Mr. ELLSWORTH. That is serious; there is no question about that. I agree with that: that the shortage is serious. Do you think gasoline should be rationed this coming summer, or is it your opinion that it should be rationed this coming summer?

Mr. BALL. Well, you are asking me a highly theoretical question. Mr. ELLSWORTH. It is a very practical question, Mr. Ball, because we are liable to be asked that by a great many people.

Mr. BALL. I would much prefer that you ask that question of the policy-making officers of our Department rather than ask it of me. Mr. ELLSWORTH. I believe that is all, Mr. Chairman.

Mr. LEA. Mr. Ball, do you regard oil shales and coal as the two next sources to go to after the exhaustion, or diminution, of our supply of petroleum from normal sources?

Mr. BALL. Oil shale, coal, and gas. Gas is the quickest and cheapest source of synthetic liquid fuels, and as you know, there is one plant being built and another one just starting now; but, of course, there again you run into a limited supply. You cannot use your gas as a source of synthetic liquids and at the same time use it as a fuel to keep houses warm and to run industries. Thus gas is limited as a source; but beyond that you have oil shale and coal, and I do look on those as the next sources when our natural petroleum supplies begin to get short.

Mr. ELLSWORTH. The gas supply is more closely associated with oil production; is it not?

Mr. BALL. Yes.

Mr. ELLSWORTH. Now, I think it would be natural to assume that we would have a diminishing supply of oil that will make the demand acute long before the supply is exhausted.

Mr. BALL. We will not run out of oil, as I said here at a previous appearance, for 100 years in the United States.

The CHAIRMAN. What is that?

Mr. BALL. We will not run out of oil in the United States for 100 years, but we are running short right now.

Mr. LEA. It seems to me it is pretty hard not to anticipate that the time is not very far away when we are going to be short in the world supply, in view of the tremendous consumption at the present time and the likelihood that our consumption now is only a comparatively small percentage of what the world will use 20 or 30 years from now.

Mr. BALL. I think that that is undoubtedly true, Mr. Lea. I think that it takes a very active imagination to think of how much oil foreign countries will use as they industrialize and raise their standards of living.

Mr. LEA. Well, are you convinced that there is a practical method of producing oil from coal and shales?

Mr. BALL. Yes; there are two methods of producing liquid fuels from coal-the hydrogenation process and the Fischer-Tropsch process. Mr. HALE. What is the second one?

Mr. BALL. The Fischer-Tropsch process. That was developed by the Germans, and in fact both of these were developed by the Germans and furnished a substantial part of the liquid fuels with which Germany ran her last war. That does not mean that she built up anything like the production that we would need in the United States. I think her synthetic production hit somewhere around 100,000 barrels a day or something like that. It might be less than that.

Both of those processes have been used commercially. They need to be improved very materially. When I say they were used commercially, they were used under wartime conditions where cost did not count. They need to be improved very materially to bring them into the competitive range with natural sources. That gap between the cost of gasoline produced from an oil well and gasoline produced from coal is steadily narrowing, partly by the increase in the price of gasoline from petroleum and partly by the research work that the Bureau of Mines, Pittsburgh Consolidation Coal Co., and Standard Oil Development Co. and others are doing in improving the processes for synthetic production and thereby lowering the costs.

I think that for the protection of our own economy and for the protection of our own defense, it is important that we continue and augment the research work that is being done on oil shales and coal and that we do it without delay.

Mr. LEA. Have the experiments so far demonstrated from a practical standpoint that quality oil can be produced from either of those sources?

Mr. BALL. The oil produced from coal, the products produced from coal, are of the highest quality. You can make an aviation gasoline that is better than the 100 octane that we made during the

war.

Oil produced from oil shale by present known refining methods will not yield a good aviation gasoline or a good motor gasoline, but it will yield an excellent Diesel fuel. Now that is by present refining methods. I am confident that if you turn the brains of the petroleum industry loose on that type of oil as a problem, it would not be too long before you had good aviation gasoline and motor gasoline coming out of it. Mr. LEA. So that I take it that a legitimate line of experiment now would be to develop or try to develop a superior quality from shales. Mr. BALL. Yes, and of course you already have a superior Diesel fuel and excellent fuel oils from the shales. The only thing you do not have is motor gasoline and aviation gasoline.

