National Affairs: Big Week for Wilbur

Conversation

(See front cover)

When Secretary of the Interior Ray Lyman Wilbur goes back to California and his home at Stanford University, it is to work, not to play. Last week he was hard at work there in the name of oil conservation. As his train sped him back from Los Angeles to Washington and an office stacked with the most technically complex problems of the Hoover administration, he left behind him a large group of California oil operators more conservation-conscious than ever before. Secretary Wilbur’s parting words had been: “Unless oil operators quit squabbling, the government will have to take charge.”

Oil conservation was the first task to which Secretary Wilbur, at President Hoover’s direction, set his hand on taking office. First, he revoked government drilling permits where the holders could not prove bona fide development (TIME, March 25). Next, he gave his sanction to the American Petroleum Institute’s voluntary nationwide agreement to hold down oil production, only to have the Department of Justice rule that such a scheme was possibly an anti-trust violation (TIME, April 22). His third proposal was a series of state treaties under the Constitution to limit the outflow of oil. Nine oil-state governors met at Colorado Springs to cold-shoulder this plan. Last week in California, Secretary Wilbur put fresh momentum into this major Hoover policy by pleading for voluntary intrastate agreements among the oil producers.

Kettleman. The rostrum chosen by Secretary Wilbur for delivery of his newest suggestion was one of the richest oil “domes” in the country—an eminence about eight miles long and a mile and one half wide near Fresno, known as Kettleman Hills North Dome. Oil production in the Kettleman Hills is now curbed to some 14,000 bbls. per day by an operators’ agreement expiring July i, 1931. Should the agreement break down, Kettleman

Hills North Dome alone could make its gushing felt throughout the industry. Geologists estimate that it contains some four billion dollars worth of oil and natural gas. Standard Oil Co. of California owns

50% of this dome, the U. S. 40%, small miscellaneous companies the balance. Wasted Billion. Declared Secretary Wilbur to the Kettleman Hills operators: “A billion dollars in resources will be wasted unless we can work out a method of orderly development of this great field. As minority landholders we want to see an agreement that will stop sinking of wells that call for offset drillings, with ring after ring of offsets. We want to participate in a voluntary plan by which all holders of proven land can benefit. We want to avoid ‘drowning’ the gasoline market with the flood of Kettleman Oil.” He proposed four remedies : i ) Pooling all profits from the field according to acre age; 2) Purchase by big companies of all small holdings; 3) Government purchase of lands not brought into the limitation agreement; 4) A holding company to con trol the whole dome’s development. Oil Oyster. Secretary Wilbur’s words were aimed directly at “Judge” E. D. Reiter, smart lawyer, licensed aviator, chairman of the Kettleman Hills conservation committee, of the Santa Fe Springs conservation committee, president of the Independent Oil Operators of Southern California. Without the support of “Judge” Reiter, the Wilbur plan could admittedly get nowhere — and “Judge” Reiter, an “oil oyster” (i. e., an operator who takes the threat of government dic tation as so much salt water), was not quick to give his support. Lyons Act. Last year the California legislature passed the Lyons Act, designed to limit oil production indirectly by limiting the production of the natural gas which .forces the oil to the surface. The state’s efforts to enforce this conservation measure have led only to indecisive court tangles. Declared “Judge” Reiter, no friend of the Lyons Act: “We have accomplished in this state by voluntary action between the operators what the state failed to do by legislative action.”

The Lyons Act plus voluntary agreements have brought California’s weekly oil production down from an average of 768,300 bbls. per week last year to 702,200 bbls. last week.

Felix. On his oil field tour Secretary Wilbur saw for himself one of the defects of voluntary agreements. Just outside the Kettleman Hills “shut-in” is operating the Felix well of Petroleum Securities Co. (a Doheny concern), wasting 30 million cubic feet of gas per day. Vainly have the Kettleman operators tried to get the Felix well to reduce production. As Secretary Wilbur was traveling back to Washington, he read news of a terrific explosion at the Petroleum Securities brand-new plant for removing gasoline from “wet gas,” a disaster which killed a foreman, destroyed a $500,000 plant and sent up 25,000 bbls. of stored gasoline in flames.

Friend & Fish. President Hoover took lanky, quizzical Ray Lyman Wilbur into his cabinet for two reasons: i) He was a level-headed executive; 2) He was an old friend since the days at Leland Stanford when Hoover first solicited Ray Wilbur’s dirty clothes for a steam laundry. They both like outdoor life and fishing. Last summer Secretary Wilbur spent more weekends with the President at the Rapidan Camp than any other cabinet member. The President would catch the fish and Secretary Wilbur, who plumes himself on his skill as a woodland cook, would prepare them over an open fire. Back in Washington, Secretary Wilbur has had some of his friend’s biggest administrative fish to cook and as any cook knows: the bigger the fish, the hotter the fry.

