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I am certainly in favor of hearing them. Would it be appropriate to suggest to the chairman that we meet this afternoon and try to come to some conclusion? All I want to do is to hear the witnesses in succession with all reasonable dispatch.
Senator VANDENBERG. I would join you in any expedition that we can give the matter.
Senator LEE. I join you in that. Let us come to some decision one way or the other, and not leave it hanging like a loose rope in the wind.
Senator PEPPER. The suggestion has just been made to me that possibly the chairman had in mind Senator Lucas and a representative of the Office of the Petroleum Coordinator, both of whom have had an opportunity to be heard. But we can find that out when we meet again. Senator CARAWAY. We will meet again at 2:30 this afternoon.
(Whereupon, at 12:20 p. m., a recess was taken until 2:30 p. m. of the same day.
(The subcommittee reconvened at 2:30 p. m., upon the expiration of the recess.)
Senator CARAWAY (chairman of the subcommittee). The meeting will please come to order. I think we may begin to hear the statements of others.
First we shall hear from Mr. Sam E. Jarvis, of Decatur, Ill.
STATEMENT OF SAM E. JARVIS, DECATUR, ILL.
Mr. JARVIS. Madam Chairman and members of the committee, my name is Sam E. Jarvis; I come from Decatur, Ill. I am an independent oil producer of the State and have been working with Mr. Swann for some time in an effort to try to help as much as I can with this war emergency. There is not very much that I can add to what Mr. Swann has already stated or to what Senator Lucas said this morning. It seems that there is a shortage of steel and that it is a problem everyone has to try to help work out. I am convinced that the Office of the Petroleum Coordinator has quite a large task on its hands to solve this problem. I have at numerous times talked with Mr. Davies and Mr. Knowlton regarding this order M-68 which now exists throughout the country.
Personally, I have never been quite in agreement with some of the theories advanced with reference to solving our problems in Illinois. However, I feel that oil is as essential to the winning of this war as steel itself; and from all the conversations I have heard this morning and from listening to the statements that have been made, it all seems to hinge around how much steel can be produced and used in the most valuable places. I have talked with Mr. Knowlton may times about this thing and have tried to offer suggestions that might be beneficial in alleviating the situation.
Our situation in Illinois at this time is such that under the spacing as allowed in M-68 it makes it very hazardous for the operators to go out and drill wildcat wells without being able to develop the property further only under 40-acre spacing which is forbidden under M-68.
It has been stated here what our production was at the end of 1941, and also what it is at the present time. It seems to me as an individual operator that with the serious shortage we have in the East, had our production not been cut so severely by this order, we could help much in the present situation. I think that at the present time there are approximately 200 strings of tools stacked in Illinois. Those tools require a crew of about 4 men, and the tour is about 6 to 8 hours. These men are more or less experts in their line. You cannot make a drilling crew overnight, and these boys have, since all these tools have been stacked, been out seeking new employment. Many of them have gone into the war effort; some of them have gone into the Army.
It is now getting to be quite a serious problem.
Mr. Knowlton stated this morning that the Office of Petroleum Coordinator was trying to put the steel where it would produce the largest amount of oil per ton. We have discussed that many times, and that is true over a long period of time on a long-time permit; but it seems to me that today we have an emergency in the East that could be helped greatly by taking more oil out of Illinois and allowing us to go ahead and develop properties in an orderly manner. I am sure that there is no independent operator in Illinois who wants to go back to the strip and half-acre drilling. It is to his interest to develop the property and operate it as best he knows how.
It is true that by allotting steel to the Gulf coast country you get a larger recovery for a certain amount of steel; however, that does not alleviate the distress in the East or the transportation problem. I have contended all along the line that by moving crude oil from Illinois to the eastern seaboard by tank car the movement is much faster than by shipping oil from the Gulf coast areas.
I think that every oilman in Illinois wants to win this war. I think they are all willing to cooperate in any manner possible to get it over as quickly as possible. I believe that by allowing the Illinois operators to go to work and drill more wells, increasing production to a point where they can get it back to around 370,000 barrels daily, it will greatly help the situation in the East.
