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Naval Petroleum Reserves (3)
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Vernon C. Loen and Charles Leppert Files
Vernon Loen's and Charles Leppert's General Subject Files
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National Petroleum Reserve (Alaska)
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The original documents are located in Box 18, folder "Naval Petroleum Reserves (3)" of the
Loen and Leppert Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
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copyright claim, please contact the Gerald R. Ford Presidential Library.
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
THE WHITE HOUSE
WASHINGTON
NETA
FORD & 077800 LIBRAND
PLS fiE IN
ELK HILLS LEGISLATION
FILE if WE HAVE
SUCH A THING? 7
CHAS.
Digitized from Box 18 of the Loen and Leppert Files at the Gerald R. Ford Presidential Library
WILLIAM L. DICKINSON
WALTER J. BAMBERG
FIELD REPRESENTATIVE
2ND DISTRICT, ALABAMA
DISTRICT OFFICES:
WASHINGTON OFFICE:
2436 RAYBURN HOUSE OFFICE BUILDING
Congress of the United States
ROOM 401 POST OFFICE BUILDING
PHONE: AREA CODE (205) 265-5611, ExT. 453
PHONE: AREA CODE (202) 225-2901
MONTGOMERY, ALABAMA 36104
WASHINGTON, D.C. 20515
house of Representatives
FEDERAL BUILDING
2ND DISTRICT COUNTIES:
Washington, D.C. 20515
100 WEST TROY STREET
PHONE: AREA CODE (205) 794-9680
BARBOUR
CRENSHAW
DOTHAN, ALABAMA 36301
BULLOCK
DALE
BUTLER
GENEVA
COFFEE
HENRY
April 28, 1975
COMMITTEES:
CONECUH
HOUSTON
ARMED SERVICES
COVINGTON
MONTGOMERY
HOUSE ADMINISTRATION
PIKE
JOINT COMMITTEE ON PRINTING
Dear Colleague:
H. R. 49, to be considered by the House on Tuesday, April 29,
is a regional special-interest bill. It would remove the Naval Petroleum
Reserves from Congressional oversight and place them in the hands of the
Department of the Interior. Up to 90% of the revenue generated under
H.R. 49 would accrue only to the seventeen Western States, and the other
10% would go to the Treasury of the United States. For the East, H.R.
49 is an empty bag.
The Naval Petroleum Reserves were set aside to assure a
stockpile of oil for the defense needs of the entire United States, not
just California. The last time the Interior Department controlled the
Reserves, the result was the Teapot Dome scandal, so jurisdiction was
promptly transferred to the Department of the Navy in 1927. H. R. 49
would now remove all jurisdiction of the Reserves from the Department
of the Navy, and transfer it back to the Department of the Interior,
whereupon they would be opened for commercial exploitation, with utter
disregard for possible emergency defense requirements. H.R. 49 is a
boon for the Western States, especially California, and a possible
windfall for the big oil interests.
On the other hand, the Committee on Armed Services proposed
substitute amendments in the language of H.R. 5919, providing for the
orderly development of the Reserves (maintaining Congressional oversight),
with a maximum production of 200,000 barrels a day for three years and
with all proceeds accruing to the United States Treasury for equitable
distribution among all States, including the East, Northeast, South and
West, alike. This orderly development, under Congressional supervision,
is a sensible and responsible alternative to turning over jurisdiction
lock, stock and barrel, to the Interior Department for exploitation.
I urge your support of the Armed Services Committee amendments,
as H.R. 5919, and your opposition to H.R. 49, as proposed by the Interior
Committee.
Sincerely yours
CERALD ? FORD
WM. L. DICKINSON
URGENT!! MEMBER'S PERSONAL ATTENTION
ALPHONZO BELL
COMMITTEES:
27TH DISTRICT
SCIENCE AND ASTRONAUTICS
CALIFORNIA
EDUCATION AND LABOR
RICHARD BLADES
ADMINISTRATIVE ASSISTANT
Congress of the United States
CRAIG VAN NOTE
LEGISLATIVE-ADMINISTRATIVE ASSISTANT
SUITE 14220
11000 WILSHIRE BOULEVARD
house of Representatives
2329 RAYBURN House OFFICE BUILDING
202-225-6451
Los ANGELES, CALIFORNIA 90024
213-824-7222
Washington, D.C. 20515
April 29, 1975
Dear Colleague,
A highly irresponsible letter has been circulated claiming there may be
another Teapot Dome scandal if the naval oil reserves are transferred to the
Interior Department. This is a scurrilous attack on H.R. 49.
If there is any evidence of scandal, let these Members of Congress put it on
the table. There has been enough innuendo, distortion and outright lies.
H.R. 49 does not remove Congressional oversight, as alleged. In fact, it
requires that all development plans for the oil reserves be referred to Congress.
A negative resolution by either the House or the Senate would veto any plan.
H.R. 49 does not open the Elk Hills reserve for "commercial exploitation,"
as alleged. It would be stupid to lease this proven oil field to private oil
companies. The Interior Dept. should be the operator, contracting out the
production for a fixed fee. This is no different than the present Navy operation.
In this way, the federal government would own all of its oil and get top price
for this "new" oil.
I shall introduce an amendment on the floor expressly forbidding the leasing
of Elk Hills by the Interior Dept.
H.R. 5919, the rival Armed Services Committee bill, does not, as claimed,
provide for "immediate, maximum development and production" of the Elk Hills reserve.
When President Ford toured the Elk Hills oil field on March 31st, he left the Navy
with this remark: "We'll be back when you're up to 400,000 barrels a day." If
the Navy and the Armed Services Committee have their way, President Ford will never
come back.
According to H.R. 5919, there can be a maximum production of only 200,000
barrels a day at Elk Hills, with a production limit of three years. The Navy
estimates that total production over those three years would be just 122,000,000
barrels.
H.R. 49, by contrast, sets no limit on the daily production or the length
of production. At a maximum efficient rate of 300,000 barrels a day, production
under H.R. 49 would soon equal in one year all the oil allowed in three years
under H.R. 5919.
H.R. 49 meets the nation's need for more domestic production. H.R. 5919
FORD
would limit and shut in this critically-needed oil, and would wastefully tie up
scarce oil drilling equipment and labor.
It is in the national interest, in this time of energy crisis, that we use
our oil reserves to reduce our dependence on foreign oil, I urge you to strongly
support H.R. 49.
Sincerely yours,
alphongo Bell
Alphonzo Bell
Congress of the United States
Douse of Representatives
Clashington, D.C. 20515
More
April 24, 1975
new york
To Members of the New England Congressional Caucus:
Dear Colleague:
In evaluating H.R. 49, regarding our Naval Petroleum
reserves, as reported out of the Interior Committee, I
think it is important for us to recognize that there is
a strong regional coloration to the measure. That is, th
proceeds generated from this 20$ billion national resource
could easily result in being distributed to a number of
Western states, to the exclusion of the rest of us.
The Mineral Leasing Act of 1920 provides that 37 1/2% of
the proceeds of the leases shall go to the State from which
the oil came, i.e. in this case, California. Furthermore,
52 1/2% shall go into the Reclamation Fund under the
Reclamation Act of 1902. In examining the provisions of
the latter Act, you will find that all these proceeds go
to 17 Western states, and none at all to Eastern states.
Finally, 10% goes to the General Treasury of the United
States.
Thus, 90% of the proceeds of the leases which may be
negotiated by the Department of the Interior for the oil
in Elk Hills will be unavailable to states outside the 17
provided for in the Reclamation Act. And the remaining 10%
is not directly available to the Northeast either.
It should be no surprise, therefore, to learn that at least
25 of California's Congressmen have co-sponsored the Interior
Committee's measure.
I strongly urge you to support the substitute language for
H.R. 49 offered by the Armed Services committee, as it appears
to me that this will both preserve and use Elk Hills as the
truly national resource that it is.
If you have any questions concerning this legislation, please
call me or my staff (Dick) at 54115.
FORD
James Jeffords Suffax
LIBRARY
T
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPT. No. 94-
1st Session
81 PART I
AUTHORIZING THE SECRETARY OF THE INTERIOR TO ESTABLISH ON
CERTAIN PUBLIC LANDS OF THE U.S. NATIONAL PETROLEUM RE-
SERVES THE DEVELOPMENT OF WHICH NEEDS TO BE REGULATED
IN A MANNER CONSISTENT WITH THE TOTAL ENERGY NEEDS OF
THE NATION AND FOR OTHER PURPOSES
MARCH 18, 1975.-Ordered to be printed
Mr. HALEY, from the Committee on Interior and Insular Affairs,
submitted the following
REPORT
[To accompany H.R. 49]
The Committee on Interior and Insular Affairs, to whom was re-
ferred the bill (H.R. 49) To authorize the Secretary of the Interior
to establish on certain public lands of the United States national pe-
troleum reserves the development of which needs to be regulated in a
manner consistent with the total energy needs of the Nation, and for
other purposes, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do pass.
The amendment is as follows:
Page 1, beginning on line 3, strike out all after the enacting clause
and insert in lieu thereof the following:
That in order to develop petroleum reserves of the United States which need to
be regulated in a manner to meet the total energy needs of the Nation, including
but not limited to national defense, the Secretary of the Interior is authorized
to establish national petroleum reserves on any reserved or unreserved public
lands of the United States (except lands in the National Park System, the Na-
tional Wildlife Refuge System, the Wild and Scenic Rivers System, the National
Wilderness Preservation System, areas now under review for inclusion in the
Wilderness System in accordance with provisions of the Wilderness Act of 1964,
and lands in Alaska other than those in Naval Petroleum Reserve #4).
SEC. 2. No national petroleum reserve that includes all or part of an existing
naval petroleum reserve shall be established without prior consultation with the
Secretary of Defense, and when SO established, the portion of such naval reserve
included shall be deemed to be excluded from. the naval petroleum reserve.
Upon the inclusion in a national petroleum reserve of any land which is in a
naval petroleum reserve on the date of enactment of this act, any equipment,
facilities, or other property of the Department of the Navy used in operations on
the land SO included and any records, maps, exhibits, or other informational data
held by the Secretary of the Navy in connection with the land S0 included shall
be transferred from the Secretary of the Navy to the Secretary of the Interior
who shall thereafter be authorized to use them to carry out the purposes of this
Act.
38-081 O
2
3
The Secretary of the Interior shall assume the responsibilities and functions
of the Secretary of the Navy under any contract which now exists with respect
EXPLANATION AND NEED
to activities on a naval petroleum reserve to which the United States is a party.
SEC. 3. (a) The oil and gas in the national petroleum reserves in the contiguous
forty-eight states established pursuant to this section may be developed under
The bill seeks to accomplish three things:
terms and conditions prescribed by the Secretary of the Interior. The Secretary
First, to authorize the Secretary of the Interior to establish national
of the Interior shall use competitive bidding procedures with prior public notice
petroleum reserves on the public lands.
of not less than 30 days of the terms and conditions for any contract, lease, or
Second, to authorize the Secretary to prepare plans for development
operating agreement for development and production of oil and gas from a
national petroleum reserve. Such terms and conditions and also plans for the
and production of oil and gas on such reserves in the lower forty-eight
development of each area of the national petroleum reserves shall be published in
states, subject to Congressional acceptance of any production plan.
the Federal Register, but shall not become effective until sixty days after final
Third, to direct the Secretary to explore for oil and gas on the 22
notice has been published and submitted to the Congress (not counting days on
million-acre Naval Petroleum Reserve No. 4 in Alaska, and to report
which either the House of Representatives or the Senate is not in session for
three consecutive days or more) and then only if neither the House of Repre-
his findings annually to Congress. However, the bill expressly prohibits
sentatives nor the Senate adopts a resolution of disapproval. Each proposed Plan
the Secretary from allowing any leasing, development, or production
of development and each amendment thereof shall explain in detail the method of
from this Alaskan reserve until further action by Congress.
development and production proposed, shall provide for disposal and transporta-
tion of the oil consistent with the public interest, and shall give full and equal
Potential Oil and Gas Production on Public Lands
opportunity for development of or acquisition of, or exchange for, the oil and gas
by qualified persons including major and independent producers or refiners alike.
Each proposed plan of development by the Secretary shall also explain the rela-
H.R. 49 proposes that public lands heretofore set aside as Naval
tive needs for developing the oil and gas resources in order to meet the total
Petroleum Reserves may be reviewed by the Secretary of the Interior.
energy needs of the Nation, compared with the need for prohibiting such devel-
After consultation with the Secretary of Defense he is authorized to
opment in order to further some other public interest.
(b) Any oil or gas produced from such petroleum reserves, except such oil or
establish national petroleum reserves, which may include all or part
gas which is either exchanged in similar quantities for convenience or increased
of a Naval Petroleum Reserve. Subsequently the Secretary of the In-
efficiency of transportation with persons or the government of an adjacent for-
terior is authorized to proposed to Congress a plan for the develop-
eign state, or which is temporarily exported for convenience or increased effi-
ment and production of any area within a national petroleum reserve.
ciency of transportation across ports of an adjacent foreign state and reenters
Such proposed plans would take effect 60 days after publication in the
the United States, shall be subject to all of the limitations and licensing require-
ments of the Export Administration Act of 1969 (Act of Dec. 30, 1969 83 Stat.
Federal Register unless rejected by either body of Congress.
841) and, in addition, before any oil or gas subject to this section may be exported
The potential 300,000 barrels per day of production from Elk Hills
under the limitations and licensing requirement and penalty and enforcement
could replace a like amount of imported crude oil. At current prices
provisions of the Export Administration Act of 1969 the President must make
this would reduce our balance of payments deficit by about $1.3 billion
and publish an express finding that such exports will not diminish the total qual-
ity or quantity of oil and gas available to the United States and are in the
and return to the U.S. Treasury approximately $1.0 billion per year.
national interest and are in accord with the Export Administration Act of 1969.
(c) The Secretary of the Interior is authorized to enter into contracts for
Committee Jurisdiction
the sale of oil and gas which is produced from the National Petroleum Reserves
and which is owned by the United States. Such contracts shall be issued by com-
Jurisdiction over public lands in the House of Representatives is
petitive bidding, they shall be for periods of not more than one-year's duration,
the responsibility of the Committee on Interior and Insular Affairs.
and in amounts which, in the opinion of the Secretary, shall not exceed those
which can be effectively handled by the purchasers.
H.R. 49 deals with establishing national petroleum reserves on any
(d) The Secretary of the Interior is hereby authorized and directed to explore
reserved or unreserved public lands, with certain specified exceptions.
for oil and gas on Naval Petroleum Reserve No. 4 and he shall report annually
These exceptions are lands in the National Park System, National
to Congress on his plan for exploration of such Reserve: Provided, That no
Wildlife Refuge System, Wild and Scenic Rivers System, Wilderness
development leading to production shall be undertaken unless authorized by
Congress.
Preservation System and lands under review for inclusion in the
(e) Any pipeline which carries oil or gas produced from the national petroleum
Wilderness System, and lands in Alaska except those in Naval Pe-
reserves shall be subject to the common carrier provisions of Section 28 (r) of
troleum Reserve No. 4.
the Mineral Leasing Act of 1920, (41 Stat. 449), as amended (30 U.S.C. Sec-
Naval Petroleum Reserves are public lands set aside by Executive
tion 185), regardless of whether the pipeline crosses public lands.
Order and used for a specific purpose. Their development and pro-
PURPOSE
duction for their oil potential is covered by statute (10 U.S.C. 7421,
et seq.). Under the House Rules, this statute puts them under the juris-
H.R. 49 proposes to authorize the Secretary of the Interior to estab-
diction of the House Committee on Armed Services.
lish on certain public lands of the United States national petroleum re-
Any production of oil and gas for other than national defense pur-
serves the development of which needs to be regulated in a manner
poses from a Naval Petroleum Reserve requires an act of Congress
consistent with the total energy needs of the Nation, and for other
because current law limits production from these reserves to national
purposes.
defense needs. This has been interpreted to mean a declaration of war.
