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INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA,
Washington 6, D. C., May 17, 1954.

Mr. ROBERT D. L'HEUREUX,

Counsel, Committee on Interstate and Foreign Commerce,

Senate Office Building, Washington 25, D. C.

DEAR MR. L'HEUREUX: This is to acknowledge your letter of April 27 enclosing a draft of an amendment to S. 525 aimed at safeguarding the health and safety of miners and the property interests in mineral deposits.

The form of the draft of the amendment you enclosed suggests it is offered as a substitute for all other amendments previously offered. I assume this is not the intent however, since the amendment in no way reaches the problems concerning oil and gas aimed at by the amendment introduced the first day of the hearing on S. 525 and endorsed by Mr. Clarence T. Smith, who appeared on behalf of the Independent Petroleum Association of America.

Since we have no intimate knowledge of coal and other hard mining operations we have no comment to offer, except to state that we have no objection to the objective sought thereby provided it is accomplished in a manner that will not conflict with the proper protection of oil and gas operations and properties.

We wish to hereby reaffirm the position of the association to the effect that the amendment endorsed by Mr. Smith at the hearing on S. 525 is essential for the proper protection of oil and gas properties.

I shall appreciate your keeping me advised of developments with respect to S. 525.

Very truly yours,

Mr. ROBERT D. L'HEUREUX,

L. DAN JONES.

THE MANUFACTURERS LIGHT & HEAT Co.,
Pittsburgh, Pa., May 14, 1954.

Counsel, Committee on Interstate and Foreign Commerce,
Subcommittee No. 6 on Business and Consumer Interests,

United States Senate, Washington, D. C.

DEAR MR. L'HEUREUX: The following represent our comments on the proposed amendments to S. 525 revised as of April 15, 1954, as well as some general comments with respect to the proceedings before the Subcommittee on Business and Consumer Interests of the Senate Committee on Interstate and Foreign Commerce held March 3, 1954, and April 2, 1954.

First of all, I would like to state that we strongly subscribe to the statements made under date of May 5, 1954, by Mr. J. French Robinson, president of the Consolidated Natural Gas Co, in his letter to you.

There were certain comments in the transcript of the hearings which make it appear that there is some confusion as to the relative ease of developing storage fields. I should like to point out that it is very difficult to find areas possessing all of the necessary attributes of a storage field including satisfactory closure and adequate porosity and permeability. This company presently has in operation, or under development, storage fields in Pennsylvania and West Virginia having an ultimate reservoir capacity of over 80 billion cubic feet. Of this total quantity, there are only three very small fields having a total capacity of less than 1 billion cubic feet which do not underlie coal, although at the moment there are no coal mines within several miles of any of the fields.. Virtually without exception, the representatives of the coal industry have indicated that they are fully aware of the desirability of and the necessity for underground gas storage. However, such expressions are meaningless if storage is to be prohibited under commercially mineable coal seams. It would be totally impossible to obtain even a small portion of the storage areas required in the territory in which we operate in locations where there is no coal.

There were also numerous comments to the effect that at least one gas company had indicated the desire to condemn not only coal seams, but active coal mines. No such suggestion has ever been made. It has been suggested, however, that a gas company should have the right to condemn a coal seam, bâî only under certain very limited conditions:

1. That coal is not being mined commercially at the time in the area where it is proposed to exercise the right of eminent domain, and has not been for 3 years prior thereto.

2. That the seam has not been assigned to an operating coal mine and could not be reasonably expected to be mined through an existing mine.

3. The storage operator must exercise such power of appropriation within 2 years of the passage of an act permitting such appropriation with respect to existing storage fields, and within whatever time the responsible governmental body might set as to future fields.

4. That the owner of the coal could not show that he would be materially and irreparably damaged in his business or that the public interest did not require such appropriation.

5. The storage operator could not sell or mine the coal without first offering such coal seam to the coal operator, or his successor in title whose coal had been appropriated at the same price which the storage operator had paid in the appropriation.

Certainly, under these limited conditions, the coal owner would not be seriously affected.

We feel very strongly that, since the areas required for storage operation and the areas in which there are commercially recoverable coal coincide in such large measure, the public interest is not served by reserving to either industry exclusive use of the area. Despite considerable testimony to the contrary, we are convinced that the area of a storage pool can be satisfactorily defined and further, that it is entirely possible to operate those fields safely. Under these circumstances, it appears to us that with a real desire on the part of both industries to cooperate, it is not necessary to legislate one business out of existence or seriously handicap one for the benefit of the other.

Very truly yours,

J. C. PETERSON.

FLORA, ILL., May 7, 1954.