Mr. LEA. Well, when we develop that quality, that superior quality from shales, then I take it that the two remaining problems would be quantity production and price?

Mr. BALL. As to oil shale, Mr. Lea, the spread in price is very,

very narrow.

Mr. LEA. How is that?

Mr. BALL. The spread in price is very, very narrow as to oil shale. Oil can be produced from oil shale by present known methods at costs very little in excess of oil from wells.

Mr. LEA. So I take it it is entirely within the possibilities that shale may produce oil equally cheap and possibly equal in quality?

Mr. BALL. I think that is entirely within the bounds of possibility. Mr. LEA. If that would be true, what is the prospect or what is the information as to the volume of shales available?

Mr. BALL. Well, the estimate that has been most quoted is that there are 91,000,000,000 barrels of oil in the oil-shafe deposits of Utah, Colorado, and Wyoming. That deposit is right around the common corner of those three States. But recent work by the Bureau of Mines indicates that that is a gross underestimate, that there may be two or even three times that much.

Mr. LEA. And there are other sections, also?

Mr. BALL. And that is all reasonably accessible.

Mr. LEA. So that that would be four times our known reserves of oil at the present time?

Mr. BALL. Yes.

Mr. LEA. That is in shale.

Mr. BALL. Yes.

Mr. LEA. And then are there not other sections of the country that are known to have large deposits?

Mr. BALL. Nothing comparable to that deposit in the corner of Utah, Colorado, and Wyoming. There are other shale deposits in the United States, but they are not comparable either in quantity or quality.

Mr. LEA. Has it been established that there are substantial quantities in Ohio?

Mr. BALL. There are oil shales in Ohio, but how extensive and how easily minable, I do not know, Mr. Lea.

Mr. LEA. Do you have any information as to Canadian sources? Mr. BALL. The only oil shales in Canada are in Nova Scotia, and while they are fairly high-grade, they do not lie so that they are easily and economically minable, and I think that the Nova Scotia shales will lag considerably behind our own. You have something else in Canada, however, and now I am talking about something on which I myself spent a good part of 13 or 14 years. You have a very large deposit of oil sand up on the Athabaska River, north of Edmonton, in Northern Alberta. That is not in the same category as oil shale at all. In oil shale the organic material has not yet been converted into oil, and it needs a high heat to convert it into oil. The oil in these oil sands is oil, a very heavy, viscous, asphaltic oil, but nevertheless it is oil. All you need to do is to mine the sand and wash the oil out with hot water. Then you have a refinable oil, an oil which is amenable to refining. A great deal of work has been done on that. There are some smaller deposits of oil sands in California.

Mr. LEA. How extensive is that deposit in Canada known to be? Mr. BALL. That Athabaska deposit has a minimum of 100 billion barrels. Let me add, however, that only 2 or 3 percent of that is minable under present economic conditions. Two or three percent can be mined by open-pit methods. For the rest of it you would have to go underground and run into very high expense.

Mr. LEA. From the transportation standpoint, how much would we gain by being able to convert coal into oil, say in fields in Alaska, by the reduction of the weight and volume for transportation, that is what I had in mind?

Mr. BALL. You would have a very material transportation advantage if you had a local source in Alaska. Unfortunately, the big coal deposits do not lie in the interior basin. They lie along on the coast range. Transportation from the west coast up to Alaska by water is not unduly expensive.

Mr. LEA. But if the coal was reduced to oil, that would greatly minimize the transportation cost?

Mr. BALL. Yes.

Mr. LEA. And is not it probable that there are vast deposits of coal up there that perhaps would not be used otherwise for an indefinite period?

Mr. BALL. There are vast deposits of coal in Alaska and it will be a long time before they are used unless Alaska has a great deal more development than now appears likely in the near future. Those coals are not of the character that so far have proved most amenable to use for the production of synthetic liquids, but I think that is a matter again of further research, and that research is being done by the Bureau of Mines now. They have samples of Alaska coal which they are going to run in the plant at Louisiana, Mo., which they are just readying or will ready for large-scale experimental work, except for the fact that their $30,000,000 appropriation expires next year and the period within which they can make long-term contracts for the plant is running out. Unless they get an extension of that act, I do not know that they will be able to go ahead and do the work that I was just speaking of.