H.R. 49, by authorizing a naval petroleum reserve to be included in a
H.R. 81
H.R. S1
5
4
As you know, House Rule X, Clause (c) (4), grants this Committee
jurisdiction over the conservation, development and use of Naval
national petroleum reserve, would lift these restrictions on production
Petroleum Reserves. That jurisdiction was reaffirmed as recently as
and would permit the reserves to be developed in order to meet the
last October, when the House adopted H. Res. 988. In view of the
total energy needs of the nation, including but not limited to national
exclusive jurisdiction of this Committee, I respectfully submit that
defense.
the action taken by the Subcommittee on Public Lands clearly ex-
Similar bills, i.e., H.R. 11840 and H.R. 16800, were introduced in
ceeded its jurisdiction and that of the Interior Committee. Accord-
the 93d Congress. After extensive hearings held by the Subcommittee
ingly, I request that the Interior Committee specifically exclude the
on Public Lands, the substance of H.R. 11840 was approved by the
Naval Petroleum Reserves from the provisions of the bill when it is
Subcommittee as part of the broader Public Land Policy and Manage-
presented for Committee action. I would also appreciate it if you
ment Act, H.R. 16800. However, no final Committee action was taken
would call this matter to the attention of the membership of your Com-
on this legislation in the 93d Congress.
mittee by having this letter read when H.R. 49 comes before the
The Committee is aware of the jurisdictional overlapping of H.R. 49
Committee.
insofar as the Naval Petroleum Reserves is concerned. A letter from
In the event that the Interior Committee approves the bill without
the Honorable Melvin Price, Chairman of the Armed Services Com-
specifically excepting the Naval Petroleum Reserves from its pro-
mittee, on this question is included as a part of this report, together
visions, I request that this letter be made a part of the Interior Com-
with the response of the Chairman of this Committee. This Commit-
mittee report on the bill.
tee believes that the urgent national need for immediate action to pro-
Sincerely,
duce more domestic oil and natural gas weighs heavily against any
MELVIN PRICE,
further delay through duplicating this Committee's hearings and con-
Chairman.
sideration. Debate on amendments or a substitute for H.R. 49, offered
on the House Floor, could give the House an opportunity to decide on
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,
a policy for establishment and development of national petroleum
U.S. HOUSE OF REPRESENTATIVES,
reserves on the public lands. If this is done without further delay,
Washington, D.C., March 7, 1975.
domestic petroleum production could be increased by 160,000 barrels
per day in less than six months, and 300,000 barrels within a year
(Letter from Chairman of Committee on Interior and Insular Affairs
according to administration officials.
to Chairman of Committee on Armed Services)
The Committee respectfully notes that the House Armed Services
Committee's Investigating Subcommittee held hearings on Elk Hills
Hon. MELVIN PRICE,
on October 17 and 18, 1973, during the 93d Congress. They recom-
Chairman, House Committee on Armed Services, Room 2120, Rayburn
mended that the reserve only be put in readiness for military use. This
Building, Washington, D.C.
Committee is not insensitive to the views and prerogatives of the Com-
DEAR MR. CHAIRMAN: H.R. 49, the bill to which you refer in your
mittee on Armed Services; however, the Members strongly urge im-
letter of March 3, has been scheduled for consideration by the Full
mediate consideration of H.R. 49 by the House. It is in this format
Committee at our next regular meeting, Wednesday, March 12, at
that H.R. 49 as well as the position of the Armed Services Committee
which time I assume the members will be aware of your position since
together with the President's recommendations in his Energy Inde-
you provided them with copies of your letter to me.
pendence Act of 1975, can be fully and adequately debated and
As to propriety of considering this legislation, we can only operate
considered.
under the assumption that we have jurisdiction over a matter that has
U.S. HOUSE OF REPRESENTATIVES,
been referred to us by the Speaker. The bill of course provides that
COMMITTEE ON ARMED SERVICES,
no petroleum reserve that includes an existing Naval Petroleum Re-
Washington, D.C., March 3, 1975.
serve can be established without prior consultation with the Secretary
of Defense.
(Letter from Chairman of Committee on Armed Services to Chairman
At such time as any report on this bill is drafted, your request that
of Committee on Interior and Insular Affairs)
your letter be made a part of that report will of course be considered.
Sincerely,
Hon. JAMES A. HALEY,
JAMES A. HALEY,
Chairman, Committee on Interior and Insular Affairs, House of Rep-
Chairman.
resentatives, Washington, D.C.
DEAR MR. CHAIRMAN: I have learned that H.R. 49, a bill to author-
Historical Need for Naval Petroleum Reserves Has Changed
ize the Secretary of the Interior to establish on certain public lands of
the United States national petroleum reserves, has been favorably re-
In the first quarter of this century four Naval Petroleum Reserves
ported by the Subcommittee on Public Lands of your Committee. That
were created from public lands to assure that, in time of war, the
bill would authorize the Secretary of the Interior to include within the
Navy's ships would have adequate petroleum supplies. Naval Petro-
national petroleum reserves the existing Naval Petroleum Reserves.
H.R. S1
H.R. 81
6
7
leum Reserve No. 1 at Elk Hills (established in September 1912) ;
Joint U.S. and Standard Oil of California Ownership of Elk Hills
Naval Petroleum Reserve No. 2 (established in December 1915) at
Reserve Oil and Gas
Buena Vista are both in California. Naval Petroleum Reserve No. 3
(established in December 1912) is Teapot Dome in Wyoming. Naval
The Elk Hills reserve is in joint ownership and, as a result of this,
Petroleum Reserve No. 4 consisting of 22 million acres located on
a unit plan contract between the Navy and the Standard Oil Company
the north slope of the Brooks Range in Alaska was established in
of California allocates 79 percent of the ownership to the Federal
February 1923. Of the first three reserves, only Elk Hills, with 1.5
government and 21 percent to Standard. Since production ceased
billion barrels, has any appreciable reserve.
following World War II, standby maintenance has been provided for
The Defense Production Act of 1950, as amended, adequately pro-
the existing wells through an operating agreement between the two
tects the nation's defense needs. Under the terms of that Act, the
parties which designates Standard as the operator of the field. How-
President is authorized to assign priorities to any defense-related
ever, the terms of the operating agreement permit its cancellation by
contracts or orders, including all fuels. The nation's entire supply of
either party. On February 14 of this year, Standard notified the Navy
fuel could be immediately reserved and held for military use if neces-
that it was exercising its right of cancellation.
sary the minute the President establishes such a priority. Therefore, a
Whether the Navy or another Federal agency manages Elk Hills,
reserve controlled by the Navy, but limited to use only during time of
any new operating agreement must be negotiated with another com-
war, has lost the significance it once had.
pany. Navy has testified that the unit plan contract and the operating
Each of the three reserves in the lower forty-eight states is ad-
agreement with Standard are equitable. The unit plan contract would
jacent to other producing areas. Due to past and present production
remain in effect under any plan of production.
Buena Vista has been virtually depleted, with a reserve of only 51
Known reserves of gas in Elk Hills exceed 1.2 trillion cubic feet
million barrels remaining. Reserves in Teapot Dome are estimated to
which would become available for sale as oil production proceeded.
be only 50 million barrels. The relative insignificance of the amount
There appears to be little need to stress the existing natural gas short-
of oil remaining in these two reserves make them reserves for the
age in the Nation.
Navy in name only.
The case at Elk Hills is different. It can be put into production
Protection of the Public Interest and Assuring Opportunity for
within sixty days. Production of 160,000 barrels per day could be
Independent Oil Refiners to Have Equitable Access to Oil Produced
obtained in less than six months and the reserve is capable of produc-
on a National Petroleum Reserve
tion of 300,000 barrels per day within one year. The Committee notes
that this amount represents approximately 40 percent of the Presi-
H.R. 49 provides that any plan of production proposed by the Sec-
dent's goal of reducing U.S. dependence on foreign crude imports by
retary of the Interior from a national petroleum reserve in the lower
800,000 barrels per day within one year. The total reserve is esti-
forty-eight states can become effective only after being published in
mated to be 1.5 billion barrels of oil and over 1.2 trillion cubic feet
the Federal Register and submitted to Congress for 60 days during
of natural gas.
which time either body of Congress may veto it by adopting a resolu-
Drainage From the Elk Hills Reserve
tion of disapproval. Any plan of production proposed by the Secretary
can develop and produce such reserves either through a Federal
Navy and Interior officials, private geologists and petroleum engi-
agency, or by contracting or leasing with a private company on the
neers, alike, all agreed in testimony that drainage from a partially
basis of competitive bidding only.
developed petroleum field is difficult and sometimes impossible to
The need for variation in any proposed production plans is evident
prevent. Navy, in 1974, and again in February of this year, testified
because of the variations in conditions and circumstances of the petro-
there was some drainage from Elk Hills. In this regard, two actions
leum reserves and supplies. As was pointed out previously, a reserve
are now being litigated between the Navy and private oil companies
such as Teapot Dome has little oil left, requiring secondary treatment
to prevent further drainage through production from wells outside
to recover the remaining oil, while Elk Hills permits primary produc-
of the boundaries of the reserve.
tion in several proven zones.
To prevent such drainage, the Navy must either enjoin the produc-
In any production plan, H.R. 49 requires that the small independent
tion of oil on the adjoining lands outside of the reserve, or attempt to
oil refiners, or purchasers of natural gas, have equitable opportunity
"jawbone" agreements with private interests to slow down produc-
to buy the product in amounts suitable to their needs, through pur-
tion from, or vacate, active wells, or drill offset wells within the re-
chase contracts limited to a year's duration. It also provides that any
serve and commence their own production. H.R. 49 would permit a
pipeline carrying oil or gas produced from a national petroleum re-
production plan subject to Congressional approval. Such a plan would
serve must be operated as a common carrier, thus assuring accessibility
not only permit production within the reserve but would also free up
of the pipeline to the small independent companies. These protections
production from wells on adjoining lands outside the reserve now
are intended to guarantee small independent companies a viable oppor-
enjoined by court action, thus ending the current litigation. This
tunity to participate in the benefits of production from such national
would mean an additional production of 20,000 barrels per day of
petroleum reserves.
order. oil by private companies on private lands now foreclosed by court
Oil or gas produced from a national petroleum reserve cannot be
exported under H.R. 49, except under the limitations and licensing
H.R. 81
H.R. S1
8
requirements of the Export Administration Act of 1969 and, in addi-
9
tion, unless the President makes a finding that such sale to a foreign
country is in the national interest.
other public land in Alaska may be designated as wilderness, wild
and scenic river, wildlife refuge, national park or national forest lands.
Potential of Naval Petroleum Reserve No. 4 in Alaska
The Committee believes Congress must determine policy for this
The Committee finds that early exploration for oil and gas in Naval
vast area of our largest State, and it believes also that the Depart-
Petroleum Reserve No. 4 is essential. H.R. 49 directs the Secretary to
ment of the Interior should be guided by new law concerning public
undertake such exploration. However, production is out of the ques-
land policy. Certainly, the Navy should not retain exclusive juris-
tion for a number of years due to a lack of transportation. There are
diction over 22 million acres of Alaska public lands in the guise of
other matters to be considered before Congress makes a final judgment
an essentially unexplored petroleum reserve.
on the production of oil and gas contained in this reserve. These lands
H.R. 49 would direct a more sensible and logical approach to the
may have substantial values, including recreation, wildlife and other
consideration of all of the public lands by integrating the management
mineral deposits, in addition to any oil and gas.
of Naval Petroleum Reserve No. 4 into the Department of the Interior.
Current oil development in Alaska is principally in the Prudhoe
That Department could then determine the oil and gas potential on
Bay area. That field involves leases issued by the State of Alaska to
this reserve, together with its other values. Congress should determine
private oil companies and will pay royalties to the owners of the land.
all the relative values, including continuation of all or parts of it as a
There could well be other fields found as extensions to the Prudhoe
national petroleum reserve.
Bay field or in other areas of Alaska which could be developed under
Meanwhile, production from proven reserves in the lower forty-
existing law and regulations and would return substantial revenues to
eight States could proceed subject to Congressional review of the pro-
the Federal government as well as to the State and the natives.
duction plans.
Exploration by the Navy within Naval Petroleum Reserve No. 4
BUDGET ACT COMPLIANCE
is presently proceeding at a snail's pace. Navy has only two explora-
Under the provision of Rule X, clause 3 (b), and clause 1 (e) (3)
tory wells on this year's schedule, although they have programmed
(c), and sections 308 (a) and 403 of the Congressional Budget Act of
24 more over the next 7 years at an estimated cost of $382 million.
1974, the Committee recognizes that some costs will be incurred as a
Little is known of the potential oil or gas reserves in Naval Petroleum
result of the enactment of H.R. 49 (see Current and Five Subsequent
Reserve No. 4. Estimates range as high as 20-30 billion barrels of oil,
Fiscal Year Cost Estimate), but it notes that the income will far ex-
but the Committee recognizes that these are little more than prelimi-
ceed the costs.
nary estimates until additional exploration has been accomplished.
Transportation facilities for oil or gas from this reserve will not
CURRENT AND FIVE SUBSEQUENT FISCAL YEAR COST ESTIMATE
be possible for at least five years and probably longer. The Trans-
Alaskan Pipeline will begin operation in mid-1977, but any connection
Pursuant to Rule XIII, Clause 7, of the Rules of the House of Rep-
to it or expansion of it by looping to carry more than the oil produced
resentatives, the Committee estimates the cost to be incurred by the
in the Prudhoe Bay field is a major construction effort that would re-
Federal Government during the current and the five subsequent fiscal
quire another two to four years beyond 1977. A pipeline to carry
years as a result of the enactment of this legislation would be as fol-
time. natural gas from the North Slope of Alaska would require even more
lows:
This bill would mean production of oil and gas from national petro-
It is vital to the national interest to assess the amount and location
leum reserves within the contiguous 48 states subject to a plan devel-
of potential oil and gas available in this 22 million acre reserve. There
oped by the Secretary of Interior which would come before Congress
is the possibility of finding other minerals and there are wildlife and
for 60 days and be subject to a veto by either body. The Committee
many other values on this large tract of public land that will have to
estimates that outlays for developing plans by the Secretary would
be considered. For example, an area on the western side of the reserve
not exceed $2 million per year.
is an historic and current calving ground of the Arctic caribou herd.
The bill also directs the Secretary of the Interior to explore for oil
The northeastern coastal plain area is considered to be the best water-
and gas on Naval Petroleum Reserve No. 4 in Alaska and report an-
fowl nesting area on the North Slope. Finally, lands in and adjacent
nually to Congress on his findings but does not allow any production.
to the Brooks Range are highly scenic. These areas should all receive
The Committee estimates that the Secretary of the Interior will expend
consideration in any plans for development. In the Committee's opin-
nothing during the current fiscal year for exploration of this area, but
ion, the Secretary of the Interior is best qualified to make judgments
up to $50 million may be spent in each of the succeeding five fiscal
regarding these other values.
years. However, it must be pointed out that these costs could con-
The Department of the Interior administers more than 300 million
siderably depending on the Secretary's findings as presented in his
acres of public land in Alaska. Some of this land is yet to be selected
annual report to the Congress and on the determination by Congress of
by the Natives and the State as permitted in the Alaskan Native
the Secretary's actual needs for exploration in Naval Petroleum Re-
Claims Settlement Act and the Alaska Statehood Act. Much of the
serve No. 4. Even without enactment of H.R. 49, Navy estimates
exploration costs of $382 million over the next seven years. Cost
H.R. S1
estimates for H.R. 49 substantially replace Navy's projected costs.
H.R. 81
10
U.S. receipts from sale of oil and gas produced from National Petro-
leum Reserves would most likely offset these expenditures many times
over.
OVERSIGHT STATEMENT
Pursuant to Rule X, clause 2(b) (1), the Subcommittee on Public
Lands conducted oversight related hearings during its hearings on
H.R. 49. While the Subcommittee did not find that existing laws were
implemented in a manner inconsistent with the intent of Congress at
the time they were enacted, it did conclude that conditions and cir-
cumstances had SO changed that new legislation was necessary and de-
sirable. Based on this conclusion, the Subcommittee recommended and
the Committee on Interior and Insular Affairs agreed (by a vote of 32
to 0) that the national interest demanded the development of new
policy with respect to Federal oil and gas reserves.
No recommendations were submitted to the Committee pursuant to
Rule X, clause (b) (2).
