investment, and the way opened for the further development of these

vast reserves.

Under the circumstances as I have just outlined them, it might seem desirable to press for preferential treatment for oil shale development by means of Government guaranties on the building of the retorts or by price subsidies. In a time of serious emergency this would, no doubt, be done. But for the present we are suggesting this means to attract private capital, operating in what has been the traditional American way. The fact that the action requested will only put the oil shale industry on a par with conventional petroleum producers further stresses the reasonableness of the resolution.

Another point of the greatest importance is that, paradoxically, Senate Joint Resolution 92 which takes the form of a tax concession will unquestionably result in higher tax revenues. At present there is no revenue at all from oil shale and there will be none until the industry is developed. Increasing the depletion allowance can be expected to get the industry off to a start, eventually resulting in important revenues from this source. This is a point not to be overlooked today when we face the need for increased defense expenditures and additional tax sources.

The Government has another monetary interest in the development of oil shale as the owner of large tracts of oil shale land. For example, half of the rich "mahogany ledge" in Colorado, which is estimated to contain 90 billion barrels of oil, is owned by the Federal Government. These lands have been withdrawn from entry and contain no other value either in physical resources or scenic interest. The Bureau of Mines has spent about $23 million in oil shale experimentation and has made substantial progress in mining and retorting methods. But without a going industry to put methods into operation, the progress remains of academic value, and the land areas now held by the Government remain unproductive. When private development of oil shale has reached a commercial stage, the return on these Federal lands will be maximized. Surely we are not in a position to be indifferent to this.

In conclusion, I emphasize that few questions facing the Congress today have more immediate and vital relation to our long term strength and stability than this. "The side which has the greatest availability of oil is the side which will win the next war," according to Mr. J. H. Carmichael, of the New York Times. I think America does not want to be caught unprepared. Approval of Senate Joint Resolution 92 is essential to forestall that possibility.

STATEMENT OF CONGRESSMAN EDGAR CHENOWETH, OF COLORADO

Mr. CHENOWETH. Mr. Chairman, and members of the committee, I appreciate this opportunity to appear before you today in support of House Joint Resolution 331, a bill I introduced on May 14, 1957, and which provides for a depletion allowance for deposits of oil shale, coal, and other natural deposits, when they are processed for the extraction of synthetic liquid fuel, and which allowance shall be the same as that allowed to oil and gas wells.

I have jointed a number of my colleagues in the House in sponsoring this legislation. We are united in our effort to obtain this deple

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tion allowance, which we consider essential to the welfare of our Nation.

I feel that we should encourage those who are spending their money to develop our oil shale deposits, and who are willing to take this risk to ascertain if the production of synthetic liquid fuel from oil shale is profitable on a commercial basis. I believe that those who are engaged in this undertaking are entitled to the incentive of this depletion allowance, which we are asking for in this legislation.

I have the honor to represen the Third Congressional District of Colorado. There are no oil shale deposits in my district, so far as can be ascertained. However, there are large deposits on the western slope of Colorado, and there is a great deal of interest in the present experimental work which is in progress. I am indeed happy to give my full support to this proposal.

I do have in my district large deposits of coal, and for many years I have been interested in the development of synthetic liquid fuel from coal. I have seen the coal mines in southern Colorado decline in number, until only 2 major coal mines are left in an area where just a few years ago there at least 30 large producing mines. I have been anxious to find a way to use this coal and put these men back to work. The use of coal for synthetic liquid fuel seems to offer the best prospects.

It is unnecessary for me to tell this committee that the coal industry is a sick industry, and needs help. There is a feeling that the coal industry is coming back, and that within a period of perhaps 10 years the demand for coal will be greatly increased.

As a member of the Special Subcommittee on Coal Research of the House Interior Committee I came to the conclusion that there is a future for coal in this country. However, the coal industry faces an immediate problem of how to continue in business until that time

comes.

While it may be true that the production of synthetic fuel from coal may come at a later date than the production from oil shale, the United States Bureau of Mines, pursuant to the Synthetic Fuels Act of 1944, has carried out some very significant research on coal hydrogenationresearch which should be continued. As indicated by the United States Bureau of Mines' Report of Investigations 5236, issued in July 1956, hydrogenation of coal to produce a liquid fuel is definitely feasible and will most certainly occur soon, either as a result of new lower cost techniques or because of the rising cost of crude petroleum.