Boulder Dam. Back in Washington last week from his oil trip, Secretary Wilbur was at once confronted with the big, hot problem of Boulder Dam. The time had almost come for him to allot contracts for the power to be generated by this gigantic development. In Congress there were open mutterings of suspicion against him lest he favor private power companies at the expense of municipalities. On his desk at the Interior Department he found a strong letter of protest from Representative Philip Swing of California, co-author of the Boulder Dam Act. California’s Senator Hiram Johnson, the other framer of the act, was already making ominous sounds on the Senate floor.

World’s largest. Boulder Canyon is a great gorge on the deep-sunk Colorado Riyer between Arizona and Nevada. Between its rock walls the U. S. is to build the world’s largest dam, 700 ft. high, less than 1,000 ft. wide. Behind the dam’s arch will form a deep narrow lake, 100 mi. long, voluminous enough to flood the state of Kentucky under a foot of water. The development has three purposes: 1) Flood control for the lower Colorado; 2) Irrigation for barren lands in; Arizona and Nevada; 3) Electric current from the 600,000 h. p. of falling water. Total cost: $165,000,000. The U. S. is to build the dam and the shell of the power plant, to be reimbursed over a 50-year period by sale of power rights. Before Congress will appropriate any money to commence construction, Secretary Wilbur must, under the law, apportion the power among bidders, receive sound contracts guaranteeing reimbursement.

Power apportionment. Last fall Secretary Wilbur tentatively decided to sell not electricity but falling water, at 1.63 mills per kilowatt hour. His proposed distribution of this power: 50% to the metropolitan water district (Southern California cities) to pump drinking water across the mountains; 25% to the Los Angeles Municipal Power Service; & 25% to Southern California Edison and associated companies. No immediate allowance was made for power to Arizona and Nevada. California municipalities outside Los Angeles also wanted a share.

S. C. E. To some minds last week Southern California Edison Co. loomed up as a greedy ogre which would gobble up Boulder Dam power. The law requires that the U. S. give state and municipal bids for power preference over those of private companies. The fact that Secretary Wilbur seemed about to give S. C. E. one-quarter of all the power, while making no allowance for other California municipalities or for Arizona and Nevada which each want some, stirred old animosities and jealousies.

The man whom, many sought to view as Boulder Dam villain was Russell Henry Ballard, president of Southern California Edison, who has spent 32 years growing up with his state’s power development. Once president of the National Electric Light Association, Mr. Ballard is a large, heavy-set man, thoroughly schooled in public utility management. Externally genial, exhibiting an interest in his employes which takes him to many of their meetings, he is an autocratic ruler of Southern California power.

Questions & Answers. What lately bred the storm against Secretary Wilbur was a set of questions relating to Boulder Dam which he submitted to Solicitor Edward Clingan Finney of the Interior Department. Mr. Finney’s answers implied that Secretary Wilbur might turn all the power at the dam over to Southern California Edison, allowing the other bidders to obtain their share from S. C. E. by subcontracts backed by bond issues. Under such an arrangement, S. C. E. would install all the power generating machinery, set up all the transmission lines, do all the real selling and distributing for the government.

Warned Nebraska’s Senator Norris last week: “Under that [Finney] decision the Secretary of the Interior is able to nullify the most important provision in the Boulder Dam Bill and give to the power trust every kilowatt of power generated by the expenditure of public money at Boulder Dam.”

Echoed California’s Senator Johnson, “I have said nothing so far on what has transpired but there will come a time when it will be necessary to speak out. . . . From the standpoint of those who wrote into the bill the provision in reference to preferences, we will not be slow to express our views, no matter what any department may do or what any solicitor may advise.”

To Secretary Wilbur, Representative Swing wrote: “Congress intended that the people should get the benefit of this great public resource, through their own agencies, direct and at cost, without the necessity of paying a commission to a go-between, that is, profits to a private power corporation.”

Bubbles. Secretary Wilbur, calm frier of big fish, was not perturbed at this congressional outburst. Said he: “There have been no final determinations reached. It is one of the bubbles on the surface. There have been many others and there will be more.”

Water. Arizona, dissatisfied over water rights, has held out from the Boulder Dam compact. Last week at Reno, Nev., water commissioners from the six other interested states* met to evolve a compromise with Arizona, which has threatened otherwise to hamstring the whole development by prolonged litigation. At this Reno conference, California made new concessions to Arizona.

Meanwhile nothing has been done at Boulder Canyon. The dam’s actual construction will probably be under the joint supervision of the army engineers and the Interior Department’s reclamation service. Thirty miles of railroad must first be laid through a desolate rock-strewn wilderness and a town for 6,000 workmen built on the brink of the gorge. The prospect of Boulder Dam brought land booms at Las Vegas, Nev. and Kingman, Ariz. But so slow has the government been in getting started that these have mostly collapsed. Last week a gold strike outside Kingman made speculators forget Boulder Dam.

* The other six: California, Nevada, Utah, New Mexico, Wyoming, Colorado.