Mr. ROBERT D. L'HEUREUX,

Counsel, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR MR. L'HEUREUX: Permit me to express my appreciation of your courtesy in writing me under date of April 27 and enclosing the material accompanying your letter.

Apparently the enclosed draft of a proposed amendment to Senate bill 525 is in support of the position taken by several of the witnesses representing certain coal interests and miners at the last hearing held on Senate bill 525 before Senator Purtell's subcommittee.

I think it might be clearly stated that the oil and gas industry does not desire to do anything harmful to the coal industry or its employees. On the other hand, the oil and gas industry should not be penalized in any way by the coal industry.

If you will remember, I appeared before Senator Purtell's subcommittee on behalf of the natural gas committee of the Independent Petroleum Association of America, in support of the so-called agreed amendment. This amendment was prepared by certain oil country lawyers and certain representatives of the original sponsors of the proposed legislation. We, as an association, are yet interested and urge the adoption of the agreed amendment and its inclusion in any legislation enacted.

The thing that alarms me is that the amendment accompanying your letter is so drafted that it would appear to entirely remove from consideration the so-called agreed amendment and the suggested amendment of Mr. J. French Robinson, who also appeared as a witness at the hearings on this legislation.

I have discussed this matter with Dan Jones, assistant general counsel of our association, with offices at 1110 Ring Building, Washington, D. C., over long distance today, and I am sure that he will contact you to discuss this entire matter further.

I would be most pleased to have any further information or clarification that you might be in position to give me on this subject.

Incidentally, I would like to ask that you correct my mailing address on the subcommittee's records, in accordance with the above letterhead.

Very truly yours,

CLARENCE T. SMITH.

CONSOLIDATED NATURAL GAS Co.,
New York 20, N. Y., May 5, 1954.

Mr. ROBERT D. L'HEUREUX,

Counsel, Committee on Interstate and Foreign Commerce,
Subcommittee No. 6 on Business nd Consumer Interests,

United States Senate, Washington, D. C.

DEAR MR. L'HEUREUX: Enclosed are six copies of my reply dated May 5, 1954, in answer to your letter of April 27, 1954, relative to a proposed amendment to the Dirksen bill S. 525, for use at the committee.

Yours very truly,

J. FRENCH ROBINSON, President. CONSOLIDATED NATURAL GAS CO., New York, N. Y., May 5, 1954.

Re Underground gas storage bill, S. 525.

Mr. ROBERT D. L'HEUREUX,

Counsel, Committee on Interstate and Foreign Commerce,
Subcommittee No. 6 on Business and Consumer Interests,

United States Senate, Washington, D. C.

DEAR MR. L'HEUREUX: This will acknowledge receipt of your letter of April 27, 1954, to which was attached a proposed amendment to the Dirksen bill, S. 525, sponsored by certain coal interests, labor associations, and the United States Bureau of Mines, in which you ask me to comment on the proposals made.

As you will recall, I presented a statement and amendment to S. 525 on March 3, 1954 and under date of April 2, 1954, I submitted a substitute for subsection (h) of section 7 of the Natural Gas Act. I also attended the hearing on April 2 at which considerable testimony was presented by the coal interests and labor associations. It was evident that no consideration had been given to these amendments suggested to S. 525.

I was somewhat astonished at the statements made at this meeting. First, there seemed to be considerable confusion as to the boundary limits of a storage pool. The statement was made by several witnesses that the more gas you put into a storage pool the larger in size the pool became. We have no storage pool in our group of companies nor do I know of any that can be expanded in this fashion.

The limits are very definitely known and the size of the pool does not materially change.

Second, a fear was expressed by some of the steel companies who operate their own coal mines that the gas industry would desire to condemn their coal operations and thereby put them out of business. Under the amendment which was presented I do not see how, by any stretch of the imagination, this could be possible.

In the way of general comment, I notice that under the proposed amendment to S. 525 dated April 15, 1954, which was attached to your letter, the coal people have suggested that all matters pertaining to underground storage of gas be placed under the jurisdiction of the United States Bureau of Mines, either directly or indirectly. We could have taken the course, had we desired, to ask that all mining operations insofar as it interfered with underground storage operations should be placed under the Oil and Gas Division of the Department of the Interior. We are of the opinion that neither of these courses would be practical.

Statements were made that no storage operation could be made absolutely safe insofar as danger to mining operations were concerned. We in the gas business think that the operations of a storage pool can be made as safe as they were at the time the original production was in progress, and that is as safe as it is humanly possible to make it today. We certainly are interested in the safety and welfare of miners of anyone working in a mine and are willing to take whatever steps are necessary to create safe working conditions.