Also, I am informed that chemical companies and coal companies will become more and more interested in the processing of coal to obtain a myriad of chemicals. At the same time industrial gas will be generated and a great source of low-cost power would become available. If a fair depletion allowance be accorded such synthetic fuel, the future of the depressed coal production areas throughout the United States will be bright indeed.

Although my district contains no known oil shale deposits, its economy is interwoven with that of western Colorado, Utah, and Wyoming. The development of the oil shale industry will require large amounts of steel, much of which will be produced at the Pueblo plant of the Colorado Fuel & Iron Corp., in my district. Any increase in the production of steel will, of course, bring about a similar increase in the production of coal.

Also, much of the food and fiber to feed and clothe the new population in the oil shale area will be provided by my district. In short, development of the oil shale industry will give the entire West an economic "shot in the arm."

In order that the tremendous capital necessary to create an oil shale industry and other synthetic fuel industries may be attracted it would appear mandatory that tax treatment be given which is equal to that accorded oil and gas production from wells.

Mr. Chairman, I urge that the committee give favorable consideration to House Joint Resolution 331, and similar bills which are pending. We must have this legislation in order to develop the oil shale deposits of western Colorado, and other Western States. I want to again thank you for the opportunity to appear in support of this legislation. I hope that the committee will report a bill to the House at an early date.

STATEMENT OF REPRESENTATIVE WAYNE N. ASPINALL, OF

COLORADO

Mr. ASPINALL. Mr. Chairman and members of the committee, I would like to thank this committee for extending an opportunity to persons interested in synthetic fuels to be heard on the subject of extending tax treatment to this industry equal to that accorded oil and gas produced from wells. In introducing House Joint Resolution 327, it was my sincere hope that this committee would give serious consideration to methods of establishing a synthetic fuels industry as a going concern within the borders of the United States.

The Green River oil shale formation is located in one of the most strategic areas in the heart of the United States, extending from the Colorado River from a point east of Grand Junction, Colo., north and west all the way into Utah and Wyoming. Among other things, it is located in the middle of the area to be served by the Upper Colorado River Basin project authorized by Congress.

This deposit is located in a position from which it could supply vital defense installations throughout the Rocky Mountain area in time of emergency. It can also supply oil by pipeline to the west coast where the domestic supply of oil is particularly short.

Further, testimony of defense officials before congressional committees indicates that oil from shale is especially adaptable to the production of jet fuels and other military fuels. From these considerations it is obvious that it is highly desirable in the interest of national security to develop this additional source of domestic oil, and to develop it quickly. America and the free world are becoming increasingly dependent upon oil imports which in time of war or other crisis, such as the Suez incident, may be lost to us entirely.

Not only is the development of this tremendous oil shale deposit important for strategic defense reasons, but also it is important as a means by which our entire economy can be bolstered. It is reliably estimated that a commercial oil shale industry producing 1 million barrels of oil per day would create jobs for 63,000 people. This would result in a community in Colorado of about 340,000 persons. Resulting direct taxes are estimated at about $800 million annually. Including other Federal income such as excise taxes and revenue from the leasing of the vast portion of this formation owned by the United States, the total Federal revenue from this development would approximate $1

billion annually. In these times when Congress is being asked for additional billions for defense it is vital that we explore every means of encouraging new business and industries which will then be able to share the tremendous tax load carried by our citizens.

In that portion of my district not covered by oil shale, a major portion is underlaid by coal. While there are a few producing mines, most lie idle and many deposits are unopened. The situation in coal mining regions in this country is to desperate that the Committee on Interior and Insular Affairs established a special subcommittee to investigate ways and means of encouraging that industry. The United States Bureau of Mines reports that liquid and gas fuels are gradually displacing coal as a source of fuel energy in this country. They state that in 1920 coal supplied about 75 percent of our fuel energy and oil and gas only 20 percent. Today the situation is reversed; coal supplies only about 25 percent while oil and gas furnishes about 65 percent of our fuel energy.

The reason for including coal in the measure before you is to encourage coal producers and others to carry on the work already admirably commenced by the Bureau of Mines for the development of commercial methods for extracting fuel from coal. We hope that in this way the depressed coal areas throughout our country may be given new vigor.

I am convinced that this legislation is necessary in order to provide incentive to private industry to go ahead and develop means of producing more fuel at low cost. I am convinced that this is in the national interest and cannot fail to strengthen the economy and the security of this country. For these reasons I whole heartedly urge you to act on this measure in this session, and, even if a crash program were started today, it is reliably estimated that 5 years would pass before significant amounts of synthetic fuels would be available. There is no time to lose, but there is much to be gained by prompt and favorable action on this measure.