COMMITTEE CONSIDERATION
In the 93d Congress hearings were held on H.R. 11840 and related
measures on December 18, 20, 21, 1973; on January 17, 22, 25, 28, 29,
1974; on February 4, 5, 28, 1974; and on March 14, 15, 1974-a total of
13 Committee Hearings.
In the 94th Congress the Subcommittee on Public Lands met to
hear and consider H.R. 49 on February 6, 21 and 28, 1975. After dis-
cussing the matter on February 28 the Subcommittee revised the legis-
lation and reported it favorably to the Full Committeee on Intrior
and Insular Affairs. On March 13, 1975, the Committee on Interior
and Insular Affairs ordered the measure favorably reported, as
amended, to the House by a vote of 32 to 0.
DEPARTMENTAL REPORT
While no formal report was received from the Department of the
Interior or the Department of Defense on H.R. 49, testimony was
taken by the Subcommittee on Public Lands from both Executive De-
partments. Generally, the Administration spokesmen testified that
their Energy Independence Act of 1975, a more general measure, is
recommended. That legislation contains a provision similar to H.R.
49 which aims towards the ultimate development of the Naval oil re-
serves by the Navy Department. H.R. 49 modifies that approach by
allowing the Secretary of the Interior to establish National Petro-
leum Reserves, including Naval Petroleum Reserves under certain
circumstances, and to utilize the expertise available to him to explore
and develop those reserves under the terms of the legislation.
While the Administration spokesmen indicated a preference for
the proposal, as transmitted, it was clearly understood by the Mem-
bers of the Committee that the Administration strongly recommends
action by the Congress to assure the immediate production of the Elk
Hills area. If the Congress concludes that a solution different from
the one transmitted is more appropriate, the Administration is not
expected to reject it on a jurisdictional basis.
H.R. 81
94TH CONGRESS
1ST SESSION
H. R. 49
[Report No. 94-81]
IN THE HOUSE OF REPRESENTATIVES
JANUARY 14, 1975
Mr. MELCHER introduced the following bill; which was referred to the Com-
mittee on Interior and Insular Affairs
MARCH 18, 1975
Reported from the Committee on Interior and Insular Affairs with an amend-
ment, and referred to the Committee on Armed Services for a period ending
not later than April 19, 1975
[Strike out all after the enacting clause and insert the part printed in italic]
A
BILL
To authorize the Secretary of the Interior to establish on certain
public lands of the United States national petroleum reserves
the development of which needs to be regulated in a manner
consistent with the total energy needs of the Nation, and
for other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That the Secretary of the Interior is authorized to establish
4 on any reserved or unreserved public lands of the United
5 States (except lands in the National Park System, the
6 National Wildlife System, and the Wild and Scenie Rivers
7 System, and the National Wilderness Preservation System
8 and primitive and roadless areas in the national forests now
VI-0
2
3
1 under review for inclusion in the Wilderness System in
1 crude oil production. Any such proposed plan by the Seere-
2 accordance with provisions of the Wilderness Act of 1964),
2 tary shall also explain the relative need for developing the
3 national petroleum reserves the development of which needs
3 oil and gas resource in order to meet the total energy
4 to be regulated in a manner that will meet the total energy
4 needs of the Nation, compared with the need for prohibit-
5 needs of the Nation, including but not limited to national
5 ing such development in order to further some other public
6 defense.
6 interest.
7
SEC. 2. No reserve that includes all or part of an
7
(b) The Secretary of the Interior is hereby authorized
8 existing naval petroleum reserve shall be established with-
8 and directed to explore for oil and gas production on public
9 out prior consultation with the Secretary of Defense, and
9 lands in the State of Alaska except lands in the National
10 when so established, the portion of the naval reserve in-
10 Park System, the National Wildlife System, and the Wild
11 cluded shall be deemed to be excluded from the naval
11 and Scenie Rivers System, and the National Wilderness
12 reserve.
12 Preservation System. The Secretary shall submit to Con-
13
SEC. 3. (a) The oil and gas reserves in the contiguous
13 gress within two years a plan of development which shall
14 forty-cight States established pursuant to this section may
14 not become effective unless authorized by an Act of Congress.
15 be developed under terms and conditions prescribed by the
15 That in order to develop petroleum reserves of the United
16 Secretary of the Interior sixty days after notice is given to
16 States which need to be regulated in a manner to meet. the
17 the Congress (not counting days on which either the House
17 total energy needs of the Nation, including but not limited to
18 of Representatives or the Senate is not in session for three
18 national defense, the Secretary of the Interior is authorized
19 consecutive days or more) if neither the House of Repre-
19 to establish national petroleum reserves on any reserved or
20 sentatives nor the Senate adopts a resolution of disapproval.
20 unreserved public lands of the United States (except lands in
21 Any such proposed plan shall explain in detail the method
21 the National Park System, the National Wildlife Refuge
22 of development proposed, and shall provide for develop-
22 System, the Wild and Scenic Rivers System, the National
23 ment and transportation of the oil consistent with public
23 Wilderness Preservation System, areas now under review for
24 interest and to give opportunity to the smaller or independ-
24 inclusion in the Wilderness System in accordance with pro-
25 ent oil producers and refining companies to utilize the
4
5
1 visions of the Wilderness Act of 1964, and lands in Alaska
1 ditions prescribed by the Secretary of the Interior. The
2 other than those in Naval Petroleum Reserve Numbered 4).
2 Secretary of the Interior shall use competitive bidding
3
SEC. 2. No national petroleum reserve that includes all
3 procedures with prior public notice of not less than thirty
4 or part of an existing naval petroleum reserve shall be estab-
4 days of the terms and conditions for any contract, lease, or
5 lished without prior consultation with the Secretary of
5 operating agreement for development and production of oil
6 Defense, and when so established, the portion of such naval
6 and gas from a national petroleum reserve. Such terms and
7 reserve included shall be deemed to be excluded from the
7 conditions and also plans for the development of each area
8 naval petroleum reserve.
8 of the national petroleum reserves shall be published in the
9
Upon the inclusion in a national petroleum reserve of
9 Federal Register, but shall not become effective until sixty
10 any land which is in a naval petroleum reserve on the date
10 days after final notice has been published and submitted to
11 of enactment of this Act, any equipment, facilities, or other
11 the Congress (not counting days on which either the House
12 property of the Department of the Navy used in operations
12 of Representatives or the Senate is not in session for three
13 on the land so included and any records, maps, exhibits, or
13 consecutive days or more) and then only if neither the House
14 other informational data held by the Secretary of the Navy
14 of Representatives nor the Senate adopts a resolution of
15 in connection with the land so included shall be transferred
15 disapproval. Each proposed plan of development and each
16 from the Secretary of the Navy to the Secretary of the In-
16 amendment thereof shall explain in detail the method of
17 terior who shall thereafter be authorized to use them to carry
17 development and production proposed, shall provide for dis-
18 out the purposes of this Act.
18 posal and transportation of the oil consistent with the public
19
The Secretary of the Interior shall assume the respon-
19 interest, and shall give full and equal opportunity for devel-
20 sibilities and functions of the Secretary of the Navy under
20 opment of or acquisition of, or exchange for, the oil and gas
21 any contract which now exists with respect to activities on a
21 by qualified persons including major and independent pro-
22 naval petroleum reserve to which the United States is a party.
22 ducers or refiners alike. Each proposed plan of development
23
SEC. 3. (a) The oil and gas in the national petroleum
23 by the Secretary shall also explain the relative need for devel-
24 reserves in the contiguous forty-eight States established pur-
24 oping the oil and gas resources in order to meet the total
25 suant to this section may be developed under terms and con-
25 energy needs of the Nation, compared with the need for
6
7
1 prohibiting such development in order to further some other
1 one year's duration, and in amounts which, in the opinion
2 public interest.
2 of the Secretary, shall not exceed those which can be effec-
3
(b) Any oil or gas produced from such petroleum re-
3 tively handled by the purchasers.
4 serves, except such oil or gas which is either exchanged in
4
(d) The Secretary of the Interior is hereby authorized
5 similar quantities for convenience or increased efficiency of
5 and directed to explore for oil and gas on Naval Petroleum
6 transportation with persons or the government of an ad-
6 Reserve Numbered 4 and he shall report annually to Con-
7 jacent foreign state, or which is temporarily exported for
7 gress on his plan for exploration of such reserve: Provided,
8 convenience or increased efficiency of transportation across
8 That no development leading to production shall be under-
9 ports of an adjacent foreign state and reenters the United
9 taken unless authorized by Congress.
10 States, shall be subject to all of the limitations and licens-
10
(e) Any pipeline which carries oil or gas produced
11 ing requirements of the Export Administration Act of 1969
11 from the national petroleum reserves shall be subject to the
12 (Act of December 30, 1969; 83 Stat. 841) and, in addi-
12 common carrier provisions of section 28(r) of the Mineral
13 tion, before any oil or gas subject to this section may be ex-
13 Leasing Act of 1920 (41 Stat. 449), as amended (30
14 ported under the limitations and licensing requirement and
14 U.S.C. 185), regardless of whether the pipeline crosses
15 penalty and enforcement provisions of the Export Adminis-
15 public lands.
16 tration Act of 1969 the President must make and publish
17 an express finding that such exports will not diminish the
18 total quality or quantity of oil and gas available to the
19 United States and are in the national interest and are in
20 accord with the Export Administration Act of 1969.
21
(c) The Secretary of the Interior is authorized to enter
22 into contracts for the sale of oil and gas which is produced
23 from the national petroleum reserves and which is owned
24 by the United States. Such contracts shall be issued by com-
25 petitive bidding, they shall be for periods of not more than
94TH CONGRESS
1ST SESSION
H.R.49
[Report No. 94-81]
A BILL
To authorize the Secretary of the Interior to
establish on certain public lands of the
United States national pertroleum reserves
the development of which needs to be regu-
lated in a manner consistent with the total
energy needs of the Nation, and for other
purposes.
By Mr. MELCHER
JANUARY 14, 1975
Referred to the Committee on Interior and Insular
Affairs
MARCH 18, 1975
Reported from the Committee on Interior and Insular
Affairs with an amendment, and referred to the
Committee on Armed Services for a period ending
not later than April 19, 1975.
Phad agmt w/ H.
H perepped that against an Camed Sear. like
didn it meet that agent.
A/S bill allows max god. 2 200, - bb/ day
for pentl of 3yrs. - don't reg. prod.
If name moves to grod - rating has
no games of and for 3yrs.
A/S bill different an brek doretains on its
self- - See A p.3. 2.25 - allows prod.
for period has exceed 3ym
0.4. L. 11 - prone In 7n
Repelim Count to agen ate Zips of
late of emertment
GERALD
FORD
LIBRARY
94TH CONGRESS
1ST SESSION
H. R. 5919
IN THE HOUSE OF REPRESENTATIVES
APRIL 14, 1975
Mr. HÉBERT introduced the following bill; which was referred to the Com-
mittee on Armed Services
A
BILL
To fully explore, fully develop, and produce the naval petroleum
reserves with the revenue derived therefrom to be placed
in a special fund for such exploration, development, and
production, for production to be applied to the petroleum
needs of the Department of Defense and for the establishment
of a study group to investigate the feasibility of creating a
National Strategic Petroleum Reserve (military), and for
other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled, :
3 That (a) chapter 641 of title 10, United States Code, is:
4 amended as follows-
5
(1) Immediately before section 7421 insert the fol-.
6
lowing new section:
I
2
3
1
"§ 7420. Definitions
1
Shale Reserve Numbered 2, located in Utah, established
2
" (a) In this chapter-
2
by Executive order of the President of December 6,
3
" (1) 'national defense' includes the needs of, and
3
1916; and Oil Shale Reserve Numbered 3, located in Col-
4
the planning and preparedness to meet, essential defense
4
orado, established by Executive order of the President
5
industrial and military emergency energy requirements
5
of September 27, 1924;
6
relative to the national safety, welfare, and economy,
6
" (3) 'petroleum' includes crude oil, associated gases,
7
particularly resulting from foreign military or economic
7
natural gasoline, and other related hydrocarbons, oil
8
actions;
8
shale, and the products of any of such resources; and
9
" (2) 'naval petroleum and oil shale reserves' means
9
" (4) 'Secretary' means the Secretary of the Navy.".
10
the naval petroleum and oil shale reserves established by
10
(2) Section 7421 (a) is amended-
11
this chapter, including Naval Petroleum Reserve Num-
11
(A) by striking out "for naval purposes" and
12
bered 1 (Elk Hills), located in Kern County, California,
12
inserting in lieu thereof "for use of the Armed
13
established by Executive order of the President on Sep-
13
Forces"; and
14
tember 2, 1212; Naval Petroleum Reserve Numbered 2
14
(B) by striking out "section 7438 hereof" and
15
(Buena Vista), located in Kern County, California, es-
15
inserting in lieu thereof "this chapter".
16
tablished by Executive order of the President on De-
16
(3) Section 7422 is amended by adding at the end
17
cember 13, 1912; Naval Petroleum Reserve Numbered 3
17
thereof the following new subsection:
18
(Teapot Dome), located in Wyoming, established by
18
" (d) (1) In order to place certain naval petroleum
19
Executive order of the President on April 30, 1915;
19
reserves in a proven state of readiness to produce petroleum,
20
Naval Petroleum Reserve Numbered 4, Alaska, on the
20 the Secretary is authorized-
21
north slope of the Brooks Range, established by Executive
21
" (A) to explore, develop, operate, and produce
22
order of the President of February 27, 1923; Oil Shale
22
petroleum, from Naval Petroleum Reserves Numbered 1,
23
Reserve Numbered 1, located in Colorado, established by
23
2, and 3 at a rate consistent with sound oilfield en-
24
Executive order of the President of December 6, 1916,
24
gineering practices up to two hundred thousand barrels
25
as amended by Executive order of June 12, 1919; Oil
25
per day for a period not to exceed three years com-
5
4
1
" (b) During the three-year period of production au-
1
mencing ninety days after enactment of this legislation;
2 thorized by subsection (d) of section 7422 (during which
2
and
3 three-year period the consultation requirements of section
3
" (B) to construct or procure pipelines and asso-
4 7431 (3) are waived), the Secretary shall submit annual
4
ciated facilities for transporting oil, associated liquids,
5 reports to the Armed Services Committees of the Senate and
5
and gases, from Naval Petroleum Reserves Numbered 1,
6 the House of Representatives detailing-
6
2, and 3 to the points where such production will be
7
" (1) the status of the exploration and development
7
refined or shipped.
8
program at each of the naval petroleum reserves;
8 Such pipelines at Naval Petroleum Reserve Numbered 1 shall
9
" (2) the production which has been achieved at
9 have a combined delivery capability of not less than three
10
each of the naval petroleum reserves pursuant to that
10 hundred and fifty thousand barrels per day, and shall be
11
authorization, including the dispostion of such production
11 fully operable by three years after the date of enactment
12
and the proceeds realized therefrom;
12 of this subsection.
13
" (3) the status of the pipeline construction and
13
" (2) The production authorization set forth in para-
14
procurement authorized by such subsection (d)
14 graph (1) (A) of this subsection is conditioned upon the
15
" (4) any need for modification of the production
15 Secretary reaching an agreement with the private owner
16
levels authorized by such subsection (d) including any
16 to continue operation of Naval Petroleum Reserve Numbered
17
recommendation for continuing production beyond the
17 1 under a unitized plan contract which adequately protects
18
three-year period provided in such subsection; and
18 the public interest.
19
" (5) the plans for further exploration, development
19
" (3) The production of petroleum authorized under
20
and production at Naval Petroleum Reserve Numbered
20 this subsection is not subject to the provisions of subsection
21
4.", (5) Section 7430 (b) is amended to read as
21
(b) (2) of this section relating to Presidential approval or
22
follows:
22 congressional authorization.".
23
" (b) Notwithstanding any other provision of law,
23
(4) Section 7423 is amended by inserting " (a) im-
24 each sale of the United States share of petroleum, gas, other
24 mediately before "The Secretary"; and by adding at the
H.R. 5919-2
33
25 end thereof the following new subsection:
6
7
1
hydrocarbons, -oil shale, or products therefrom, shall be made
1
(1) all proceeds realized under this chapter from
2
by the Secretary at public sale to the highest qualified bidder
2
the disposition of the United States share of petroleum
CO:
at such time, in such amounts, and after such advertising as
3
or refined products, oil and gas products, including roy+
4 the Secretary considers proper and without regard to Federal,
4
alty products;
or
State, or local regulations controlling sales or allocation of
5
(2) the net proceeds, if any, realized from sales
6 petroleum products."