Some of the representatives of the coal industry apparently take the point of view that where mining operations are taking place near an underground storage pool the gas storage operations should be discontinued. We could also take the opposite viewpoint of some of the coal people and state that where the operation of an underground storage pool is being interfered with by mining operations, that the mining operations should be discontinued. Again, we do not think this is the proper approach. We do feel that where underground storage pools are overlain with coal operations they can be operated safely.

Nature has seen fit to place oil and gas deposits to a very large extent beneath coal deposits and the general public is entitled to the benefits from all of these natural resources. It must, therefore, be assumed that the coal industry and the oil and gas industries can work together so that these operations in each field can be carried out economically and safely.

I am attaching herewith my suggestions on the eight specific paragraphs that have been suggested by representatives of the coal industry to amend S. 525, as revised as of April 15, 1954:

1. Agreeable.

2. Agreeable. I note that the certificate provided for in this paragraph is not necessarily the certificate of convenience and necessity provided for in section 7 (c) of the Natural Gas Act. This paragraph provides for a certificate or an amendment to an existing certificate, authorizing the establishment of a natural gas storage pool "by condemnation."

In those instances in which a natural gas company already has an existing certificate of convenience and necessity it must apply specially pursuant to this subsection for a further certificate specifically authorizing the acquisition by condemnation. In those instances in which a natural gas company wishes to secure authority to acquire and operate an interest in an underground storage pool project but will be able to do so by contract and not by condemnation it is only necessary for the natural gas company to secure a certificate of convenience and necessity in the usual manner provided by section 7 (c) of the act. Only in those instances where natural gas company wishes to secure the right at the outset to acquire underground storage rights by condemnation is it necessary to follow the provisions outlined here in section 7 (h) of the act.

3. Opposed. It seems entirely unreasonable that a natural gas company which is subject to one governmental agency, namely the Federal Power Commission, for certificates, rates, etc. should be required to go to another agency of the Government to secure approval for a certificate. If the Federal Power Commission desires to get information from the United States Bureau of Mines or from the Oil and Gas Division of the Department of the Interior, that is for them to determine. If any provision for a report from the United States Bureau of Mines is included, a provision for a similar report from the Oil and Gas Division should be included so that reports received will reflect the full views of the Department of the Interior instead of just a part of the Department (both the Bureau of Mines and the Oil and Gas Division being in the Department of Interior).

In any event, a copy of the application filed with the Federal Power Commission should be sufficient and no separate application should be made to the Director of the Bureau of Mines or the Oil and Gas Division.

4. We oppose for the same reason mentioned in No. 3 above and in addition, all the data requested would already have been filed with the Federal Power Commission at the time application for a certificate is made.

5. Opposed. This section in effect lodges the power for the ultimate decision in the United States Bureau of Mines. The provision set forth in paragraph 4 providing that the Director of the Bureau of Mines and the Oil and Gas Division shall certify to the Federal Power Commission the results of its investigation is adequate. This will permit the ultimate decision to be made by the Federal Power Commission after considering all the factors, including any reports of the Director of the Bureau of Mines and the Oil and Gas Division.

5a. Opposed. This paragraph would prohibit the underground storage operations for any field which was overlain with coal and would render impossible new underground storage operations throughout a large section of the country. 5b. Opposed. The phrase "in any manner" appears in effect to preclude the use of underground storage which is overlain by a coal seam. 5c. Opposed. For the same reason as 5b.

6. Agreeable.

7. Agreeable.

8. Agreeable.

If we can render any further assistance, please call upon us.

Yours very truly,

J. FRENCH ROBINSON, President.

47560-54- -9

Re S. 525.

Mr. ROBERT D. L'HEUREUX,

NATURAL GAS STORAGE CO. OF ILLINOIS,
Chicago 6, Ill., May 5, 1954.

Counsel, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C.

DEAR MR. L'HEUREUX: This will acknowledge receipt of your letter dated April 27, 1954, under which you forwarded a draft of an amendment to section 7 (h) of the Natural Gas Act which the group of persons who met with you to discuss measures to safeguard the health and safety of coal miners has suggested be substituted in lieu of S. 525.

A similar letter and enclosures were directed by you to Messrs. Burlingame and Holmes, who are officers of this company, as well as to Mr. McDugald, attorney for the companies.

As indicated in Mr. McDugald's letter to you dated April 29, 1954, we are participating in the preparation of a memorandum concerning this matter which will constitute our comments with reference to the suggested amendment forwarded under your letter of April 27, and hope that this will be in your hands at an early date. We have been delayed by reason of a rather heavy program of rate proceedings before the Federal Power Commission, but will expedite this matter in every way possible.

We appreciate very much your courtesy in allowing us to comment with reference to this proposal.

Very truly yours,

J. J. HEDRICK.

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