Mr. Holmes who preceded me on the stand, when he told you that he believed that there was a meeting of the minds between the sponsors of the legislation and the industry, he was eminently correct in his statement. I think I am speaking for the industry in Illinois and for the Independent Petroleum Association of America.

This matter was considered at length at the annual meeting of the Independent Petroleum Association of America held in Denver, Colo., on May 6 and May 7, 1951. Of course the action related to S. 1000 which is identical, and there has been no change in the action of the petroleum association since that time on this matter.

I would like to briefly read the action of the association relative to the subject.

Senator PURTELL. Is it very long?

Mr. SMITH. It is a part of a long record, but the part which I desire to read will take only a few minutes.

Senator PURTELL. You may proceed.

Mr. SMITH. It is as follows:

Be it resolved by the directors of the Independent Petroleum Association of America, in the midyear meeting assembled in Denver, Colo., on the 7th day of May 1951:

(a) That we are opposed to Senate Bill 1000 and its companion bill, H. R. 3793, now pending in the United States Congress, providing for the unlimited and unrestricted condemnation of strata for underground storage of natural gas, and hereby direct the officers of the association to actively oppose the enactment of such bills as introduced; but

(b) That we recognize the public interest in and need of underground storage of natural gas and the possible resultant benefit to the oil and gas industry through stabilization of demand for natural gas at the well head; and

(c) That while reaffirming our long-established policy of opposition to unnecessary Federal control and regulation of the industry, we take cognizance of the present need for the right of condemnation of strata for underground storage of natural gas by the holder of a Federal certificate of public convenience and necessity and the probable delay in securing such legislation in the several States in the near future.

Therefore, we believe that it is in the public interest and in the interest of the oil and gas industry that we do not oppose the enactment of S. 1000 or H. R. 3793, if amended, so as to safeguard and protect the interests of the oil and gas producers by the insertion of the following language:

Then follows the identical language which Mr. Holmes has in his report and suggests as an amendment.

I have only one further thought to express. A question has been raised by the Chairman of the Federal Power Commission as to certain language contained in the amendment, particularly the phrase:

Commercial quantities producible through primary production methods either with or without pressure maintenance, or secondary recovery methods of any type. I would like to say to the committee that this proposed amendment was prepared by a group of what we commonly speak of as oil country lawyers representing producers and representing pipeline companies. The terms which are used here are well known and commonly used and commonly phrased terms within the industry in the preparation of leases, the preparation of contracts, and in the court decisions. It was our opinion, the group of country lawyers who worked on this amendment, that you cannot say it any more plainly than it was said or in any other way so that it can be understood within the industry itself.

I will say this to the committee, if it is desired, the Independent Petroleum Association of America, through its counsel, Russel Brown and assistant counsel, Dan Jones, will be pleased to submit a brief on this thing if the committee would like to have it for your file. I think that is all I have.

Senator PURTELL. Unless it is requested to be done by Senator Schoeppel I would say we will await the decision or perhaps the pleasure of the committee before we ask you to file a brief on that, unless it is your desire to do so.

Mr. SMITH. Not unless the committee desires it.

Senator PURTELL. It may be helpful, but I cannot ask to impose upon you to that extent.

Are there any questions? Have you any questions, Senator Schoeppel?

Senator SCHOEPPEL. No questions.

Senator PURTELL. Would you like to ask some questions, Senator Hunt?

Senator HUNT. I would like to get Mr. Smith's reaction to this thought. Would you have an objection to the amendment to the Natural Gas Act whereby the Federal Power Commission would be required to secure the permission of the State utility body before utilizing any area in any certain State for these purposes?

Mr. SMITH. I am speaking personally only now, because that subject has not been discussed in either association for whom I am speaking today. I personally would have no objection fundamentally as I read the resolution of the Independent Petroleum Association of America, and I think this is generally true in the industry, we would prefer to see all regulatory matters pertaining to the oil and gas industry retained within the States themselves, and certainly I would have no objection to some clearance through some State body as an added checkmate on the rest of the Federal eminent domain.