6
or exchanges within the Department of Defense of re-
7
(6) Section 7430 is further amended by adding at the
7
fined petroleum products accruing to the benefit of any
8 end thereof the following new subsection:
8
component of that Department as the result of any such
9
(e) Any disposition of the United States share of the
9
sales or exchanges; and
10 production authorized by section 7422 (d) shall be conducted
10
" (3) such additional sums as have been, or may bes
11 in such a manner as to insure that an amount of petroleum
11
appropriated for the maintenance, operation, explora-
12 products equal in value to the crude oil and associated gases
12
tion, development,and production of the naval petro-
13 and liquids supplied from the naval petroleum reserves shall
13
leum and oil shale reserves.
14 be made available to the armed forces of the United States.
14
" (b) Funds available in the naval petroleum and oil
15
Any disposition of that production shall be SO arranged as
15 shale reserve special fund shall be available for expenditure
16
to give full and equal opportunity for acquisition of the
16 in such sums as are specified in annual congressional ap-
17 petroleum and associated products by all interested com-
17 propriations Acts for the expenses of
18 panies, including major and independent oil refineries alike.".
18
" (1) exploration, prospecting, conservation, de-
19
(7) Section 7432 is amended to read as follows:
19
velopment, use, operation, and production of the naval
20
7432. Naval petroleum and oil shale reserves special
20
petroleum and oil shale reserves as authorized by this
21
fund
21
chapter;
22
"
(a) There is hereby established on the books of the
22
" (2) production, including preparation for produc-
23
Treasury Department a special fund designated the 'naval
23
tion as authorized by this Act, or as may hereafter be
24 petroleum and oil shale reserves special fund'. There shall be
24
authorized; and
25 credited to such fund-
25
" (3) the construction and operation of facilities
8,
9
1
both within and outside the naval petroleum and oil
1
(2) by striking out
2
shale reserves. incident to the production and the de-
"7432. Expenditures: appropriations available."
3
livery of crude petroleum and derivatives, including
2 and inserting in lieu thereof the following:
4
pipelines and shipping terminals.
"7432. Naval petroleum and oil shale reserve special fund."
5
(c) The budget estimates for annual appropriations
3
SEC. 2. (a) The Secretary of the Navy shall establish
6 from the naval petroleum and oil shale reserve special fund,
4 a study group which shall investigate the feasibility of creat-
7 shall be prepared by the Office of Naval Petroleum and Oil
5 ing a national strategic petroleum reserve (military) (here-
8 Shale Reserves and shall be presented by the President in-
6 inafter in this section referred to as the "reserve") Any such
9 dependently of the budget of the Department of the Navy
7 reserve should include petroleum stored at strategic locations,
10 and the Department of Defense.
8 or available for delivery to such locations, and include facili-
11
(d) Contracts obligating only such funds as are ap+
9 ties for storage, transportation, or processing thereof. In
12 propriated and made available annually may be entered into
10 computing the amount of petroleum to be stored in such
13 by the Secretary for periods of not more than five years
11 reserve, the peacetime operating stocks and prepositioned
14 renewable for a like term."
12 war reserve stocks of the Department of Defense shall not be
15
(8) Section 7433 (b) is amended by adding immediately
13 included. Such reserve should be in addition to any national
16 before the period at the end thereof the following: "and
14 strategic petroleum reserve (civilian) which may be other-
17 credited to the naval petroleum and oil shale reserve special
15 wise provided for.
18 fund".
16
(b) The investigation required under subsection (a)
19
(b) The analysis of such chapter 641 is amended-
17 shall include, but need not be limited to, determinations with
20
(1) by inserting immediately before
18 respect to the size, scope, objectives, and all cost factors as-
"7421. Jurisdiction and control."
19 sociated with the establishment of the reserve. In arriving
21 the following:
20 at its findings and recommendations, the study group shall
"7420. Definitions.";
21 consult with, and seek, the position of the Joint Chiefs of
22 and
22 Staff relative to the overall posture of the reserve.
10
1
(c) Not later than one year after the date of the enact-
2
ment of this Act, the Secretary of the Navy shall report to
3 the Congress the findings and recommendations of the study
4 group.
94TH CONGRESS
1ST SESSION
H. R. 5919
A BILL
To fully explore, fully develop, and produce the
naval petroleum reserves with the revenue
derived therefrom to be placed in a special
fund for such exploration, development, and
production, for production to be applied to
the petroleum needs of the Department of
Defense and for the establishment of a study
group to investigate the feasibility of creat-
ing a National Strategic Petroleum Reserve
(military), and for other purposes.
By Mr. HÉBERT
APRIL 14, 1975
Referred to the Committee on Armed Services
94TH CONGRESS
1ST SESSION
H. R. 5919
IN THE HOUSE OF REPRESENTATIVES
APRIL 14, 1975
Mr. HÉBERT introduced the following bill; which was referred to the Com-
mittee on Armed Services
A
BILL
To fully explore, fully develop, and produce the naval petroleum
reserves with the revenue derived therefrom to be placed
in a special fund for such exploration, development, and
production, for production to be applied to the petroleum
needs of the Department of Defense and for the establishment.
of a study group to investigate the feasibility of creating a
National Strategic Petroleum Reserve (military), and for
other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That (a) chapter 641 of title 10, United States Code, is
4 amended as follows-
5
(1) Immediately before section 7421 insert the fol-
6
lowing new section:
I
2
3
1
"§ 7420. Definitions
1
Shale Reserve Numbered 2, located in Utah, established
2
" (a) In this chapter-
2
by Executive order of the President of December 6,
3
" (1) 'national defense' includes the needs of, and
3
1916; and Oil Shale Reserve Numbered 3, located in Col-
4
the planning and preparedness to meet, essential defense
4
orado, established by Executive order of the President
5
industrial and military emergency energy requirements
5
of September 27, 1924;
6
relative to the national safety, welfare, and economy,
6
" (3) 'petroleum' includes crude oil, associated gases,
7
particularly resulting from foreign military or economic
7
natural gasoline, and other related hydrocarbons, oil
8
actions;
8
shale, and the products of any of such resources; and
9
" (2) 'naval petroleum and oil shale reserves' means
9
" (4) 'Secretary' means the Secretary of the Navy.".
10
the naval petroleum and oil shale reserves established by
10
(2) Section 7421 (a) is amended—
11
this chapter, including Naval Petroleum Reserve Num-
11
(A) by striking out "for naval purposes" and
12
bered 1 (Elk Hills), located in Kern County, California,
12
inserting in lieu thereof "for use of the Armed
13
established by Executive order of the President on Sep-
13
Forces"; and
14
tember 2, 1212; Naval Petroleum Reserve Numbered 2
14
(B) by striking out "section 7438 hereof" and
15
(Buena Vista), located in Kern County, California, es-
15
inserting in lieu thereof "this chapter".
16
tablished by Executive order of the President on De-
16
(3) Section 7422 is amended by adding at the end
17
cember 13, 1912; Naval Petroleum Reserve Numbered 3
17
thereof the following new subsection:
18
(Teapot Dome), located in Wyoming, established by
18
" (d) (1) In order to place certain naval petroleum
19
Executive order of the President on April 30, 1915;
19 reserves in a proven state of readiness to produce petroleum,
20
Naval Petroleum Reserve Numbered 4, Alaska, on the
20 the Secretary is authorized-
21
north slope of the Brooks Range, established by Executive
21
" (A) to explore, develop, operate, and produce
22
order of the President of February 27, 1923; Oil Shale
22
petroleum, from Naval Petroleum Reserves Numbered 1,
23
Reserve Numbered 1, located in Colorado, established by
23
2, and 3 at a rate consistent with sound oilfield en-
24
Executive order of the President of December 6, 1916,
24
gineering practices up to two hundred thousand barrels
25
as amended by Executive order of June 12, 1919; Oil
25
per day for a period not to exceed three years com-
5
4
1
mencing ninety days after enactment of this legislation;
1
" (b) During the three-year period of production au-
2
and
2 thorized by subsection (d) of section 7422 (during which
" (B) to construct or procure pipelines and asso-
3 three-year period the consultation requirements of section
3
4 7431 (3) are waived), the Secretary shall submit annual
4
ciated facilities for transporting oil, associated liquids,
5 reports to the Armed Services Committees of the Senate and
5
and gases, from Naval Petroleum Reserves Numbered 1,
6 the House of Representatives detailing-
6
2, and 3 to the points where such production will be
7
refined or shipped.
7
" (1) the status of the exploration and development
8
8 Such pipelines at Naval Petroleum Reserve Numbered 1 shall
program at each of the naval petroleum reserves;
9 have a combined delivery capability of not less than three
9
" (2) the production which has been achieved at
10
10 hundred and fifty thousand barrels per day, and shall be
each of the naval petroleum reserves pursuant to that
11 fully operable by three years after the date of enactment
11
authorization, including the dispostion of such production
12 of this subsection.
12
and the proceeds realized therefrom;
13
" (3) the status of the pipeline construction and
13
" (2) The production authorization set forth in para-
14
procurement authorized by such subsection (d)
14 graph (1) (A) of this subsection is conditioned upon the
15
" (4) any need for modification of the production
15 Secretary reaching an agreement with the private owner
16
levels authorized by such subsection (d) including any
16 to continue operation of Naval Petroleum Reserve Numbered
17
recommendation for continuing production beyond the
17 1 under a unitized plan contract which adequately protects
18
18 the public interest.
three-year period provided in such subsection; and
19
19
" (3) The production of petroleum authorized under
" (5) the plans for further exploration, development
20
20 this subsection is not subject to the provisions of subsection
and production at Naval Petroleum Reserve Numbered
21
4.", (5) Section 7430 (b) is amended to read as
21 (b) (2) of this section relating to Presidential approval or
22
follows:
22 congressional authorization.".
23
23
(4) Section 7423 is amended by inserting "(a)" im-
" (b) Notwithstanding any other provision of law,
24 each sale of the United States share of petroleum, gas, other.
24 mediately before "The Secretary"; and by adding at the
H.R. 5919-2
25 end thereof the following new subsection:
6
7
1
hydrocarbons, oil shale, or products therefrom, shall be made
1
(1) all proceeds realized under this chapter from
2 by the Secretary at public sale to the highest qualified bidder
2
the disposition of the United States share of petroleum
3 at such time, in such amounts, and after such advertising as
3
or refined products, oil and gas products, including roye
4 the Secretary considers proper and without regard to Federal,
4
alty products;
5 State, or local regulations controlling sales or allocation of
"
5
(2) the net proceeds, if any, realized from sales
6 petroleum products."
6
or exchanges within the Department of Defense of re-
7
(6) Section 7430 is further amended by adding at the
7
fined petroleum products accruing to the benefit of any
8 end thereof the following new subsection:
8
component of that Department as the result of any such
"
9
(c) Any disposition of the United States share of the
9
sales or exchanges; and
10 production authorized by section 7422 (d) shall be conducted
10
" (3) such additional sums as have been, or may be,
11 in such a manner as to insure that an amount of petroleum
11
appropriated for the maintenance, operation, explora-
12 products equal in value to the crude oil and associated gases
12
tion, development;and production of the naval petro-
13 and liquids supplied from the naval petroleum reserves shall
13
leum and oil shale reserves.
14 be made available to the armed forces of the United States.
14
" (b) Funds available in the naval petroleum and oil
15 Any disposition of that production shall be SO arranged as
15 shale reserve special fund shall be available for expenditure
16
to give full and equal opportunity for acquisition of the
16 in such sums as are specified in annual congressional ap-
17 petroleum and associated products by all interested com-
17 propriations Acts for the expenses of-
18 panies, including major and independent oil refineries alike."
-
18
" (1) exploration, prospecting, conservation, de-
I
19
(7) Section 7432 is amended to read as follows:
19
velopment, use, operation, and production of the naval
20
"§ 7432. Naval petroleum and oil shale reserves special
20
petroleum and oil shale reserves as authorized by this
21
fund
21
chapter;
22
" (a) There is hereby established on the books of the
22
" (2) production, including preparation for produc-
23
Treasury Department a special fund designated the 'naval
23
tion as authorized by this Act, or as may hereafter be
24 petroleum and oil shale reserves special fund'. There shall be
24
authorized; and
25 credited to such fund-
25
" (3) the construction and operation of facilities
8-
9
1
both within and outside the naval petroleum and oil
1
(2) by striking out
2
shale reserves incident to the production and the de-
"7432. Expenditures: appropriations available."
3
livery: of crude petroleum and derivatives, including
2 and inserting in lieu thereof the following:
4
pipelines and shipping terminals.
"7432. Naval petroleum and oil shale reserve special fund."
5
(c) The budget estimates for annual appropriations
3
SEC. 2. (a) The Secretary of the Navy shall establish
6 from the naval petroleum and oil shale reserve special fund,
4 a study group which shall investigate the feasibility of creat-
7
shall be prepared by the Office of Naval Petroleum and Oil
5 ing a national strategic petroleum reserve (military) (here-
8 Shale Reserves and shall be presented by the President in-
6 inafter in this section referred to as the "reserve") Any such
9 dependently of the budget of the Department of the Navy
7 reserve should include petroleum stored at strategic locations,
10 and the Department of Defense.
8 or available for delivery to such locations, and include facili-
"
11
(d) Contracts obligating only such funds as are ap+
9 ties for storage, transportation, or processing thereof. In
12 propriated and made available annually may be entered into
10 computing the amount of petroleum to be stored in such
13 by the Secretary for periods of not more than five years
11 reserve, the peacetime operating stocks and prepositioned
14 renewable for a like term."
12 war reserve stocks of the Department of Dëfense shall not be
15
(8), Section 7433 (b) is amended by adding immediately
13 included. Such reserve should be in addition to any national
16 before the period at the end thereof, the following: "and
14 strategic petroleum reserve (civilian) which may be other-
17 credited to the naval petroleum and oil shale reserve special
15 wise provided for.
18 fund"
16
(b) The investigation required under subsection (a)
19
(b) The analysis of such chapter 641 is amended-
17 shall include, but need not be limited to, determinations with
20
(1) by inserting immediately before
18 respect to the size, scope, objectives, and all cost factors as-
"7421. Jurisdiction and control."
19 sociated with the establishment of the reserve. In arriving
21 the following:
20 at its findings and recommendations, the study group shall
"7420. Definitions.";
21 consult with, and seek, the position of the Joint Chiefs of
22 and
22 Staff relative to the overall posture of the reserve.
10
1
(c) Not later than one year after the date of the enact-
2 ment of this Act, the Secretary of the Navy shall report to
3 the Congress the findings and recommendations of the study
4 group.
94TH CONGRESS
1ST SESSION
H. R. 5919
A BILL
To fully explore, fully develop, and produce the
naval petroleum reserves with the revenue
derived therefrom to be placed in a special
fund for such exploration, development, and
production, for production to be applied to
the petroleum needs of the Department of
Defense and for the establishment of a study
group to investigate the feasibility of creat-
ing a National Strategic Petroleum Reserve
(military), and for other purposes.
By Mr. HÉBERT
APRIL 14, 1975
Referred to the Committee on Armed Services
DRAFT ONLY
TESTIMONY OF
CONGRESSMAN ALPHONZO BELL
(27TH DISTRICT -- CALIFORNIA)
BEFORE THE HOUSE COMMITTEE ON RULES
APRIL 22, 1975
Mr. Chairman, I thank you and the other Members of the Committee for
allowing me this opportunity to present my views on the two bills before you
here today.
The distinguished Chairman and the other Members here know of my long
involvement with the subject of bringing our petroleum reserves into production
to help offset this Nation's very dangerous energy situation. Since early in
the 93d Congress, I have advocated utilization of Petroleum Reserve #1 at
Elk Hills in California to help offset our dangerous reliance on unstable
foreign oil imports.
Mr. Chairman, the time has long passed since there was a need for
special oil reserves for the exclusive use of the Navy.
The Naval oil reserves were set aside early in this century to assure
a source of fuel for Naval vessels. The need for these special reserves was
eliminated, however, during the Korean War when Congress enacted the Defense
Production Act of 1950. As you know, this Act guarantees the military top
priority over all American oil supplies and production -- and during any
national emergency, the Armed Forces have first call on all oil and gas in
America.
