gas in the field, that the return for gas produced by natural gas companies should be related to current market prices, and that control over the end use of gas is undesirable and unnecessary. It may be said in conclusion that the proposed amendments to the Natural Gas Act are considered economically sound and desirable.

STATEMENT BY HAROLD W. WRIGHT, GENERAL MANAGER, LOS ANGELES CHAMBER OF COMMERCE, IN CONNECTION WITH PROPOSED AMENDMENTS TO THE NATURAL GAS ACT

Mr. WRIGHT. Speaking principally for the consuming public of Los Angeles and southern California, we need large volumes of natural gas for domestic, commercial, and industrial uses in order to meet the growing requirements of this area. Due to the declining supply of natural gas in the State of California and to the rapidly growing consumer requirements for natural gas, it became essential to import gas from Texas and New Mexico. A $70,000,000 natural gas pipe line, which will extend 1,200 miles from the Panhandle of Texas through the Permian Basin of Texas and New Mexico to Los Angeles, Calif., is now under construction. It is expected that the first deliveries of natural gas from this Texas-to-California pipe line will be made in the autumn of this year, 1947.

To demonstrate that large volumes of natural gas are utilized in southern California the two distributing companies-Southern California Gas Co. and Southern Counties Gas Co.-delivered approximately 171,000,000,000 cubic feet of gas in 1946 to their customers, and would have delivered more if the gas had been available (California Public Utilities Commission Case No. 4591, exhibit A-6, p. 3). In 1946 the California Commission granted a certificate of public convenience and necessity to the distributing companies in southern California for the construction and operation of the California segment of the Texas-to-California pipe line, and it recognized the present and future need for an out-of-State supply of natural gas in these words:

It is clear, based both upon the facts of record and this Commission's own knowledge of the gas situation in California, that the State's declining gas supply must be conserved, and that the supply available to utilities serving the southern California territory must be augmented, not only to meet the growth in load but to maintain present customer service. The record justifies the conclusion that the proposed transmission line to be constructed by applicants to connect with that of the El Paso Natural Gas Co. is both economically and physically feasible and is in the public interest (Re Southern California Gas Company and Southern Counties Gas Company, Decision No. 386€8, 46 C. R. C. 339, 345).

When the Federal Power Commission granted a 1946 certificate of public convenience and necessity for the construction and operation of the Texas-to-California natural gas pipe line, it also recognized the need for an out-of-State supply of natural gas for southern California plus the unusual fact that the primary fuel for space heating in southern California is natural gas. The appropriate statement of the Federal Power Commission follows:

In 1945 the California applicants served more than a million meters, or about three and a half million persons; and the gas requirements of firm customers aggregated 113,640,000 M c. f. and of interruptible customers were 91,197,000 M c. f. The domestic and commercial customers use great volumes of gas for space heating, and the domestic customers use large quantities of gas for cooking and water heating. The saturation of house-heating use is 99 percent. The consumption per meter has been rising steadily over the years, and the population of the area served by applicants continues to grow. There is no competition from coal and little from fuel oil or electricity for space heating, cooking, and water heating.

It appears that within a short period of time the available local gas supply will not be sufficient to meet the firm demands for gas upon the California applicants. which would result in serious detriment to the public interest. * *From the evidence this Commission concludes that the planned 305,000 M c. f. per day capacity will be required in the near future to meet anticipated deficiencies. * * * "Upon consideration of the record in this case, the Commission concludes that there is a public need or demand for out-of-State natural gas in southern California, and that the economically feasible pipe-line system proposed by the three qualified applicants will serve that need adequately and properly for the reasonably foreseeable future (Re El Paso Natural Gas Company, Southern Californiɑ Gas Company, and Southern Counties Gas Company, F. P. C. Opinion No. 134, 64 P. U. R. (N. S.) 152, 156, 161).

Southern California is experiencing an extraordinary population growth. For example, in 1946 there was a net gain of 159.400 persons; and the trend is evidenced by the recent historical growth showing a net gain of 1,250,023 persons from 1940 to 1946. Consequently, in maintaining a thriving, balanced and expanding community the citizens of southern California are vitally interested in a large, constant supply of natural gas from out-of-State sources for generations to come. In making a forecast of the future natural gas supply and demand for both southern California and northern California, the California Public Utilities Commission made a special study which emphasizes the importance of importing future large additional volumes of natural gas. The California Commission's study did not analyze the natural gas availability for the winter season peak-day requirements of consumers, but made a forecast on an annual basis. After making full allowance for existing known California natural gas reserves, for substantial new discoveries, and for the maximum deliveries of gas now under contract from the Texas-to-California pipe line, it is concluded in the Commission's State-wide study:

That for the 1955 period firm loads on an annual basis can be met, but more of the interruptible service would be required to be dropped; that for the 1960 period and beyond there is insufficient gas to meet even the firm requirements, indicating the absolute necessity of further augmenting the gas supply (California Public Utilities Commission Case No. 4591, exhibit A-3, p. 59).

It is manifest, therefore, that California is interested in whatever legislation is required to accomplish the following objectives and recommends such legislation:

(1) Free access to available natural gas supplies in other States which means no interference with the desire of, or opportunities for, natural gas producers in other States to sell their natural gas to interstate pipe lines for ultimate public consumption. More specifically, California is interested in the removal of the barrier to the free marketing of natural gas to interstate pipe lines by producers, which is described in the Federal Power Commission's staff report on the recent Nation-wide natural gas investigation in these words:

As a result of this feeling of uncertainty regarding the status of sales by producers and gatherers, there have been indications that producers of gas and associated oil may be unwilling in the present situation to contract for the sale of gas intended for interstate movement, for fear that they may thereby become subject to regulation as natural gas companies under the act. The oil industry, which produces large amounts of natural gas, has been particularly apprehensive of this possibility. Those who operate processing and cycling plants have given expression to the same uncertainty and fears.