Mr. KITCHEN. I have a number of additional statements. I may say, before I get to that point, I am summarizing my statement and request that the full statement appear in the record.

The CHAIRMAN. Without objection it will appear in the record. (The statement referred to is as follows:)

STATEMENT OF RICHARD S. KITCHEN, CHAIRMAN OF THE COMMITTEE FOR OIL SHALE DEVELOPMENT, DENVER, COLO., BEFORE WAYS AND MEANS COMMITTEE OF THE HOUSE OF REPRESENTATIVES, UNITED STATES CONGRESS, RE SYNTHETIC FUEL DEPLETION ALLOWANCE

We greatly appreciate the opportunity to appear before this committee on the matter which we feel is of utmost importance to our region and to our country as a whole. Because of limitations of time I will confine myself to a brief explanation of the background of our committee and will then present three witnesses on the subject of oil shale which is the natural resource in which we are personally primarily interested. The first witness will be former United States Senator Edwin C. Johnson, who will speak on the broad policy questions involved in this legislation.

Secondly, I will present Mr. Fred Hartley, vice president in charge of research, of the Union Oil Co. of California, who will summarize his written statement which is designed to acquaint you with the technology of oil shale and to demonstrate that we are not troubling you with a matter involving mere speculation of future development, but are presenting to you a definite opportunity to aid in the early development of a gigantic new industry.

Finally, I will present one of my law partners, Hover T. Lentz, Esq., of Denver, Colo., who is a well-known expert in the field of income-tax law, and who will present very briefly a technical amendment which the committee might prefer to consider at such time as any action is taken on these measures.

The Committee for Oil Shale Development is an unincorporated association of individuals. It is an outgrowth of the efforts of individual chambers of commerce on the western slope of Colorado, and of the Colorado State Chamber of Commerce to aid in the development of this new industry. In order to coordinate these efforts it was felt that a committee should be established and it was further thought to be desirable that the committee should not be identified with any organization or with any one State, because oil shale deposits occur in many States and because oil shale technology cuts across various professional fields. Accordingly, a committee was formed with the very able assistance of the Senators and Congressmen from the three States, House Joint Resolutions 327, 328, 329, 330, and 331 were introduced and referred to your committee and thence to the various executive departments for comment. I understand that these comments are now or soon will be in the hands of your committee.

Mr. KITCHEN. In the interest of saving time, and in addition to the oral testimony of the three witnesses already mentioned, I ask the permission of the committee to include in the record, as part of my testimony, the following written statements: Statement of Dr. Charles H. Prien of the Denver Research Institute; statement of Fred V. Larson and Frederick H. Larson, independent shale oil operators; statement of Dr. Tell Ertl, consulting geologist; statement of R. E. Cheever, city manager, city of Grand Junction, Colo.; statement of A. C. Rubel, president of Union Oil Co. of California; statement of Howard N. Yates, executive vice president, Colorado State Chamber of Commerce; Statement of H. E. Linden, president, The Oil Shale Corp.; statement of the Honorable Frank A. Barrett; statement of the Honorable Wayne N. Aspinall; statement of the Honorable J. Edgar Chenoweth; brief in support of equal depletion allowance for synthetic fuels, by Committee for Oil Shale Development.

I will now proceed to introduce our three witnesses for presentation of their oral testimony.

With respect to House Joint Resolution 327, and companion resolution, we understand that these resolutions have been referred to the various departments for comment which are not yet in the hands of this committee, and when these comments are received by this committee, I would request the privilege of submitting written comments on them for the record.

The CHAIRMAN. Mr. Kitchen, we would not want to deny you that privilege. It is a question of time. This hearing will conclude on the 7th of February and within a short time thereafter we will have to close the record.

Now, we do not know when these reports will be in. I think it would be better for you to obtain permission to file subsequent statements for use by the staff, although the statements may not appear in this record. We will be glad to give you that permission.

Mr. KITCHEN. The following further written statements have been submitted, and in order to save time in addition to the oral testimony of these witnesses, I ask permission of the committee to include in the record as part of my testimony the following written statements: The statement of Charles H. Prien, of the Denver Research Institute:

Fred V. Larson and Frederick H. Larson, Independent Shale Oil Producers;