The Naval reserves, as such, owe their existence to nothing more than
happenstance -- namely the reaction of Congress to the particular problems
surrounding the Teapot Dome scandal during the Harding administration. Were
it not for that infamous scandal which grew out of a particular President's
very unwise choice of Cabinet officers, what are now Naval reserves would
instead still be National petroleum reserves administered by the Secretary of
the Interior.
Although that reaction by Congress to a problem back in the 1920's may
have been a wise policy decision then, it is now clearly outdated -- an
anachronism. I fail to see the reasoning behind having our Navy administer
this Nation's mineral resources in 1975.
The job of our Department of Defense is to have our fighting ships
ready, our jets ready, our military personnel ready, and our military equipment
ready to protect the United States. Its job is not to handle the energy reserves
and resources of this Nation.
Clearly the Department of the Interior, which has traditionally held the
responsibility of managing our mineral resources, has more expertise and is
better qualified to administer our oil reserves, as set down in H.R. 49.
This bill would authorize the Secretary of the Interior, after consultation
with the Secretary of Defense, to establish National Petroleum Reserves on public
lands of the United States, including the existing Naval fields. These national
reserves would then be regulated and developed in a manner consistent with the
total energy needs of the entire Nation, including but not limited to national
defense.
As you know, this legislation has already been unanimously reported by
the House Committee on Interior and Insular Affairs, and now has the support
of more than 95 co-sponsors in the House. Similar legislation has been intro-
duced in the Senate by Senators Mark Hatfield and Charles Percy.
-2-
Mr. Chairman, I think most Members of Congress agree that the Federal
Government desperately needs to formulate an overall, central policy with
regard to the exploration, development, production, and transportation of our
domestic petroleum resources. This can best be carried out, as set down in
H.R. 49, by that agency of our Government most competent to administer such
matters -- the Interior Department, in cooperation with the Federal Energy
Administration and the new Energy Resources Council.
The bill reported by the House Armed Services Committee (H.R. 5919)
pretends to aim at helping our energy situation, but I seriously question
whether we will ever see any meaningful production under their bill, if enacted,
due to several glaring and serious deficiencies in it.
First, the Armed Services bill allows for production up to a maximum
of only 200,000 B/D for a period of only 3 years, but it in no way directs
any production. Even if the Navy moved quickly to produce the maximum allowable
under this bill, which we would have no guarantee of, the Nation would see only
3 years of production at that very minimal level. Also, it is important to see
that, as the bill is written, the 200,000 B/D maximum they are talking about
applies to production from Reserves #1, 2, and 3 combined.
Secondly, the Armed Services bill is deficient in that, intentionally
or otherwise, its provisions dove-tail in upon themselves: subsection "A"
(page 3, line 25) allows for production "for a period not to exceed three
years
" yet the following subsection (page 4, line 11) provides for
construction or procurement of pipelines to "be fully operable by three years
after the date of enactment
Mr. Chairman, you know the Navy's track record on this as well as I do,
and I see all kinds of potential here in H.R. 5919 for them to stall off producing
until the pipelines are ready, which very conveniently happens to coincide with
the expiration of their authority to produce under the bill.
The third major inadequacy that I see in the Armed Services bill is that
it spells out nothing whatsoever about PET 4 in Alaska -- it doesn't even mention
it. Our bill, H.R. 49, authorizes and directs the exploration for oil in that
vast area in Northern Alaska SO we will know how much oil we've got up there.
Mr. Chairman, right now, even though that reserve was established over 40 years
ago, we don't even know whether there are any oil and gas up there in any
sizeable quantities -- because the Navy has allowed that huge field to lie
there totally unexplored for all practical purposes.
With PET 4, we are talking about an area larger than the State of Indiana,
and it is high time we got it explored to find out what quantity of oil we have
there.
Finally, Mr. Chairman, the most serious deficiency in H.R.5919 is that
it permits the Navy to retain control over this Nation's oil reserves -- which
I see as completely illogical and anachronistic.
Certainly the concept of assuring a source of fuel for America's military
forces is vitally necessary and highly essential to the national defense -- but
I don't think this necessitates having our Navy in the oil business.
The U.S. Navy has no more business being in the oil business than the
Department of the Interior would have managing the Sixth Fleet.
We can no longer afford the luxury, Mr. Chairman, of allowing such a
critical resource as Elk Hills, or PET 4 in Alaska, to sit there in such an
inadequate state of development and readiness and to be administered by an
agency neither designed nor qualified to administer mineral resources.
I seriously question whether we can even legitimately call Elk Hills or
PET 4 "reserves" -- given their present total lack of any state of readiness,
they are more accurately categorized as potential "resources" than "reserves".
The Navy has never really brought either of these two fields up to legitimate
reserve status.
-3-
Bringing the vast Elk Hills field in California up to its full maximum
efficient rate of production, as H.R. 49 would allow for, would take only
1 to 3 years and would provide 300,000 to 450,000 additional barrels of badly
needed domestic oil a day (or, potentially, 10 million gallons of gasoline
per day.)
At current prices, this amount of increased domestic production would
have an immediate favorable impact on our balance of payments to the tune of
more than $1 billion per year.
Other sources promise potential procution 10 or more years down the
pike, but Elk Hills is the only place in the United States where we can realize
such a sizeable quantity of oil production almost immediately, when it is so
desperately needed to help ward off our dangerous dependence on the whims of
the Arab nations.
Apparently the Navy is now thinking along the lines of drilling some
1000 additional wells at Elk Hills, then essentially shutting them in. Mr. Chairman,
it doesn't take an economist to see that this makes no sense economically. Such
a program would be inefficient, uneconomical, and inflationary. It would also
place unreasonable and non-productive demands on the Nation's supply of oil
rigs, drilling pipe, tubular goods, and the qualified personnel who are badly
needed elsewhere for productive undertakings. This is precisely, Mr. Chairman,
why Standard of California has asked to be let out as operator of Elk Hills --
they don't want to continue to have their scarce equipment and personnel drained
into an operation where they think there isn't going to be any production.
Mr. Chairman, allow me to cite something Arthur Burns said last fall:
"We cannot afford continuing buying oil from foreign sources
at the rate we are going now. If we continue this, this will result
in a massive redistribution of the political and economic power of the
world. This is a dangerous implication for the United States. Oil
exporting countries have taken in $75 billion in oil revenues from the
total world. The U.S. contribution to this has been $23 billion."
By now, those figures are even much higher. But we in Congress can do something
about this, and can do something about it right now which will make a substantial
difference to this Nation in the future.
Mr. Chairman, in the national interest the Congress must allow Elk Hills
to be brought into production. And, in the national interest, this should be
done in the most competent manner possible -- by the Department of the Interior.
The Interior Department, as of December 31 of last year, has 1,448
personnel who were classified as petroleum engineers and geologists. Specifically,
according to information I have obtained from the Department, this total includes
203 petroleum engineers and 1,245 geologists.
By contrast, according to the latest data I have received, the Naval
Office of Petroleum and Oil Shale Reserves consists of only 47 persons --
11 Naval personnel and 36 civilians.
Clearly, the United States Department of the Interior has the expertise and
is best qualified to administer our petroleum reserves. Right now, Interior is
administering the equivalent of 3 million barrels per day of production from leases
on the Outer Continental Shelf. To try to bring the Navy up to a comparable level
of competence would require a wasteful and redundant duplication within the Defense
Department of the Bureau of Land Management and the U.S. Geological Survey.
Mr. Chairman, in thinking about petroleum reserves for the future, we should
look toward the development of total governmental, national petroleum reserves which
would be capable of immediate production during a national emergency as envisioned
in H.R. 49 as reported by the House Interior Committee. This would, of course,
include as top priority national defense purposes, yet would be a much saner and
more rational over-all policy than having individual agencies holding reserves
exclusively for their own use. I therefore urge this Committee's priority con-
sideration to making H.R. 49 as reported by Interior Committee in order for
consideration on the House Floor.
Thank Mr. Chairman.
matters the interior Department, in cooperation with the Federal Energy
Administration and the new Energy Resources Council.
The bill reported by the House Armed Services Committee (H.R. 5919)
pretends to aim at helping our energy situation, but I seriously question
whether we will ever see any meaningful production under their bill, if enacted,
due to several glaring and serious deficiencies in it.
First, the Armed Services bill allows for production up to a maximum
of only 200,000 B/D for a period of only 3 years, but it in no way directs
any production. Even if the Navy moved quickly to produce the maximum allowable
under this bill, which we would have no guarantee of, the Nation would see only
3 years of production at that very minimal level. Also, it is important to see
that, as the bill is written, the 200,000 B/D maximum they are talking about
applies to production from Reserves #1, 2, and 3 combined.
Secondly, the Armed Services bill is deficient in that, intentionally
or otherwise, its provisions dove-tail in upon themselves: subsection "A"
(page 3, line 25) allows for production "for a period not to exceed three
years
" yet the following subsection (page 4, line 11) provides for
construction or procurement of pipelines to "be fully operable by three years
after the date of enactment
"
Mr. Chairman, you know the Navy's track record on this as well as I do,
and I see all kinds of potential here in H.R. 5919 for them to stall off producing
until the pipelines are ready, which very conveniently happens to coincide with
the expiration of their authority to produce under the bill.
The third major inadequacy that I see in the Armed Services bill is that
it spells out nothing whatsoever about PET 4 in Alaska - it doesn't even mention
it. Our bill, H.R. 49, authorizes and directs the exploration for oil in that
vast area in Northern Alaska SO we will know how much oil we've got up there.
Mr. Chairman, right now, even though that reserve was established over 40 years
ago, we don't even know whether there are any oil and gas up there in any
sizeable quantities -- because the Navy has allowed that huge field to lie
there totally unexplored for all practical purposes.
With PET 4, we are talking about an area larger than the State of Indiana,
and it is high time we got it explored to find out what quantity of oil we have
there.
Finally, Mr. Chairman, the most serious deficiency in H.R.5919 is that
it permits the Navy to retain control over this Nation's oil reserves -- which
I see as completely illogical and anachronistic.
Certainly the concept of assuring a source of fuel for America's military
forces is vitally necessary and highly essential to the national defense -- but
I don't think this necessitates having our Navy in the oil business.
The U.S. Navy has no more business being in the oil business than the
Department of the Interior would have managing the Sixth Fleet.
We can no longer afford the luxury, Mr. Chairman, of allowing such a
critical resource as Elk Hills, or PET 4 in Alaska, to sit there in such an
inadequate state of development and readiness and to be administered by an
agency neither designed nor qualified to administer mineral resources.
I seriously question whether we can even legitimately call Elk Hills or
PET 4 "reserves" -- given their present total lack of any state of readiness,
they are more accurately categorized as potential "resources" than "reserves".
The Navy has never really brought either of these two fields up to legitimate
reserve status.
WRITE ONLY ON ONE SIDE OF EACH PAGE
CONGRESS
1s:
SESSION
Hi
RES.
(Note-Fill in all blank have except
A
see provided to: the date and
number o: resclution.)
IN TEE HOUSE OF REPRESENTATIVES
PEN; DIVIDING TIME BETWEEN INTERIOR AND ARMED SERVICES; MAKING INTERIOR SUBSTI-
UTE IN ORDER AS AN ORIGINAL BILL; MAKING IN ORDER AS A SUBSTITUTE THE TEXT OF
TR, 5319; IF TEXT OF H.R. 5913 IS REJECTED, IT SHALL THEN BE IN ORDER TO
ONSIDER EN BLOC AMENDMENTS OF ARMED SERVICES COMTE,
submitted the following resolution; which was
INTERIOR FILING SUPPLEMENTAL REPORT TO PROVIDE IMPACT STATEMENT)
RESOLUTION
Resolved, That upon the adoption of this resolution it shall be in
order to move that the House resolve itself into the Committee of the
Whole House on the state of the Union for the consideration of the bill
(H.R.49) to authorize the Secretary of the Interior to establish on certain
public lands of the United States national petroleum reserves the develop-
ment of which needs to be regulated in a manner consistent with the total
energy needs of the Nation, and for other purposes. After general debate,
which shall be confined to the bill and to the amendments made in order
by this resolution and which shall continue not to exceed
hour(
hour(s) to be equally divided and controlled by the chairman and
namFINA CLOSTED. two time seels
ranking minority member of the Committee on Interior and Insular Affairs
and
hour(s) to be equally divided and controlled by the chairman and
ranking minority member of the Committee on Armed Services, the bill
dider
shall be read for amendment under the five-minute rule. It shall be in
are
order to consider the amendment in the nature of a substitute recommended
by the Committee on Interior and Insular Affairs now printed in the bill
the
as an original bill for the purpose of amendment, and said substitute shall be
considered as having been read for amendment. Immediately after general de-
maders
bate is concluded, it shall be in order to consider the text of the bill H. R. 5919
if offered as an amendment in the nature of a substitute for the amendment
recommended by the Committee on Interior and Insular Affairs. "If said amend-
11
ment in the nature of a substitute is rejected in Committee of the Whole it
making
shall then be in order to consider en bloc the amendments recommended by the
arder
Committee 'on Armed Services now printed in the bill to the amendment recom-
mended by the Committee on Interior and Insular Affairs. At the conclusion of
the consideration of H.R. 49 for amendment, the Committee shall rise and report
armedical
the bill to the House with such amendments as may have been adopted, and any
amount
Member may demand a separate vote in the House on any amendment adopted in
the Committee of the Whole to the bill or to the amendment in the nature of a
substitute. The previous question shall be considered as ordered on the bill and
amendments thereto :.) final passage without intervening motion except one motion
to recommit with or without instructions.
:
FORD:
LIBRARY
Substitute
STATUS OF NAVAL PETROLEUM RESERVES LEGISLATION
I. Key Provisions of Titles 1 & 2 of President's Energy
Independence Act
Will provide unlimited production (300,000+barrels
per day) from NPRs 1, 2 & 3.
Proceeds from sale of oil from NPRs 1-3 would be
used to supply military fuel needs, plan and
construct domestic and civilian storage program
of 1.3 billion barrels and increase exploration
program on NPR-4.
Will provide production from NPR-4 once specific
production plan approved by the Congress (i.e. leasing).
for
Some NPR oil would be used strategic military
purposes (up to 20%) and the remainder would be sold
in a commercial manner. Proceeds would be used to
fill domestic and military storage systems.
NPR-4 would produce 2 million barrels per day by 1985,
roughly 12% of the nation's petroleum requirements
in that year.
II. Key Provisions of Chairman Hebert's Bill
Production would be authorized from NPRs 1-3, but
only for 3 years and at a .maximum rate of 200,000
barrels per day.
Exploration of Alaskan reserve is authorized, even
though we already have the authority and there is
no commitment to development and production.
Action on the Strategic Petroleum Reserve is restricted
to a study, an authority we already have.
Funds from the sale of limited NPR production can
only be used to explore and develop NPRs 1-3 and to
explore NPR-4. Funds from this source cannot be used
to design and construct the storage system.
Passage of the Hebert bill would leave us short by
2 million barrels per day of our 1985 goal and would
require large annual appropriations from a general
1817
fund to build the storage system.
LIBRARY GERALD R. FORD
III. Key Provisions of Melcher's Bill
Elk Hills production to 160,000 bbls/day quickly, then
to 300,000 bbls/day -- the maximum efficient rate of
recovery.
Secretary of Interior to develop plan (after consulting
with the Secretary of Defense concerning Naval reserve)
subject to veto by Congress.
Exploration only of Alaskan Petroleum Reserve No. 4
authorized. Development subject to future Congressional
action.
Oil produced to be sold commercially at competitive
bids and at terms to permit independent refiners to
have access to it or to be used by military as needed
by military.
Treasury to receive $1 billion per year when Elk Hills
producing at 300,000 bbls/day less $1/bbl. cost of
production (basis current cost of comparable oil at
California docks)
4/32
FEDERAL
INERGY
FEDERAL ENERGY ADMINISTRATION
WASHINGTON, D.C. 20461
AUMINISTRATION
OFFICE OF THE ADMINISTRATOR
MEMORANDUM FOR THE PRESIDENT
FROM:
Frank Zarb of
SUBJECT: Talking Points for your Meeting with
Congressman Hebert
During your Wednesday trip to Louisiana to dedicate the
F. Edward Hebert Library, it would be helpful if you
could discuss the Naval Petroleum Reserve development
and Strategic Storage legislation with Congressman
Hebert.