I listened with much interest to Mr. Knowlton's paper this morning. I agree 100 percent with everything that he said, but there are many things that he did not say. Naturally, the Office of the Petroleum Coordinator has to project its plans over a long period of time, but it is my opinion that at this time we have an emergency that must be taken care of; and if it is as serious as Senator Lucas explained here this morning, something should be done about it immediately.
Mr. Knowlton stated in his paper that Illinois was ahead of any other State in the Union in drilling wildcat wells. That is true; but he did not state how many dry holes were drilled out of that number of operations. Our situation there is this: That if we are restricted by M-68 from developing known resources, are compelled to wildcat, and are then not allowed to develop property after the wildcat wells are drilled, we cannot go on continually doing that without going broke.
Some time ago we discussed with the Office of the Petroleum Coordinator the matter of used equipment. For your information, Madam Chairman, and the information of the members of the committee, we made a survey of the used equipment available at the time in Illinois.
I do not know whether you have covered that, Mr. Swann.
Mr. JARVIS. There is no need to go into it. However, I think we have enough material, without requesting any more new material, to drill about six or seven hundred wells in that country.
Mr. SWANN. Three thousand.
Mr. JARVIS. Then, there is another problem that comes up. I think this thing should be done immediately, for the reason that we have an emergency in the East, and we can alleviate it probably by some immediate drilling in Illinois, due to the fact that we can move the crude by tank car much faster than it can be brought in from the other districts. Personally, if we have to take the oil from any other State than Illinois—and I think I speak for 50 percent of the independent operators in Illinois--that is where we want it taken from, whether we are hurt by the production of that State or not. Now is the time we need it; we do not need it a year from now,
now, or 3
Another thing: If we go ahead and use the equipment we have to drill wells, then by the time we get this equipment used up there will be a number of wells down in production to the point where we can pull those wells and salvage the material and use it again. There are a number of wells in Illinois right now where many operators are pulling out the casings and are salvaging them to use them again if they can get the “Go" sign from the O. P. C.
I have heard much discussion about pipe lines and the shortage of steel, but I believe that if the situation, as Senator Lucas stated this morning, is so seriously affecting the people of the East, we in Illinois can do a great deal to relieve that situation until these pipe lines are completed.
Mr. Knowlton showed the committee a chart projecting the increase in decline of production in the State, which was all right.
Senator CLARK of Missouri. It is the contention of the Illinois producers that this order M–68 is responsible for that reduction in production in Illinois; is that not correct?
Mr. JARVIS. That is correct, sir.
Senator CLARK of Missouri. In other words, it is not a natural shortage; it is an artificially made shortage !
Mr. JARVIS. I was just starting to bring that out and was referring to my
notes. I do not question the chart that Mr. Knowlton had. I might say that I have been received and treated very courteously in the 0. P. C. office and have had the finest cooperation from those gentlemen that could be received. But there is an emergency in this country, and I think we should not wait or act on a plan that is based on a period of years. We must act now. If Illinois can help relieve that situation, it should do it and be allowed to do it. If there is some way for Michigan or Texas or Louisiana to relieve that situation, they should be allowed to do it.
To get back to the chart which Mr. Knowlton showed you, it is a true chart. But production in all States increases and decreases; that is natural. But it takes numerous wells to be drilled to keep that pro
duction up to the level. We in Illinois would go out and wildcat, but it does not do any good if we do not develop the properties after we drill the wildcat wells.
It seems to me, from what I have heard here and from the talk that has been going around through our country, that there is too little emphasis being placed on the importance of oil with reference to this war effort. I am talking now about the importance of oil in sight. You know, we can theorize about our reserves and our ultimate recovery, but it is beyond the power of any man to tell you just what they will be.
I should now like to ask some questions about Mr. Knowlton's statement. As a matter of information, I should like to know how many barrels of crude oil we have in storage on the surface for use right now. I refer to that for this reason. Things do not look so bright in Europe, and should some of those countries fail and have to call on us for large quantities of oil, where are we going to get it? Our drilling crews are disintegrating. We cannot go out and pick up drilling crews overnight. It does not take us long in Illinois to drill these wells if we can get crews; but when the men are all gone, we have to get whom we can get. We cannot put untrained men on the drilling of wells; we have to have men who know how to drill wells. It seems to me that that is a very serious thing.