Senator HUNT. My interest in that is due to the fact that I happen to know of one intrastate situation where a company found it necessary to store gas in a field that had been exhausted and I should want to protect the interests of my people in my State to know that they did have that opportunity to use those areas for the people in my own State when they had use for it. I do not believe there would be much objection to this amendment. I wanted your counsel on it. Mr. SMITH. I think you will find in Mr. Thomas' statement a reason for it. I think it goes to the fact that we passed a comparable act in Illinois and the Illinois Act has a limitation in it limiting the right of condemnation only for storage of gas to be used within the State of Illinois.

Senator HUNT. I would not necessarily go that far with my amendment but it would seem to me consistent that the Federal Power Commission should secure that permission before issuing a certificate of convenience and necessity to an out-of-State company.

Senator SCHOEPPEL. Only this year in the Kansas City area I must admit that the use of natural gas has greatly pyramided. It is a good fuel and a clean fuel and I am not arguing against the coal usage, but the connections and the great acceleration of the users of

natural gas in practically all of the midcontinent area as it moves eastward has been terrific.

Only this year in the Kansas City area it became pretty painful to many of the municipalities as well as individual users that additional storage facilities for natural gas to take care of the tremendous peak loads with low temperatures was necessary to be considered.

Now if, as I view it, if power or authority is granted to a regulatory body to provide for condemnation for storage, say in my State of Kansas, which is one big, heavy user, and the State of Missouri and that related area there, without any consideration to the needs or requirements for storage in those areas or use in those areas, we could get into difficulty and it would not exactly serve what I would consider the public interest, and I do feel that there is some legitimate basis for this subcommittee here and the full committee to consider that phase of the thing.

I am quite sure that the Federal Power Commission would in its wisdom and judgment, before granting unlimited authorization, would probably take that into consideration, but we cannot tell. These commissions change. Viewpoints change, and I do think it is incumbent upon some of us to safeguard the area of not only the users but the potential users as they keep pyramiding up.

Mr. SMITH. You have in mind affording all interested parties an opportunity to be heard in the application for certificates of convenience and necessity?

Senator SCHOEPPEL. That is right, and I do feel that the State regulatory body of each State who has the sole duty of the regulation of the industry and to whom the public interest is paramount, I do think they should be accorded the right to be heard and should have some rights of approval or disapproval.

Mr. SMITH. That is true in the Illinois statute. The application must first be made to the Commerce Commission for a certificate. Senator SCHOEPPEL. I do think that is a matter for executive session after the hearings are closed, Mr. Chairman.

Senator PURTELL. We shall do much deliberating on this.
Have you any questions, Senator Dirksen?

Senator DIRKSEN. No, except that I have known Clarence Smith for years and I have the utmost confidence in what he suggests.

Senator HUNT. I am having prepared an amendment to do just what I have suggested and I am telling you of the amendment and also for the benefit of anybody in the audience who might be interested, that I will present such an amendment.

Senator PURTELL. Did you have something you wanted to say, Mr. Holmes?

Mr. HOLMES. I would like to call attention to some of the language in our proposed amendment under S. 525 where we have tried to give at least some, perhaps not enough, but at least some protection to the local distributor within the State and if I might this small part of it:

That the right of eminent domain shall not be exercised to acquire, for the purpose of gas storage, any interest in 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 was acquired by such natural-gas company or by such person before 47560-54- -3

STATEMENT OF FRANK ECKERT, INDEPENDENT FEWEOLETY ASSOCIATION OF AMERICA

Mr. ETRERT. I az vie chairman of the natural-gas committee of the Independent Petroleum Association of America, and my cy Exterest is to see that the iblependent producers are taken care of when they start condemning property for gas storage. We all feel tha gas storage is very vital and necessary to all concerned and that the large utilities and the pipeline companies canna get along very TETIDO gas storage.

In other words instead of having a Subth line from Locisam to Pennsylvania with can cely take care of summer use, if they have a sich line they can store gas all summer and have the advantage of a 4-inch line for the wintertide. It is very DecessEZT.