As you know, Titles I and II of your Energy Independence
Act provide for unlimited production from existing Naval
Petroleum Reserves (primarily Elk Hills, California),
full-scale exploration and development of NPR-4 in
Alaska, and authorization of a Strategic Reserve System
as an insurance against potential embargoes.
Congressman Hebert's Investigations Subcommittee and
subsequently the Armed Services Committee reported out
a substitute Title which falls short of obtaining the
objectives of your energy program. Congressman Helcher's
bill, which would give jurisdiction of the Naval
Petroleum Reserves to the Department of the Interior,
is considerably closer in fulfilling your objectives.
Both bills are scheduled for concurrent debate by the
House next week.
Attachments
Tab A - Status of Legislation
Tab B - Suggested Talking Points
STATUS
Congressman Herbert's Investigations Subcommittee, and sub-
sequently the full Armed Services Committee, reported out
a substitute Title I which limits your authority in the
following areas:
NPR production would be limited to 200,000 barrels
per day for only a three-year period. The Navy
estimates this to be maximum of 122 million barrels.
While exploration of the Alaskan reserves is
authorized, there is no urgency expressed in regard
to development and production.
Action on a Strategic Petroleum Reserve (Military)
is restricted to a study to be submitted within
one year.
Funds from the sale of NPR production would be used
only to explore and to develop NPR's 1, 2, and 3,
and to explore NPR-4 in Alaska. There is no commit-
ment or link to fully-produce Alaska or to implement
both the Civilian and-Military Strategic Reserve
Systems.
Congressman Herbert's main objections to your legislation
appear to be based mainly on two assumptions:
Congress generally, and the Armed Services Committee
specifically as guardians of the NPR's for national
defense purposes, should not give up their current
control over them, and are opposed to our legislation
which they feel is a "blank check."
Strict limitations should be put on any Elk Hills
production, as the Armed Services might need this
oil for future emergencies.
The House also has before it a bill sponsored by Representative
Melcher which would transfer the NPR's, along with other
Federal land, to the Secretary of the Interior for development.
Unlike the Armed Services Committee bill, it would authorize
unlimited production of NPR's 1, 2, and 3, subject to a 60-day
Congressional veto. However, the Melcher Bill does not provide
for a special fund or for a strategic storage system. It would
also authorize exploration of NPR-4, but full development
would require further Congressional authorizations. It is
likely that both the Melcher and the Armed Services Committee
bills will be considered by the full House next week.
SUGGESTED TALKING POINTS
It would be helpful if you could make Congressman Hebert
aware of your specific objections to the Armed Services
Committee substitute Title I:
1. There is a lack of commitment to a Strategic
Reserve System, as the bill only provides for
a study.
Such a system, when fully developed, would
deliver much more oil during an emergency
than Elk Hills could, even if it were fully
developed (three million barrels a day,
versus 300,000 - 400,000 barrels per day)
The Strategic Reserve System (1.3 billion
barrels), along with the Defense Production
Act, would be more than sufficient to meet
any possible defense requirements during an
emergency situation.
2. It does not provide for sufficient production
from NPR's 1, 2, and 3 (Elk Hills, Buena Vista,
and Teapot Dome), limiting them to a maximum of
200,000 barrels a day for three years.
Full production, conditioned upon increasing
pipeline capacity, is needed to increase our
domestic supplies and decrease our vulnerabil-
ity to imports in the short term.
Because of the tight budgetary situation, we
need the proceeds from full NPR production
to develop NPR-4 in Alaska and to implement
the Strategic Reserve System as outlined in
Titles I and II of your legislation.
3. It does not provide for the production of NPR-4
in Alaska, a key element in obtaining long-term
energy invulnerability.
This huge area of untapped domestic reserves
may provide as much as two million barrels a
day by 1985.
Because of the long lead times involved in
developing this area, it is necessary to have
TAB B
-2-
the authority to explore and produce NPR-4
as soon as possible.
4.
Given the present features and deficiencies of
both the Armed Services Committee and the Melcher
bills, you would have to consider the options of
supporting either bill with appropriate amendments
that would more closely adhere to the objectives
of your energy program.
is
FORD
2
THE WHITE HOUSE
WASHINGTON
May 1, 1975
MEMORANDUM FOR:
MAX L. FRIEDERSDORF
THRU:
VERN LOEN VL
FROM:
CHARLES LEPPERT, JR. Caty
SUBJECT:
Elk Hills
Rep. Bill Ketchum called regarding the Elk Hills legislation. Ketchum is
disturbed at the President's support of the Armed Services Committee bill.
He feels that the President made a commitment to support production from
Elk Hills when he visited the area and told both Ketchum and A1 Bell that
he would take a good hard look at the Interior bill. Ketchum and Bell feel
the President has not taken the look at the Interior bill as he promised or
else he would not support the Armed Services bill.
Ketchum further stated that the President should have also weighed the
political considerations involved in this legislation. The area involved is
in his Congressional District yet he was not consulted by the Administration
on this bill. He feels the President or the Administration should have sought
the view of the Member of the Congressional District involved and those
Members who had worked so long and hard for the Interior bill and were on
record in opposition to the Armed Services Committee bill and the Navy's
failure to cooperate.
Ketchum feels the President has no consideration for his own GOP Members
of Congress and that this attitude by the President and his Administration
is eroding away all the support the President has with the California GOP
delegation.
THE WHITE HOUSE
WASHINGTON
NETA
PLS CALL GINGLES
+
TELL them THAT P HAS
THRUST of THIS
SEEN, ^ EDITORIAL IN THE
DAILY NEWS Summary HE
GETS EACH DAY.
TX
CHAS.
OK 5/6/75
JOHN GINGLES
LEGISLATIVE ASSISTANT TO
2329 RAYBURN H.O.B.
CONGRESSMAN ALPHONZO BELL
WASHINGTON, D.C. 20515
CALIFORNIA
202/225-6451
house of Representatives
Washington, D.C. 20515
MEMORANDUM
2 May 75
Charlie -
Thought you might be interested in
the attached.
The Congressman been working on this
from the beginning convinced that he was
helping the President with his energy goals,
and is now understandably a bit disheartened.
It would be nice if the President
could see this editorial.
Jun
OTIS CHANDLER, Publisher
Cos Angeles Times
ROBERT D. NELSON
Executive Vice President and General Manager
HARRISON GRAY OTIS, 1882-1917
WILLIAM F. THOMAS
Executive Vice President and Editor
HARRY CHANDLER, 1917-1944
NORMAN CHANDLER, 1944-1960
CHARLES C. CHASE, Vice President-Production
ROBERT L. FLANNES, Vice President and Assistant to the Publisher
ROBERT C. LOBDELL, Vice President and Géneral Counsel
VANCE L STICKELL, Vice President-Sales
JAMES BASSETT, Associate Editor
ANTHONY DAY, Editor of the Editorial Pages
ROBERT J. DONOVAN, Associate Editor
FRANK P. HAVEN, Managing Editor
JEAN SHARLEY TAYLOR, Associate Editor
THURSDAY MORNING, MAY 1, 1975
Elk Hills' Importance to the U.S.
The chances for extensive and, above all, neces-
vices Committee, have weakened the prospects for
sary development of the vast Elk Hills Naval Pe-
greatly augmented production from Elk Hills. The
troleum Reserve in Kern County have been dimin-
committee's bill would retain Navy control over the
ished, thanks to President Ford's sudden change of
oil fields, limit expanded production to no more
mind and some fancy politicking on the House floor.
than 200,000 barrels a day for a maximum of three
Right now, it looks like the Navy and its congres-
years, and earmark all the oil for the military.
sional supporters are in a good position to win the
Given the Navy's reluctance to tap Elk Hills-
Elk Hills fight, and, if that proves true, the nation's
even during World War II it drew only minimal
hopes for achieving greater energy self-sufficiency
amounts from the vast pool-that probably means
will likely be set back.
that actual production would be much less than the
Legislation to turn control of Elk Hills over to the
céiling authorized.
Interior Department and make possible production
None of that will do. Elk Hills is a readily availa-
of up to 300,000 barrels of oil a day has been tem-
ble source of much-needed domestic oil. Expanded
porarily withdrawn from consideration. Amend-
and continuous production would reduce imports of
ments will be made to close various alleged, and in
costly foreign fuels, and could help significantly in
some cases farfetched, loopholes-among them the
creation of a strategic oil reserve that would great-
Price
THE WHITE HOUSE
WASHINGTON
May 9, 1975
MEMORANDUM FOR:
MAX L. FRIEDERSDORF
THRU:
VERN LOEN VC
FROM:
CHARLES LEPPERT, JR. Czg.
SUBJECT:
Elk Hills Legislation
Attached for your information is a copy of H. R. 49 as recently amended and
reported by the Committee on Interior and Insular Affairs.
The major amendments to the bill were both clarifying in nature and sub-
stantive. Some of the major amendments provide that: the Secretary
only with the approval of the President can establish, explore and develop
National petroleum reserves, the Mineral Leasing Act of 1920 is not applicable,
all revenues derived go into the general treasury, the anti-trust and common
carrier provisions were strengthened, and sets up a separate office in the
Department of the Interior known as the Office of National Petroleum Reserves
with a Director and staff.
cc: Doug Bennett
Glenn Schleede
H.R. 49 (Elk Hills)
as amended*
by the
Committee on Interior and Insular Affairs
May 7, 1975
To authorize the Secretary of the Interior to establish
on certain public lands of the United States national petroleum
reserves the development of which needs to be regulated in a
manner consistent with the total energy needs of the Nation, and
for other purposes.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That in
order to develop petroleum reserves of the United States which
need to be regulated in a manner to meet the total energy needs
of the Nation, including but not limited to national defense,
the Secretary of the Interior, with the approval of the President,
is authorized to establish national petroleum reserves on any
reserved or unreserved public lands of the United States (except
lands in the National Park System, the National Wildlife Refuge
System, the Wild and Scenic Rivers System, the National Wilderness
Preservation System, areas now under review for inclusion in the
Wilderness System in accordance with provisions of the Wilderness
Act of 1964, and lands in Alaska other than those in Naval
Petroleum Reserve Numbered 4).
SEC. 2. No national petroleum reserve that includes all
or part of an existing naval petroleum reserve shall be established
without prior consultation with the Secretary of Defense, and when
so established, the portion of such naval reserve included shall
be deemed to be excluded from the naval petroleum reserve.
FORD
Upon the inclusion in a national petroleum reserve of any
land which is in a naval petroleum reserve on the date of
enactment of this Act, any equipment, facilities, or other
*In lieu of the Committee amendment reported on March 18 (H. Rept.
94-81 pt. I) H.R. 49 would read as above.
-2-
property of the Department of the Navy used in operations on the
land SO included and any records, maps, exhibits, or other
informational data held by the Secretary of the Navy in connection
with the land so included shall be transferred from the Secretary
of the Navy to the Secretary of the Interior who shall thereafter
be authorized to use them to carry out the purposes of this Act.
The Secretary of the Interior shall assume the responsibilities
and functions of the Secretary of the Navy under any contract which
now exists with respect to activities on a naval petroleum reserve
to which the United States is a party.
SEC. 3. (a) The oil and gas in the national petroleum
reserves in the contiguous forty-eight States established pursuant
to section 2 may be developed under terms and conditions
prescribed by the Secretary of the Interior and approved
by the President. The Secretary of the Interior shall
explore, develop or produce the oil and gas or shall use
competitive bidding procedures with prior public notice of not
less than thirty days of the terms and conditions for any
contract, or operating agreement for development and
production of oil and gas from a national petroleum reserve.
If the Secretary does not explore, develop and produce oil and
gas from the areas known as Naval Petroleum Reserves Numbered 1, 2, and
3 these reserves shall only be explored, developed and produced
by competitive bid contracts providing for the payment by the
United States of a monetary sum rather than a share of production:
Provided, That he shall not enter into any such contract with an
owner of any part of Naval Petroleum Reserve Numbered 1, and
he shall not authorize any production within Naval Petroleum
-3-
Reserve Numbered 1 unless he has reached an agreement with the
current owner of part of the Reserve to continue operations
under a unit plan contract which protects the public interest.
Such terms and conditions and also plans for the development
of each area of the national petroleum reserves shall be published
in the Federal Register, but shall not become effective until
ninety days after final notice has been published and
submitted to the Congress (not counting days on which either the
House of Representatives or the Senate is not in session for
three consecutive days or more) and then only if neither the House
of Representatives nor the Senate adopts a resolution of
disapproval. Each proposed plan of development and each
amendment thereof shall explain in detail the method of
development and production proposed and shall provide for disposal
and transportation of the oil consistent with the public interest.
Each proposed plan of development shall provide that the terms of
every sale or cxchange of oil and gas from a national petroleum
reserve shall be SO structured as to give a full and equal opportunity
for the acquisition of, or exchange for, the oil and gas by all
interested companies, including major and independent oil producers
and refiners alike and shall be SO structured as to include blocks
small enough to permit small companies to offer viable bids
on the oil tenedered. Each proposed plan of development
shall also explain the relative need for developing the oil and
gas resources in order to meet the total energy needs of
the Nation, compared with the need for prohibiting such
development in order to further some other public interest.
-4-
All geological and geophysical information collected
and developed pursuant to the development and
implementation of the plan shall be made available to the public
within a period of three years after its collection. Privileged
or proprietary information will not be released without consent.
(b) (1) At each stage in the formulation and promulgation
of any terms and conditions, plans of development or amendment
thereto, and rules and regulations, and at each stage in the
entering and making of contracts and operating arrangements,
under this Act, the Secretary of the Interior shall consult with
and give due consideration to the views and advice of the
Attorney General of the United States.
(2) All plans submitted to the Congress by the
Secretary of the Interior under this Act shall contain a report
by the Attorney General of the United States on the anticipated
effects upon competition of such plans.
(3) No contract or operating arrangement may be made or
issued under this Act until at least 30 days after the Secretary
of the Interior notifies the Attorney General of the proposed
contract or operating arrangement. Such notification shall
contain such information as the Attorney General may require in
order to advise the Secretary of the Interior as to whether
such contract or operating arrangement would create or
maintain a situation inconsistent with the antitrust laws.
If the Attorney General advises the Secretary of the Interior
that a contract or operating arrangement would create or maintain
such a situation, the Secretary of the Interior may not make or
-5-
issue that contract or operating arrangement unless he thereafter
conducts a public hearing on the record in accordance with
the Administrative Procedure Act and finds therein that such
contract or operating arrangement is necessary to effectuate
the purposes of this Act, that it is consistent with the public
interest, and that there are no reasonable alternatives consistent
with this Act, the antitrust laws, and the public interest.
(4) Nothing in this Act shall be deemed to convey to any
person, association, corporation, joint venture, or other
business organization immunity from civil or criminal liability,
or to create defenses to actions, under the antitrust laws.
(5) As used in this section, the term "antitrust laws"
means --
(A) the Act entitled "An Act to protect trade and
commerce against unlawful restraints and monopolies",
approved July 2, 1890 (15 U.S.C. 1 et seq.), as amended;
(B) the Act entitled "An Act to supplement existing
laws against unlawful restraints and monopolies, and for
other purposes", approved October 15, 1959 (15 U.S.C.
12 et seq.), as amended;
(C) the Federal Trade Commission Act (15 U.S.C.
41 et seq.), as amended;
(D) sections 73 and 74 of the Act entitled
"An Act to reduce taxation, to provide revenue for the
Government, and for other purposes", approved
August 27, 1894 (15 U.S.C. 8 and 9), as amended; or
(E) the Act of June 19, 1936, chapter 592
(15 U.S.C. 13, 13a, 13b, and 2la).
(c) Any oil or gas produced from such petroleum reserves,
except such oil or gas which is either exchanged in similar
quantities for convenience or increased efficiency of transportation
with persons or the government of an adjacent foreign state, or
which is temporarily exported for convenience or increased
efficiency of transportation across parts of an adjacent
foreign state and reenters the United States, shall be subject
to all of the limitations and licensing requirements of the
Export Administration Act of 1969 (Act of December 30, 1969;
83 Stat. 841) and, in addition, before any oil or gas subject
to this section may be exported under the limitations and
licensing requirement and penalty and enforcement provisions
of the Export Administration Act of 1969, the President must make
and publish an express finding that such exports will not
diminich the total quality or quantity of oil and gas available
to the United States and are in the national interest and are in
accord with the Export Administration Act of 1969.