Mr. LEA. I take it that because of the importance of it they will get an extension.

Mr. BALL. I think it would be most unfortunate to interrupt that work.

Mr. LEA. Is there any reason why production cannot be secured from shale without a very large investment?

Mr. BALL. It would mean a very large investment, and I think it must be borne in mind, Mr. Lea, considering a synthetic fuel program, that it would mean the development of a tremendous new industry. To produce from coal, for example, the amount of liquid fuels that we now use in the United States would require a coal-mining industry— not including the plants for making the synthetics but just for mining alone an industry twice the size of our present coal industry.

Mr. LEA. And when we went into shale, how great would the mining part of that be?

Mr. BALL. It would be comparable, not quite so great but almost, and the steel consumption is terrific.

Mr. LEA. Looking ahead and making a guess, does it look like a desirable plan would be for production to begin in shale or coal and shade off with the diminishing supply of oil?

Mr. BALL. I think that that is the thing. I do not believe that synthetic production from either shale or coal is ready for commercial use quite yet, although shale is closer to it than coal. I think that we should be pushing our research work, and as soon as steel can be had without subtracting it from the much needed steel for producing oil from oil wells, that we should start building commercial plants. I do not mean a lot of them, and I do not mean big ones, but a commercial plant for oil shale and for each of the two coal processes. Mr. LEA. That method of approaching the problem would seem to invite private capital into it gradually.

Mr. BALL. That is right.

Mr. LEA. And in sufficient quantities, eventually, I take it.

Mr. BALL. I think on the more expensive processes that probably the Government will have to take the lead for some little time, but that industry can be induced to participate at a fairly early date. Mr. LEA. I believe that is all.

Mr. SCOTT. Mr. Ball, some time ago figures were given us indicating that exports to Canada have been running about three times as much for 1947 as for the previous year. What is Canada doing with all of that petroleum?

71869-48-pt. 1- -15

Mr. BALL. Burning it.

Mr. SCOTT. Three times as much?

Mr. BALL. Yes.

Mr. SCOTT. They are not stock piling it and not exporting it? Mr. BALL. They are only exporting to Newfoundland, and they do not export overseas.

Mr. SCOTT. We are not using three times as much here, are we? Mr. BALL. No, and we are not by any means their only source of supply. They import a good deal of oil from the Caribbean area, particularly from Colombia, where the major development is owned by a Canadian company which again is owned by an American company, but they did have the same expansion in oil burners that we had. Since they are north of us they got the same expansion of oil burners. and space heaters that we got in our Northern States, only multiplied some more, despite the fact that they stopped part of that expansion sometime last summer.

Mr. SCOTT. While they were getting three times as much oil, why is it that the Atlantic seaboard and New England regions were not equally aware of this increase, this increasing need?

Mr. BALL. I think that your figure of their receiving three times as much as last year applies only for short periods and for certain products. I think that we have the information here on that. I am going to ask Mr. Fentress to answer that.

This is Mr. Carroll D. Fentress, who is assistant to the Director of the Oil and Gas Division.

STATEMENT OF CARROLL D. FENTRESS, ASSISTANT TO THE DIRECTOR, OIL AND GAS DIVISION, DEPARTMENT OF THE INTERIOR

Mr. FENTRESS. The first 9 months of last year showed an increase of United States exports to Canada compared to the comparable period for 1946 of 19.9 percent.

Mr. SCOTT. We have figures before us, however, that are larger than that.

Mr. FENTRESS. I think that the figures that you are speaking of are inventories of certain particular products in Canada.

Mr. SCOTT. I thought that they referred to barrels of petroleum shipped; that is my impression.

Mr. FENTRESS. Now, there are certain individual products for which that statement is correct. I was totaling all products.

Mr. SCOTT. For example, what individual product is it that you have?

Mr. FENTRESS. The shipments of kerosene have multiplied considerably and the shipments of distillate heating oils.

Mr. Scorт. That is what I thought.

Mr. FENTRESS. And that led, as you probably know, to the agreement between the Canadian Government and this country for a voluntary curtailment of exports to Canada.

Mr. SCOTT. After it was discovered that Canada was getting an undue proportion as compared to New England and Pennsylvania and New York.

Mr. FENTRESS. If I may use the phrase coined by someone else, sir, we did not feel that there was a "parity of pinching."