So we are Dot of posed to storage, But there are a lot of independente like ourselves; for instance, we supply gas to an industrial plant surrounded by gas wells, and we do not like to have the condelg companies, vtility ecpances, pipette occpartes, dolent that property and use it for storage and just drive as out of business.

Senator PURTELL. Is that your only outlet for gas or do you have others!

Mr. E.KERT. There would not be any outlet if they took the prop

Mr. ECKERT. The man who preeled ne. Mr. Holmes, ofered an amendment which I just read an 2 1 takes care of everything. I believe.

Just so the independent producer is not driven out of bersiness by Laving his property taken awar There is always some stubborn man who will not deal. He has a $50.00) property and wants a couple of hundred thousand dollars for it. While be will get paid for it, he doesn't want the money. That is the line of business be is in

Our company started in 1998. It is not so large, but it seld. We want to stay in business. That is all I have to say.

Senator HUNT. Where are you from!

Mr. ECKERT. I am from Bradford, Pa.

Senator PURTELL. Have you any questions to ask. Serator Dirksen ? Senator DIRKSEN. You said that the amendment proposed by Mr. Holmes would take care of you!

Mr. ECKERT. Yes, sir.

Senator PURTELL. Do you have any questions. Senator Hunt!
Senator HUNT. Nocnestions.

Senator PURTELL. Thank you for appearing. Mr. Eckert,

The next witness is Mr. W. E. Ferguson of Columbus Ohia, who is a gas-storage engineer.

Is he here? If he is not here, we will give him the right to file his statement if he has one, or if he wishes to appear later when we have the further hearing we will permit him to appear.

The next witness is Mr. J. French Robinson of the Consolidated Natural Gas Co.

STATEMENT OF J. FRENCH ROBINSON, PRESIDENT, CONSOLIDATED NATURAL GAS CO.

Mr. ROBINSON. My name is J. French Robinson.

My business address is 30 Rockefeller Plaza, New York, N. Y. I am president of Consolidated Natural Gas Co. I have been employed in the natural-gas business by Consolidated or its subsidiaries continuously since 1921, having begun as a geologist and engineer.

Consolidated Natural Gas Co. is a public utility holding company registered under the Public Utility Holding Company Act of 1935. It owns all of the stock of five operating natural-gas subsidiaries which constitute an interconnected system operating in the States of West Virginia, Ohio, Pennsylvania, and New York. It is one of the largest natural-gas utility systems in the country. It distributes gas in Cleveland, Youngstown, Canton, Akron and other cities in Ohio; Pittsburgh, Greensburg, Johnstown, Altoona and other cities in Pennsylvania; and Clarksburg, Parkersburg, Fairmont and other towns in West Virginia. It supplies gas at wholesale for distribution in such cities as Albany, Rochester, Syracuse, and Buffalo, in New York. The System serves 992,000 retail customers directly, and an additional 500,000 retail customers through wholesale sales to utilities buying all their gas from us. It serves an estimated population in excess of 7,250,000.

The Consolidated system has one of the largest underground storage. operations in the country. It is operating 26 underground storage pools which, in the aggregate, hold approximately one-fourth of the total natural gas stored by the entire natural-gas industry. The inventory cost of natural gas in storage in the pools of the system at the end of 1953 was in excess of $55 million.

These storage operations have been developed over the period since 1935 and have involved numerous problems connected with the acquisition of storage rights such as are contemplated by S. 525. My work for the Consolidated system has involved the solution of these problems as they have come up and I am familiar with the varied relations with property owners, producers, and other utilities.

Underground storage is a vital facility in the natural-gas industry as it exists today. Due to the constant increase in the use of gas for house heating, the large distribution utilities have a harder and harder job in balancing supplies against demands. The most practicable means by which this may be accomplished is through large volume storage facilities, and the use of exhausted gas pools for this purpose has proven to be the most feasible method. If storage were not developed, the industry would be forced either to make larger and larger offpeak sales of dump gas or to greatly expand its transmission facilities with a consequent increase in rates.