The Natural Gas Industry Committee emphasizes that, insofar as gas producers "feel justified in exercising extreme caution to avoid entering the stream of interstate commerce and may refuse to put their gas on the market," the availability of gas for interstate commerce will be retarded. Others point out that under the

present unsettled conditions producers of gas will be inclined, so far as possible, to boycott the interstate pipe lines, selling their gas instead to intrastate transmission companies and nearby chemical plants or holding it from present markets altogether, "not because of any technical need but to avoid sales under arduous circumstances.”

Most important of all are the indicated effects of this situation on efforts to prevent gas wastage. State officials and others have warned that the reluctance of some gas producers to sell their gas for interstate marketing is interfering with the progress of conservation measures and is a contributing factor in the continued flaring of large volumes of casinghead (oil-well) gas. Col. E. O. Thompson, of the Texas Railroad Commission, testified that greater success in preventing waste would have been realized "had it not been for the fear of the producers of gas, this casinghead, that if they hooked onto a pipe line they would be declared a public utility and limited to 6%1⁄2 percent of the total earnings." He stated that certain desirable conservation projects had been held up, among other possible reasons, because of this fear of producers that by selling their gas they might become subject to Federal regulation under the Natural Gas Act.

All those who have manifested concern with respect to this matter strongly urge the need for clarifying the situation and setting definitely at rest the doubts and uncertainty which now prevail (Federal Power Commission, Natural Gas Investigation, docket No. G-580, section 1 (b) of the Natural Gas Act with reference to production and gathering, staff report, March 1947, pp. 35-37).

(2) Another objective in which California is interested is the exclusion from Federal administrative control of all power over the end use of natural gas. It should be noted that the Texas-to-California pipe line will utilize great volumes of Permian Basin natural gas which otherwise would be blown to the air and wasted. It is an established procedure in California to have conservation practiced at the production end of the natural gas industry. If end use of natural gas must be controlled, we believe it should be controlled locally.

(3) Finally, California is interested in the objective of making the Federal Power Commission procedure for certificates of public convenience and necessity sufficiently flexible and expeditious to assure the greatest possible freedom, consistent with the rights of the public, in the construction and operation of interstate natural gas pipe lines. This should be especially true in the cases of new interstate natural gas pipe lines where no protests are received by the Commission. Also, a certificate should not be a prerequisite to extensions and additions to existing pipe lines where management has decided that the customers' demands in its existing markets justify the additional expenditure for increased facilities. Although I am informed that the Federal Power Commission has adopted a short-cut procedure to facilitate the granting of certificates where no protest has been filed, it seems to be more desirable to have legislation which prescribes the objective that I have described.

Thank you gentlemen of the House of Representatives Interstate and Foreign Commerce Committee, for this opportunity to present our views on three of the desirable objectives of the proposed amendments to the Natural Gas Act embodied in H. R. 2185 introduced by Mr. Rizley.

STATEMENT OF ROBERT HENDEE, COLORADO SPRINGS, COLO.

Mr. HENDEE, Mr. Chairman and members of the committee, I wish to present a statement as a representative of the Rocky Mountain Oil & Gas Association. This association represents all segments, large and small, of the oil and gas industry in the States of Montana, Wy

oming, Colorado, Idaho, and Utah and has its headquarters in Casper, Wyo.

In these States natural gas is produced in large quantities in Montana and Wyoming; mostly in the central and southern sections of the latter State. From Montana a large natural gas pipe line carries natural gas into the Dakotas and Nebraska, while gas from southwestern Wyoming is transported to Salt Lake City and other Utah communities. Also gas from northern Wyoming is carried across State lines into Montana. At the same time Cheyenne, in the extreme southeast of Wyoming, is supplied with gas from the Panhandle field of Texas through the pipe lines of the Canadian River Gas Co., Colorado Interstate Gas Co., and Colorado Wyoming Gas Co. Although very small quantities of natural gas are produced in Colorado, the entire southeastern section of the State is presently being tested by all known geological processes and many test wells are contemplated. Oil production is much more prolific than natural gas in this great area, and while there are many of the larger oil companies in the field, it is still the land of the pioneer in that many lone operators and small companies are constantly acquiring acreage and using that tool of discovery, wildcatting.

The Rocky Mountain Oil & Gas Association is made up of members from the larger oil companies and from among the many small companies and individual operators. Although dominantly related to the many facets of the oil industry, it did become vitally interested in the closely related gas business at the inception of the natural gas investigation, docket G-580. A natural gas committee was appointed to attend the various hearings in this case and to report back to the association. At the present I am chairman of that committee and have been instructed to present to you the sentiment of the association. Being made up mostly of individuals the membership greatly fears the encroachment of the Federal Power Commission or any other Federal agency in its business.

A great deal of the land in these States is Federal land. All exploration and production upon or from this public domain already is subject to the jurisdiction of the Interior Department. Therefore the Rocky Mountain Oil & Gas Association is heartily in accord with these amendments, defining as they do the position of the Federal Power Commission with respect to the production and gathering of natural gas, and urges your favorable consideration of them.

Mr. RIZLEY. We have some other statements of people, which I do not have here at present, who have statements completed, and who were to be witnesses. We would like to have permission to offer in the record those statements at the appropriate time.

The CHAIRMAN. The committee will extend that permission to you, Mr. Rizley.

Mr. RIZLEY. I want to say to the chairman that the committee did not have a chance to take after me the other day when I testified. I assume that sometime later in the hearing, if the committee desires, I will be glad to appear at any time.

The CHAIRMAN. Do you want the committee to take after you? Mr. RIZLEY. I am not particular about it, but they seem to want to do it. I will stand ready to do it at any time.