretty close to the end of your term you can go to the land holder and say, "Now, look here; here is the situation: I have drilled this hole, and I had a crooked

hole, and I had to quit. Now, won't you give us an extension provided we keep on working? If you don't let us in here you will not get anybody else to come in on more favorable terms." That is usually the situation. "Why not let us go ahead? We are here." Or you take the case of a geologist or some other oil man who makes a specialty of going around looking for structures, and when he finds something promising, of taking up the leases on the land and getting somebody with capital to drill. He may be in the same situation. He may have spent three or four years before he was able to get anybody to go ahead and operate his lease. In the meantime he is running up against the end of his term. But there you always have power in somebody to get an extension. And you usually get an extension. Once in a while you have to pay something to the land holder for it. Usually the one who owns the land, who has the land, makes the most money out of oil, because he gets his 122 per cent or more of royalty free from all risk and expense. If he is satisfied that the man who is on there is doing his best he is only too glad to grant an extension. But, as I say, in the case of the Government, unless Congress does something there will be no power in anybody to grant an extension.

Senator JONES of New Mexico. In the case of your gas structure what is considered development entitling you to go ahead under the present law?

Mr. JONES. Well, of course the only way by which you may extend the life of your title beyond the permit is by getting a lease. The lease involves the rental of, I think, a dollar per acre per year. If you are not getting enough production to pay for the rental that rental is taken out of the royalty due the Government. And if you are getting production in any quantity the rental does not amount to anything. But you must have something approaching commercial production before you are able to get a lease at all.

Now it is just possible in the case of that gas structure that if they get something good in the first well the Secretary, taking all of the conditions into consideration, might concede that he has power to grant a lease and permit us to pay rental while not using the production. You see we would not be able to use the production until we get the pipeline. He might possibly lease the land to us then and let us pay this dollar per acre per year covering all of the land comprised in the permit during the time necessary to drill the other wells. There is a possibility of that in the case of that gas situation.

Senator JONES of New Mexico. That was the thought that was running through my mind, that as to the gas structure that might be taken care of under existing law.

Mr. JONES. Yes, sir.

Senator JONES of New Mexico. But the other case which you mentioned. I do not recall any provision in the law under which that could be taken care of.

Mr. JONES. No: I do not believe there is, Senator. I do not believe there is any possible way of covering those situations, and they are the more numerous. This gas situation is an exception, but a very meritorious case; that is because of the money that has been spent, and the public interest. The city of Laramie would very much like to have that gas.

Senator JONES of New Mexico. And do you think that discretion should be unlimited, as you have proposed in your bill?

Mr. JONES. Well, my idea was this: I would hesitate to put any bill like that in which would cover land on which considerable work had not been done. But where the work has already been done that, to my mind, earns a considerable leeway. Now, where they have already done work under the clause which says, "Provided that the Secretary is satisfied that they are making a bona fide effort," my idea was that they are now continuing doing something toward proving it; it seemed to me that that would sufficiently protect the matter. Of course the Secretary could make those extensions for six months, and with the absolute provision that if they did not do so and so within six months, why he would cut them out.

Senator JONES of New Mexico. I can conceive a situation growing out of this statement where it would be very inequitable not to grant an extension. There is a disposition, however, in the Congress, or rather in some Members of Congress, and some members of the Land Committee, not to grant an unlimited authority to anybody, and I wish you would study the situation a little carefully and see how far you think the situation would justify restrictions in the proposed legislation. I can understand that you are presenting a real problem here, and one that ought to be dealt with, in my judgment, but we will have to consider the people with whom we must deal in the Congress, and a great many of them do not understand western conditions and the problems with which we have to deal out here, and if you can think over the situation and surround your thought with some limitations I think it would be quite helpful to us.

Mr. JONES. Yes; I appreciate that side of the proposition.

Senator JONES of New Mexico. Because we will have to deal with that idea, or rather be confronted with that idea in proposing any legislation on the subject. And if you can think over the situation from a practical standpoint and see what limitation might be inserted, not to such an extent as to thwart the purpose of the measure, I am sure it would be helpful.

Senator CAMERON. Anything further, Mr. Jones?

Mr. JONES. Well, I will present this to the Oil and Gas Association, and it will probably be discussed in all its phases, especially including your suggestions, Senator, and then we will have it sent

on again.

Senator JONES of New Mexico. Yes; if you will do that, and then send it on to us at Washington.

Mr. JONES. Yes. Thank you very much.

Senator CAMERON. Mr. Earl Erhart.

STATEMENT OF EARL ERHART, STOCK RAISER, CENTERVILLE,

COLO.

Senator CAMERON (presiding). Mr. Erhart, will you give your full name, your residence, and your occupation.

Mr. ERHART. Earl Erhart. Centerville, Colo. Stockman.

Senator CAMERON. Mr. Erhart, do you wish to make a statement to the committee?

Mr. ERHART. I have not prepared any statement.

Senator CAMERON. Well, go on and state what you would like to

sav.

Mr. ERHART. I have a few notes that I would like to refer to.
Senator CAMERON. All right, go right ahead.

Mr. ERHART. I am a user of the Leadville National Forest, in the Buena Vista district, the Chalk Creek division. Now, we find there in our particular place that our objection is lack of control and overstocking of the range. Now, for instance, this summer we were forced off of what we call our low range into a high range. Of course, we do not object to that. That was a pretty good thing. But while we were off from the low range we were not protected in horses coming in off of the Cochetopa Range.

And then another thing, we do not think it is quite right; we do not understand why it is some of these cattle are permitted on a twothirds basis and some on three-quarters basis; that is, three-quarters on and one-quarter off. And some all on. Now, we do not understand why that should be. These cattle run practically the same.

Senator JONES of New Mexico. Well, how can you tell whether a fourth of them are running on the forest reserve, or half, or twothirds?

Mr. ERHART. You can not tell.

Senator CAMERON. But they have their permit that way?

Mr. ERHART. They issue their permit in that way. Now, we feel like they ought to have a standard way of issuing these permits in that particular.

Senator CAMERON. In other words, one has for two-thirds of a year and one has for three-fourths of a year?

Mr. ERHART. No; what I mean is that two-thirds of these cattle would be on the forest reserve-for instance, they would issue a permit for 100 head. Now, two-thirds of these would be one and one-third off.

Senator JONES of New Mexico. Is it not about this way up there, that you have nothing to define the boundary between the forest reserve and the outside land, and the people in the vicinity with a certain number of cattle just guess that about one-half of them would be on the public domain and about half in the forest reserve, and you pay accordingly?

Mr. ERHART. Yes, sir.

Senator JONES of New Mexico. And the cattle just simply move back and forth as between the forest reserves and the land outside of the forest reserve?

Mr. ERHART. Yes, sir; that is very true. But what we would like to have them do is to put these cattle all on on the same basis instead of some half on and some three-fourths on.

Senator JONES of New Mexico. Are those that are given the smaller percentage as running on the forest reserve a little farther away from the forest?

Mr. ERHART. In this division they are practically all run in the

same way.

Senator JONES of New Mexico. And how close to the forest reserve are some of the privately owned lands?