(d) Pursuant to any program hereafter authorized by the
Congress, the President may, in his discretion, direct that not
more than 25 percentum of the oil produced from such national
petroleum reserves shall be placed in strategic storage facilities
or exchanged for oil and gas products of equal value which shall
be placed in such strategic storage facilities.
(e) The Secretary of the Interior is authorized to enter
into contracts for the sale or exchange of oil and gas which is
-7-
produced from the national petroleum reserves and which is owned
by the United States. Such contracts shall be issued by
competitive bidding, shall be for periods of not more than
one year, and shall be in amounts which will permit the
attainment of the objectives for disposal and transportation set
forth in subparagraph (a) of this section. Each bid offering
shall be structured to include blocks small enough to permit small
refiners to offer viable bids on the oil tendered. The United
States shall not enter into any contract for the sale of oil and
gas produced from the area known as Naval Petroleum Reserve
Numbered 1 which shall result in any person, association, or
corporation obtaining directly or indirectly, control over more
than 20 percent of the oil and gas owned by the United States
produced from that Reserve during any single year, except that such
control may exceed 20 percent in order to insure maximum income
to the United States. All proceeds from any such contract for the
sale of oil and gas produced from areas designated as Naval
Petroleum Reserves if they are included in National Petroleum
Reserves shall be deposited in the Treasury of the United States.
(f) The Secretary of the Interior with the approval
of the President, is hereby authorized and directed to explore for oil
and gas on the area designated as Naval Petroleum Reserve Numbered 4
if it is included in a National Petroleum Reserve and he shall
report annually to Congress on his plan for exploration of such
reserve: Provided, That no development leading to production shall
be undertaken unless authorized by Congress. He is
authorized and directed to undertake a study of the feasibility
--8-
of delivery systems with respect to oil and gas which may be
produced from such reserve.
(g) Any pipeline which carries oil or gas produced
from the national petroleum reserves shall be operated and
maintained as a common carrier and shall accept, convey, and
transport without discrimination and at reasonable rates oil and
gas produced from national petroleum reserves. The Secretary
of the Interior shall provide in every contract for the sale
or exchange of oil or gas produced from such reserves that the
contracting party, if owner or operator of a controlling interest
in any pipeline or any company operating the pipeline which carries
oil or gas produced from the national petroleum reserves, shall
at reasonable rates and without discrimination accept and convey
the oil and gas which is produced from the reserves of the
Government or of any citizen or company not the owner of any
pipeline subject to the provisions of this section. The Secretary of
the Interior shall have the power to make rules and regulations for
the purpose of carrying out the provisions of this section and shall
have the authority to declare forfeit any contract, operating
agreement, right-of-way, permit or easement held by any person or
entity violating such rules or regulations. This section
shall not apply to any natural gas common carrier pipeline operated
by any person subject to regulation under the Natural Gas Act
or which is regulated by any public utility subject to regulation
by a State or municipal regulatory agency having jurisdiction to
regulate the rates and charges for the sale of natural gas to
-9-
consumers within the State or municipality.
(h) With respect to pipelines and related input and
terminal facilities in the vicinity of any national petroleum
reserve the Secretary of the Interior is authorized to obtain
by purchase, including condemnation, such property interests as
he may determine to be necessary to effectuate the transportation
by purchasers or oil and gas from any national petroleum reserve
to refinery points or points of interconnection with common carrier
pipelines. The Secretary is further authorized to construct such
pipelines and related input and terminal facilities as he
determines to be necessary in order to effectuate disposals of
oil and gas from national petroleum reserves in accordance with
the objectives set forth in subparagraph (a) above.
SEC. 4 (a). There is hereby established in the Department
of the Interior an Office of National Petroleum Reserves which
shall have as its head a Director who shall be appointed by the
President, by and with the advice and consent of the Senate. In
carrying out the provisions of this Act, the Secretary shall delegate
all functions and duties authorized by this Act to the Director.
In addition to the Director, there shall be such other employees,
as may be necessary, who shall be appointed by the Secretary
subject to the provisions of title 5, United States Code,
governing appointments in the competitive service, and shall
be paid in accordance with the provisions of chapter 51 and
subchapter 3 of chapter 53 of such title relating to classification
and general schedule pay rates.
-10-
(b) No person appointed to the Office of National
Petroleum Reserves shall, during his term in office, be engaged
in any business, nor have any financial interest in any
business entity, which is engaged in the exploration, development,
production, transportation or sale of oil or gas. Before
accepting employment with the Office of National Petroleum Reserves,
each employee must agree, for a period of two years after
termination of employment, not to accept employment with, or
receive any benefit, financial or otherwise, from any business
entity which is engaged in the exploration, development,
production, transportation or sale of oil or gas.
ence on M
one in six o
views.
As a busi
8-4-75
mented, "1
the mercy
Middle Ea
and then h
A forum-ideas, analysis, diverse opinion
produce m
able to tel
to go."
The risk
Harris Survey
is that the
and other
rise sharp
Public makes big shift,
End abort
economy.
policy is
natural-ga
supports oil decontrol
mensurate
energy by
The Har
ties of a d
By Louis Harris
achieve deregulation, but receive credit
if the pric
for sticking to his position in the face of
to 50 cent
THE PUBLIC'S support for deregula-
heavy congressional opposition.
Families -
tion of all oil produced in the United
States has now risen to a decisive 54 to
Earlier this month, the Harris respon-
"If the
dents were asked: "Would you favor or
22 per cent majority; a rise from a 46 to
[read am
oppose deregulation of the price of all
31 per cent plurainty in April, according
likely to :
oil produced in the United States in this
to the latest Harris Survey.
do now,
would encourage development of oil pro-
often, or 1
The new support represents a turna-
duction here at home?"
round from the 42 to 26 per cent plurali-
Use car:
Favor
Opense
Not sure
ty who opposed deregulation only 2 year
July, 1975
54
72
74
April
dis
31
23
As much as
ago. The survey: conducted in July
July,,1974
2a
42
30
Little less 3.
Lor less ofte
among a cross-section of 1,497 adults
Nearly 2 in every 10 people openly
Not at zil
nationwide, shows that an identical 54 to-
Not sure
admitted to the Harris Survey that they
22 per cent majority also supports com-
had changed their minds on the energy
Clearly
plete deregulation of natural gas. pro-
decontrol issue. When asked why they
numbers
duced in this country-
had switched their position, three major
would cui
These latest results represent a victo-
reasons were cited:
if the pi
ty for President Ford who has long ad--
furtner. i
vocated decontrol of the prices of do-
. "Deregulation will result in more
they wou
mestic oil and natural gas. Ford be
domestic production and eventually
biles.
lieves deregulation would provide an in-
bring prices down," said nearly a third
centive for domestic production of more-
of those who changed their minds. A
However
basic energy and would reduce Ameri-
Denver truckdriver said, "Under price
behavior
controls, we've been producing less and
car own
can dependence on foreign energy
less oil here in the U. S. By letting the
their car
sources.
price go up, we'll get more- production
all" to re
WITH MAJORITY support for his pro
and that will finally bring the price
back in : :
gram, the President not only could
down. Same thing as happened with
cut in ca
meat."
rise.
RED TAG
September 11, 1975
MEMORANDUM FOR:
JACK MARSH
MAX FRIEDERSDORF
THROUGH:
VERN LOEN
FROM:
CHARLES LEPPERT, JR.
SUBJECT:
Status Report on H.R. 49. The Elk
Hills Legislation
H. R. 49 (S. 2173) is now pending on the Speaker's desk awaiting action
by the House. Rep. John Melcher has been talking to the Speaker
regarding the appointment of House Conferees. The Speaker is insisting
that at least one of the Conferees should be from the House Armed
Services Committee. Melcher does not want a Conferee from the House
Armed Services Cemmittee because the House passed the House Interier
Committee Bill (H. 49) and not the House Armed Services Committee
Bill (H.R. 5919).
Unefficially, the Senate will probably appoint six (6) Cenferees, three (3)
from the Senate Interior Committee and three (3) from the Senate Armed
Services Committee, if the House goos ahead and appoints Conferees.
Melcher will want the upper hand in the Conference Committee if he
agrees to go to Conference. It is anticipated that if Melcher cannot get
his bill out of Conference then the Conference Committee will not reach
agreement on this legislation.
A copy of my August 6 status report is attached for background information.
Attachment
CLigcb
FORD & LIBRARY 076830
THE WHITE HOUSE
WASHINGTON
August 6, 1975
MEMORANDUM FOR:
JACK MARSH
FROM:
CHARLES LEPPERT, JR.
Coffee
SUBJECT:
Status of Naval Petroleum Reserves
Legislation (Elk Hills)
The House of Representatives on July 8, 1975 passed by a vote of 391-20,
H.R. 49, authorizing the Secretary of the Interior to establish on certain
public lands of the United States national petroleum reserves for develop-
mentand regulation consistent with the total energy needs of the nation.
H.R. 49 was reported by the House Committee on Interior and Insular
Affairs.
On the same day, the House, by a vote of 102-305 rejected H. R. 5919, as
a substitute for H. R. 49. H. R. 5919 was the bill reported by the House
Committee on Armed Services and supported by the Administration,
Also on July 8, the Senate passed by a vote of 91-0, S. 677 which authorized
the creation and maintenance of strategic reserves of crude oil and petroleum
products to insulate the nation against future interruption of oil imports.
Creation of a similar reserve system was requested by the Administration
in the omnibus energy bill sent to the Congress in February 1975. S. 677
was reported by the Senate Interior and Insular Affairs Committee.
During the Senate debate on S. 677, Senator Howard Cannon, Chairman of
the Senate Armed Services Subcommittee dealing with naval petroleum
reserves agreed to consider a bill permitting some production from the
naval petroleum reserves for use in creating a national strategic reserve.
Thereafter, the Senate passed S. 2173.
The Senate on July 29, by a vote of 93-2 passed S. 2173 authorizing the.
creation of a national strategic petroleum reserve and providing for limited
production from naval petroleum reserves. The Senate then took up H. R. 49,
struck everything after the enacting clause and substituted the provisions of
S. 2173 as passed by the Senate. S. 2173 was reported by the Senate Committee
on Armed Services.
2
S. 2173, as amended and passed by the Senate has been sent to the House
of Representatives. S. 2173 is now pending at the desk before the Speaker
of the House awaiting action of the House. As of August 1, 1975, the
House had taken no action on S. 2173. The House may disagree and ask for
a conference and appoint Conferees, amend S. 2173 and return it to the
Senate or refer S. 2173 to a Committee of the House.
The chief differences between H. R. 49, as passed by the House and S. 2173,
as passed by the Senate are as follows:
H.R. 49 provides for unlimited production from naval
petroleum reserves and transferred jurisdiction to the
Department of Interior from Defense.
S. 2173 sets a maximum efficient rate of production from
each reserve of 350, 000 barrels per day for a period of
five (5) years and retains jurisdiction of the naval petroleum
reserves in the Department of Defense.
cc: Bill Kendall
RED TAG
September 11, 1975
MEMORANDUM FOR:
JACK MARSH
MAX FRIEDERSDORF
THROUGH:
VERN LOEN
FROM:
CHARLES LEPPERT, JR.
SUBJECT:
Status Report on H.R. 49, The Elk
Hills Legislation
H.R. 49 (S.2173) is now pending on the Speaker's desk awaiting action
by the House. Rep. John Melcher has been talking to the Speaker
regarding the appointment of House Conferees. The Speaker is insisting
that at least one of the Conferees should be from the House Armed
Services Committee. Melcher does not want a Conferee from the House
Armed Services Committee because the House passed the House Interior
Committee Bill (H.R. 49) and not the House Armed Services Committee
Bill (H. R. 5919).
Unefficially, the Senate will probably appoint six (6) Conferees, three (3)
from the Senate Interior Committee and three (3) from the Senate Armed
Services Committee, if the House goes ahead and appoints Conferees.
Melcher will want the upper hand in the Conference Committee if he
agrees to go to Conference. It is anticipated that if Melcher cannot get
his bill out of Conference then the Conference Committee will not reach
agreement on this legislation.
A copy of my August 6 status report is attached for background information.
Attachment
CL:gcb
FORD & 07V830 LIBRARY
THE WHITE HOUSE
WASHINGTON
August 6, 1975
MEMORANDUM FOR:
JACK MARSH
FROM:
CHARLES LEPPERT, JR. Colg
SUBJECT:
Status of Naval Petroleum Reserves
Legislation (Elk Hills)
The House of Representatives on July 8, 1975 passed by a vote of 391-20,
H.R. 49, authorizing the Secretary of the Interior to establish on certain
public lands of the United States national petroleum reserves for develop-
mentiand regulation consistent with the total energy needs of the nation.
H.R. 49 was reported by the House Committee on Interior and Insular
Affairs.
On the same day, the House, by a vote of 102-305 rejected H.R. 5919, as
a substitute for H. R. 49. H.R. 5919 was the bill reported by the House
Committee on Armed Services and supported by the Administration.
Also on July 8, the Senate passed by a vote of 91-0, S. 677 which authorized
the creation and maintenance of strategic reserves of crude oil and petroleum
products to insulate the nation against future interruption of oil imports.
Creation of a similar reserve system was requested by the Administration
in the omnibus energy bill sent to the Congress in February 1975. S. 677
was reported by the Senate Interior and Insular Affairs Committee.
During the Senate debate on S. 677, Senator Howard Cannon, Chairman of
the Senate Armed Services Subcommittee dealing with naval petroleum
reserves agreed to consider a bill permitting some production from the
naval petroleum reserves for use in creating a national strategic reserve.
Thereafter, the Senate passed S. 2173.
The Senate on July 29, by a vote of 93-2 passed S. 2173 authorizing the
creation of a national strategic petroleum reserve and providing for limited
production from naval petroleum reserves. The Senate then took up H. R. 49,
struck everything after the enacting clause and substituted the provisions of
S. 2173 as passed by the Senate. S. 2173 was reported by the Senate Committee
on Armed Services.
GERALD
2
S. 2173, as amended and passed by the Senate has been sent to the House
of Representatives. S. 2173 is now pending at the desk before the Speaker
of the House awaiting action of the House, As of August 1, 1975, the
House had taken no action on S. 2173. The House may disagree and ask for
a conference and appoint Conferees, amend S. 2173 and return it to the
Senate or refer S. 2173 to a Committee of the House.
The chief differences between H. R. 49, as passed by the House and S. 2173,
as passed by the Senate are as follows:
H. R. 49 provides for unlimited production from naval
petroleum reserves and transferred jurisdiction to the
Department of Interior from Defense.
S. 2173 sets a maximum efficient rate of production from
each reserve of 350, 000 barrels per day for a period of
five (5) years and retains jurisdiction of the naval petroleum
reserves in the Department of Defense.
cc:Bill Kendall
FORD is QERALD LIBRARY
RED TAG
THE WHITE HOUSE
WASHINGTON
September 11, 1975
MEMORANDUM FOR:
JACK MARSH
MAX FRIEDERSDORF
THROUGH:
VERN LOEN
FROM:
CHARLES LEPPERT, JR.
CLg
SUBJECT:
Status Report on H. R. 49, The Elk
Hills Legislation
H. R. 49 (S. 2173) is now pending on the Speaker's desk awaiting action
by the House. Rep. John Melcher has been talking to the Speaker
regarding the appointment of House Conferees. The Speaker is insisting
that at least one of the Conferees should be from the House Armed
Services Committee. Melcher does not want a Conferee from the House
Armed Services Committee because the House passed the House Interior
Committee Bill (H. R. 49) and not the House Armed Services Committee
Bill (H. R. 5919).
Unofficially, the Senate will probably appoint six (6) Conferees, three (3)
from the Senate Interior Committee and three (3) from the Senate Armed
Services Committee, if the House goes ahead and appoints Conferees.