We talk about steel for tanks, ships, trucks, guns, and all that. It is true that tanks, trucks, and the transportation to move this stuff are important to the war effort; but it does not make any difference how many tanks or ships we build if we do not have the oil to use in them. It is not going to do anybody any good. Of course, this is to say nothing about the amount required for our allies in case they call on us.
We hope that the committee will see fit to adopt Senator Lucas' amendment. We think that the operators in Illinois, if given the "go” sign and left unmolested, can very easily bring our production back to where it was as of December 31, 1941.
Senator VANDENBERG. What would you say about Mr. Knowlton's suggestion that a large percentage of Illinois independents agreed with the order, which he found was popular when he got out there?
Mr. JARVIS. Senator, I would say I could not agree with Mr. Knowlton on that. I will say this: I feel that the majority of the operators agree with Mr. Knowlton insofar as 1-acre spacing or this wild orgy of drilling is concerned.
The wild orgy of drilling in Illinois in the Salem district-in fact, in all districts—after the discovery of 1937 was not brought on altogether by independent operators. We do not feel that we were responsible for a lot of that. However, the independent operators have uncovered, I think, approximately 70 percent of the new fields in the State. But here was a wild drilling orgy that there was no use for at all. However, that was not done altogether by the independent operators. There were some few who had strip wells there, and there was a lot of drilling that could have been eliminatedinside locations—if they had so desired.
I should like to tell the committee that at the present time every pipe-line company in Illinois, forgetting about the emergency in the East or the pipe line which is proposed to be built up in this country, is crying for oil. In fact, one pipe-line company told me the other
day that if I could give them the gases in the well, they would carry the oil out in buckets; they needed it that badly.
Senator VANDENBERG. You are getting a little away from my question. Mr. Knowlton left the impression with me that he thought he was speaking for a majority of the oil producers in Illinois, and I was wondering if you disagreed with him on that subject.
Mr. JARVIS. Yes; I do, Senator. I do not think anybody is satisfied with it, for this reason: I do not think they take any particular issue with the 0. P. C. in this way: that in our country we have many small leases—3-, 5-, 10-, 15-, or 20-acre tracts. The greatest objection to this ruling and this spacing agreement is the fact that we have to go out and communitize, do a lot of extra work, and get a lot of unwilling partners to go in. Then you have to go in and communitize the landlords. That creates a lot of extra work and a loss of time that, in our opinion, is not at all necessary.
I think that if we could have an order in some concrete manner that would allow all that, there would not be so much trouble for the oil operator. It is a slow process and a hard job to get a lot of people together, especially if you get a lessor on here who does not want to communitize with you. You cannot force a man to do it if he does not want to, so you
go ahead. Senator PEPPER. Madam Chairman, I was going to ask if the witness would wind my interrupting him long enough to read the following from page 236 of the House hearings before the Rivers and Harbors Committee, under the chairmanship of Judge Mansfield, of Texas, whose presence I am pleased to note in the room at this time.
Mr. JARVIS. Not at all, Senator.
Senator PEPPER. Major Parten was on the stand. The following colloquy took place between Mr. Green and Major Parten:
Mr. GREEN. You are not opposed to the enactment of this bill?
for the extension of the coastal waterway system. Major PARTEN. I would say that the Office of the Petroleum Coordinator has no objection to the bill. In view of the statement of the able Senator from Michigan on the floor today as to what a distinguished citizen Major Parten is, that carries added weight to the statement.
Senator VANDENBERG. I paid Mr. Parten a very high compliment, which I thought he deserved. I think the statements you have read are hardly fair to him, because I think he, in his statement here, said that he had no opinion respecting some sections of the bill, because he had no right to an opinion.
Senator PEPPER. This war for the purpose of showing that he did not object to the bill.
Senator VANDENBERG. All right. I am being good-natured again. [Laughter.]
Mr. Jarvis. I believe that the majority of operators in Illinois would be very much satisfied with 120-acre spacing. I think that spacing is the greatest objection. I have property of my own. To give you some idea of what the present order leads you into, on approximately 280 acres in one small pool—I have never drilled that yet—under the present set-up of 40-acre spacing or 20-acre spacing I can drill one well