Melcher will want the upper hand in the Conference Committee if he
agrees to go to Conference. It is anticipated that if Melcher cannot get
his bill out of Conference then the Conference Committee will not reach
agreement on this legislation.
A copy of my August 6 status report is attached for background information.
Attachment
THE WHITE HOUSE
WASHINGTON
August 6, 1975
MEMORANDUM FOR:
JACK MARSH
FROM:
CHARLES LEPPERT, JR.
Cag
SUBJECT:
Status of Naval Petroleum Reserves
Legislation (Elk Hills)
The House of Representatives on July 8, 1975 passed by a vote of 391-20,
H.R. 49, authorizing the Secretary of the Interior to establish on certain
public lands of the United States national petroleum reserves for develop-
ment and regulation consistent with the total energy needs of the nation.
H.R. 49 was reported by the House Committee on Interior and Insular
Affairs.
On the same day, the House, by a vote of 102-305 rejected H. R. 5919, as
a substitute for H. R. 49. H.R. 5919 was the bill reported by the House
Committee on Armed Services and supported by the Administration.
Also on July 8, the Senate passed by a vote of 91-0, S. 677 which authorized
the creation and maintenance of strategic reserves of crude oil and petroleum
products to insulate the nation against future interruption of oil imports.
Creation of a similar reserve system was requested by the Administration
in the omnibus energy bill sent to the Congress in February 1975. S. 677
was reported by the Senate Interior and Insular Affairs Committee.
During the Senate debate on S. 677, Senator Howard Cannon, Chairman of
the Senate Armed Services Subcommittee dealing with naval petroleum
reserves agreed to consider a bill permitting some production from the
naval petroleum reserves for use in creating a national strategic reserve.
Thereafter, the Senate passed S. 2173.
The Senate on July 29, by a vote of 93-2 passed S. 2173 authorizing the
creation of a national strategic petroleum reserve and providing for limited
production from naval petroleum reserves. The Senate then took up H. R. 49,
struck everything after the enacting clause and substituted the provisions of
S. 2173 as passed by the Senate. S. 2173 was reported by the Senate Committee
on Armed Services.
FORD
2
S. 2173, as amended and passed by the Senate has been sent to the House
of Representatives. S. 2173 is now pending at the desk before the Speaker
of the House awaiting action of the House. As of August 1, 1975, the
House had taken no action on S. 2173. The House may disagree and ask for
a conference and appoint Conferees, amend S. 2173 and return it to the
Senate or refer S. 2173 to a Committee of the House.
The chief differences between H.R. 49, as passed by the House and S. 2173,
as passed by the Senate are as follows:
H.R. 49 provides for unlimited production from naval
petroleum reserves and transferred jurisdiction to the
Department of Interior from Defense.
S. 2173 sets a maximum efficient rate of production from
each reserve of 350, 000 barrels per day for a period of
five (5) years and retains jurisdiction of the naval petroleum
reserves in the Department of Defense.
cc: Bill Kendall
your
RED TAG
THE WHITE HOUSE
WASHINGTON
March 1, 1976
MEMORANDUM FOR:
MAX L. FRIEDERSDORF
THRU:
VERN LOEN
FROM:
CHARLES LEPPERT, JR.
SUBJECT:
H.R. 49, Naval Petroleum Reserves
Attached is a copy of H.R. 49, the Naval Petroleum Reserves Produc-
tion Act of 1976, indicating the remaining issues to be decided by the
Conferees.
It is anticipated that the remaining issues can be decided in one more
meeting of the conferees which at this time is not scheduled but is
expected to take place this week.
Attachment
CCI Jack Marsh
RED TAG
March 5, 1976
MEMORANDUM FOR:
JIM MITCHELL
THRU:
MAX L. FRIEDERSDORF
VERN LOEN
FROM:
CHARLES LEPPERT, JR.
SUBJECT:
HR 3981, Coastal Zone Management Act Amendments
HR 6218, Outer Continental Shelf Lands Act Amendments
HR 49 # Naval Petroleum Reserves Production Act
Attached per your request are copies of the above mentioned legislation.
HR 3981, the Coastal Zone Management Act Amendments of 1975, as reported
by the House Merchant Marine and Fisheries Committee is scheduled for
consideration by the House of Representatives on Wednesday, March 10, 1976.
As you are aware the impact aid provisions of this bill are important.
HR 6218, (Committee Print No. 2) the Outer Continental Shelf Lands Act
Amendments of 1976, is before the Ad Hoe Select Committee on Outer Conti-
nental Shelf for mark-up. The mark-up has begun and they have completed
marking-up the first fifteen pages of HR 6218, Committee Print No. 2 as the
original text.
Rep. Fish (R-NY) has introduced a substitute to HR 6218. This substitute is
also attached along with section by section analyses of both bills and com-
parisons of both bills.
If possible, maybe Secretary Richardson can meet with Rep. Fish and get
him to withdraw his present substitute and introduce another substitute
containing the Administration impact aid provisions. It's worth a try and
then try to get a conference on this bill if it has the Administration impact
aid provisions and the Coastal Zone Management bills from the House and
Senate. If Secretary Richardson dees meet with Rep. Fish then Rep. Forsythe
(NJ) should also be invited to that meeting.
Also attached is the unofficial print of the Naval Petroleum Reserves bill
as reported by the Conference Committee on Thursday, March 4. It is
anticipated that this conference report will come before the House of
Representatives late the week of March 8 or the following week.
DERALD FORD LIBRAGO
THE WHITE HOUSE
WASHINGTON
March 29, 1976
MEMORANDUM FOR: Tem Loeffler
Nancy
Vera
FROM:
Charlie Leppert
H. R. 49 (Elk Hills legislation) Conference
Report was taken off the program for the
House today because Mr. Melcher and
Mr. Abdnor were not in town.
(Hebert)
Kally me
Talk
Nete
FORD is LIBRARY 0766
EMBARGOED FOR RELEASE
APRIL 5, 1976
UNTIL 2:15 P.M., EST.
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
SIGNING OF THE NAVAL PETROLEUM RESERVES
PRODUCTION ACT OF 1976 (H.R. 49)
The President today signed the Naval Petroleum Reserves
Production Act of 1976 which:
Authorizes production of petroleum from Reserves 1, 2 and
3, located in Elk Hills, California; Buena Vista, California;
and Teapot Dome, Wyoming.
Transfers Jurisdiction of Reserve Number 4 in Alaska from
the Secretary of the Navy to the Secretary of the Interior
effective June 1, 1977 and redesignates it as a National
Petroleum Reserve.
Calls upon the President to submit to Congress a proposed
development plan and appropriate legislation to authorize
development and production from the Alaskan Reserve.
The President also urged the Congress to pass the 17 major
energy proposals which are still awaiting action.
BACKGROUND
Legislation authorizing production from the Naval Petroleum
Reserves was one of thirteen proposals submitted to the
Congress by the President in January 1975 as a part of his
Energy Independence Act.
During the past year, the President has proposed additional
energy legislation, including bills concerned with uranium
enrichment, financing energy facilities, energy resource
development impact assistance and Alaskan natural gas.
(Eighteen proposals awaiting action were identified in
the President's February 26, 1976, Energy Message.)
Four of the original thirteen proposals were included in
the Energy Policy and Conservation Act which the President
signed on December 22, 1975. The Naval Petroleum Reserve
legislation is the fifth proposal now in law.
PRINCIPAL PROVISIONS OF THE NEW ACT
The principal provisions of the Naval Petroleum Reserves
Production Act are outlined below. Under the previous law,
all of the NPR's were under the jurisdiction of the Secretary
of the Navy and were held in reserve for use only in times of
national emergency.
National Petroleum Reserve in Alaska
- NPR-4 is redesignated as a "national" petroleum reserve
and is transferred effective June 1, 1977, to the Secretary
of the Interior who shall assume all administrative
responsibilities formerly held by the Secretary of the
Navy.
more
2
- Interior shall continue Navy's exploration activities
and report annually to the Congress on further exploration
plans.
- The President is called upon to submit to the Congress
no later than January 1, 1980, a plan for the development
of the Alaskan Reserve, appropriate legislation, and
economic and environmental impact assessments. Develop-
ment plans are to be prepared in consultation with the
State of Alaska and appropriate Federal agencies.
Naval Petroleum Reserves 1, 2 and 3.
- The Secretary of the Navy is directed to begin producing
within 90 days NPR's 1, 2 and 3 at their maximum efficient
rate consistent with sound engineering practices for a
period of 6 years.
- Production can be continued for additional increments of
3 years if the President certifies that such production
is in the national interest and neither House of Congress
disapproves the action within 90 days.
- The Secretary of the Navy is directed to provide storage
and transportation facilities for NPR-1, within three years
of enactment, to accommodate production of not less than
350,000 barrels of oil per day.
- Sales of the U.S. share of oil (about 80%) shall be made
at public auction to the h: ghest bidder for periods not
to exceed one year. Up to 25% is set aside for sale to
small refiners at prevailing market prices.
- The Secretary of the Navy must consult with the Attorney
General on matters which may affect competition and may
not sign a contract inconsistent with anti-trust laws.
- The President may direct all or part of the U.S. share
to be placed in the Strategic Petroleum Reserve directly
or through exchange agreements. The Strategic Reserve
was authorized by the Energy Policy and Conservation
Act (December 22, 1975).
- Proceeds from the sale of NPR production shall be credited
to a Naval Petroleum Reserve Special Account which, subject
to the appropriations process, shall be made available
for:
Exploration, development and production of NPR's 1, 2
and 3, and for exploration and study in regard to the
National Petroleum Reserve in Alaska.
Facilities incident to production and delivery of
petroleum.
Petroleum and facilities for the Stragetic Petroleum
Reserve.
IMPACT OF THE BILL
NPR-1 at Elk Hills has proven resources of approximately
1.25 billion barrels of oil -- one of the largest petroleum
fields in the U.S. Fully developed, it could produce oil at
the rate of 200,000 to 300,000 barrels per day. Current
more
3
production is about 2,000 to 3,000 barrels a day,
principally from production to offset private production
in adjoining fields and for testing and maintenance
purposes.
NPR-2 at Buena Vista is currently in full production,
allowing a U.S. share of about 600 barrels per day.
NPR-3 at Teapot Dome has reserves of 42.5 million barrels
and could produce at the rate of 21,000 barrels per day.
NPR-4 in Alaska has only 100 million barrels of proven
reserves, but estimates of potential reserves run as
high as 30 billion barrels.
# # #
EMBARGOED FOR RELEASE
APRIL 5, 1976
UNTIL 2:15, E.S.T.
Office of the White House Press Secretary
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
In my first State of the Union Message more than a year
ago, I set forth goals for regaining energy independence for
the United States. I also outlined a comprehensive and
ambitious national program needed to achieve our energy
goals. The first goal is to reduce our growing reliance on
imported oil.
We have launched energy programs that are possible
within existing authorities and I have asked the Congress
for the additional legislative authority that we must have.
My proposed Energy Independence Act of 1975 contained
thirteen specific programs to encourage energy conservation
and increase domestic energy production. More recently, I
sent to the Congress proposals dealing with nuclear energy,
investment in energy facilities, and other measures needed
to achieve our goals.
One of the original thirteen proposals was especially
important because it permitted immediate action to produce
more oil here in the United States. There are only a very
few steps like this that are possible. Generally, it takes
three years or more to bring new oil production on line.
Actions to increase domestic oil productions are
critical because oil imports have grown to the point where
they now account for almost 40% of the petroleum we are
using. We are even more dependent now than we were a
little over two years ago when we experienced the disrup-
tion of an oil embargo.
I am, therefore, pleased to sign into law today the
Naval Petroleum Reserves Production Act of 1976 which puts
in place one more element of our program to reduce
dependence on foreign oil.
The Naval Petroleum Reserves had special importance
when they were established over 50 years ago to guarantee
an adequate supply of oil for the U.S. Navy. Today, the
Reserves have even greater importance to the whole Nation
because they can help reduce our dependence on imported oil
and help stem the outflow of American dollars and jobs.
This new Act directs the Secretary of the Navy to
commence a vigorous production program from the three Naval
Petroleum Reserves located in California and Wyoming. The
Act also redesignates the fourth Naval Petroleum Reserve in
Alaska as a National Petroleum Reserve and transfers the
jurisdiction to the Department of the Interior in June 1977.
Production from the Alaskan Reserve is not authorized at
this time, but the Act specifically calls upon the President
to submit a development plan and appropriate legislation to
the Congress. Work has already begun on those measures.
more
2
The new Act also makes it possible for production from
the Naval Reserves to contribute directly to the creation
of the Strategic Petroleum Reserve authorized in the Energy
Policy and Conservation Act which I signed on December 22, 1975.
Once established, the Strategic Reserve will provide both a
deterrent to future embargoes and a significant means to
-offset the effects of any future supply interruption.
The Strategic Reserve will permit us to have needed
petroleum much more readily available in the case of an
emergency for our Armed Services and other critical national
needs.
When in full production, the three Naval Petroleum
Reserves in California and Wyoming will provide more than
300,000 barrels of oil per day. The development and pro-
duction of Naval Petroleum Reserve Number One in Elk Hills,
California, will make the biggest contribution.
The U.S. share of this production, about 80 percent,
may be sold at auction and up to 25 percent of that amount
could be set aside for sale to small refiners. At the
President's discretion, all or part of the U.S. share may
be used to build up the Strategic Petroleum Reserves. The
Act authorizes use of revenues from the sale of petroleum
for work on the Naval Petroleum Reserves, for the National
Reserve in Alaska, and for the Strategic Petroleum Reserve.
This Act is an important step toward reversing our
declining domestic oil production and it is another sign
that we are making progress. Four of my original 13 proposals
were included in the Energy Policy and Conservation Act which
I signed into law on December 22, 1975.
The Congress still has before it 18 major energy
proposals, including those remaining from the original 13
I submitted in January 1975 and others I have submitted
since then. We need those measures to conserve energy and
to increase domestic production. Congress must act on those
measures so that we can achieve our national goals for
energy independence.
#####
FORD
FOR IMMEDIATE RELEASE
APRIL 5, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON SIGNING THE
NAVAL PETROLEUM RESERVES
PRODUCTION ACT
THE ROSE GARDEN
2:23 P.M. EST
Secretary Rumsfeld, Secretary Kleppe, Secretary
Middendorf, Administrator Zarb, distinguished Members of the
House and Senate:
Just over two years ago the Arab oil embargo
taught the United States a lesson, that we should not be too
dependent on other nations for our oil supplies. We learned
all too well the high price of energy dependence, both in the
terms of inflation and lost jobs.
Over a year ago, in my First State of the Union
Message, I set forth goals for regaining our energy indepen-
dence and a comprehensive program for achieving those goals.
Shortly thereafter I submitted to the Congress my comprehensive
energy independence plan, which contained specific programs
to encourage conservation and increase domestic production.
One of my proposals called for development and
production of our Naval Petroleum Reserve. This step is
especially important because it is one action we can take to
get an immediate increase in domestic oil production, thereby
lessening our dependence on foreign oil.
Accordingly, today I sign into law the Naval
Petroleum Reserves Production Act of 1976. This act directs
the Secretary of the Navy to begin full-scale production from
the two petroleum reserves in California, including Elk Hills,
and one from Wyoming.
When in full production, these three reserves will
provide more than 300,000 barrels of oil per day, which
represents about 4 percent of what we now import daily from
foreign suppliers.
The new act also makes it possible for production
from the Naval reserves to contribute directly to the creation
of strategic petroleum reserve authorized in the Energy
Policy and Conservation Act, which I signed into law
December 22, 1975.
MORE
Page 2
Once established, the strategic reserve will
provide both a deterrent to future embargoes and a significant
means to offset the effects of any future supply interruption.
The strategic reserve will permit us to have needed petroleum
much more readily available in case of emergency for our Armed
Forces and other critical national needs.
The act also redesignates the Naval Reserve in
Alaska as a Naval Petroleum Reserve to be managed by the
Department of the Interior.
This act is a very important step toward reversing
our declining domestic oil production, but other steps
obviously must be taken.
Eighteen major energy proposals still await
Congressional approval on Capitol Hill. I strongly urge the
Congress to move ahead on these additional initiatives so
that as we celebrate our 200th year of independence, we take
an affirmative action toward achieving energy independence
as well.
END
(AT 2:26 P.M. EST)