commercial application. In situ methods of production may be in use within 20 years but they will not likely be more economical than the mining/retorting systems of that day.

THE NEED AND THE MARKET

Do we need shale oil now? Obviously with imports of 2,500,000 barrels a day, we have an adequate supply of oil for the present. The fact is that we cannot have shale oil in any significant quantity for at least 10 years. The more pertinent question is whether or not we will need shale oil by 1975 or 1980.

Take almost anyone's appraisal and you will find a prediction that domestic oil supply will fall short of demand by a wide margin by 1980 or thereabouts. Since we are now supplementing domestic supply with imports amounting to 20% of demand we obviously are going to have to find much greater quantities of oil, to increase imports or develop synthetic oil. Most likely we will do all three.

In this light, let me focus your attention on a regional situation. The Rocky Mountain area now produces about 1,000,000 barrels of oil per day from a proven reserve of less than 3 billion barrels. Both production and reserves have been static or declining in most of the producing states. Exploration also has declined significantly. Colorado is a striking example of production declining, with a decrease in 10 years from 160,000 to 90,000 barrels per day.

It seems to me that shale oil first will become a regional supply of oil making up the decline in production of conventional oil in the Rocky Mountains and this combined with increased demand for petroleum products in the area may take all the shale oil that can be produced for the next 10 to 15 years.

TIMING AND COST

Contrary to some expressed thought, oil shale will not emerge in a flood to drown the domestic oil industry. Many factors will see to this, not the least of which is the time required to build an industry and its cost. By the time the technology is proven to the degree needed to justify the large expenditures that are inevitable we may be into the 1970's. It has been stated that a 58,000 B/D oil shale plant using the TOSCO II system will cost $130 million. If we round this off to $2000 per daily barrel, simple arithmetic tells us that 1,000,000 barrels per day will cost $2 billion. If we add the power plants, pipelines and other similar industrial installations, and the expansion of highways, schools, hospitals, and municipal facilities, this cost could double. To build a 1,000,000 B/D industry by the end of the 1970's will be a monumental task requiring that no time be lost at any step. To build the industry faster probably is out of the question owing to the physical size of the effort and the political, technical and financial barriers to be surmounted. It seems likely that there will be a need for the oil about as fast as it can be developed.

COMPETITORS OF SHALE OIL

The importation of overseas oil is the most serious competitor of a shale oil industry as well as the domestic producer. Shale oil can no where near attain the present dollar cost of a barrel of imported Persian Gulf oil nor can any oil being found in North America today. I need not dwell on this point in a talk to oil men but it is worth mentioning in the following context.

There is, in my opinion, an urgency to bring oil shale, coal and tar sands into production as suppliers of a part of our North American oil needs. First, we must protect against interruption of overseas supplies. The current Egypt-Israel controversy is another example of the constant threat to mideast oil. Second, but not less important, we should keep a strong bargaining position in the market for world oil. We may find Arabian oil much more expensive when we no longer have productive capacity in excess of normal demand. I would advance the thought that we should keep some of our shut-in capacity available for emergencies and use oil shale, coal and tar sands as a part of the "baseload" supply. In respect to coal and tar sands, it seems to me that all will fit into our future oil supply, first as regional sources, later in the national oil mix of Canada and the United States. The technologies are remarkably similar, in that mining and materials handling and the up-grading of hydrogen-deficient hydrocarbons

Morton M. Winston, Executive Vice President. The Oil Shale Corporation, testimony before the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee April. 1967.

are involved in each. There is no reason that favorably situated “high-grade” deposits of all three sources-oil shale, tar sands and coal-will not be competitive with each other and with conventional petroleum.

OTHER MINERALS

The discovery of other potentially valuable minerals in some of the oil shale formations, while adding to the legal and administrative problems of the Federal government, already has had a beneficial influence. The minerals to which I refer are nahcolite (sodium bicarbonate), dawsonite (a sodium aluminum carbonate) and halite (sodium chloride). The more interesting of these may be dawsonite since if economically recoverable it could be a new source of aluminum. Bauxite, 90% of which is imported, is now our sole raw material for this strategically important commodity.

Will these other minerals be economically recoverable? How will they influence the shale oil future? These and other questions must await the detailed evaluation always necessary for nearly discovered minerals. Like oil shale itself there is no question but what the quantities are large-zones several hundred feet thick covering thousands of acres-but also like oil shale the economics of recovery must be established. At this time the potential is exceedingly interesting but no definite answer can be given. A number of companies, including chemical and aluminum companies, are making evaluations and will accelerate their efforts if lands containing these minerals can be obtained on a reasonable basis from the Federal government.

THE FEDERAL OIL SHALE LEASING POLICY

I was tempted, because this topic is in the news, to devote my whole presentation to it. The reason I have refrained is that its importance can be overstated. There is no assurance at the present time, although we are hopeful, that the leasing regulations will be acceptable to industry when issued in final form. Certainly they are not workable in their present form. Another thing, an important fact that often escapes notice, is that shale development is proceeding on private lands, will continue to do so, and may even accelerate if development on public lands is discouraged by oppressive regulation.

I sincerely hope that Secretary Udall will modify his proposed leasing regulation to the extent that a healthy, competitive and ultimately profitable private industry can be developed on the public oil shale lands. This is his stated aim but in my opinion the regulations as written will not achieve the objectives he seeks. While there are other questionable provisions of the regulations, it is basically unsound to require that a lessee make public all the know-how, and give up title to any patents, resulting from his research on public lands. Not only is this stipulation likely to discourage qualified applicants for leases but if followed would surely would surely result in a mediocre technology. I cannot visualize a company using its always limited research budget and its top personnel to do research on this basis when there are always more opportunities than resources available for proprietary research.

I look at those parts of the regulation relating to patents and disclosure as essentially a negation of the patent system, which is in large measure responsible for the industrial and scientific progress of our country. As a reward for innovation, and for disclosing the nature of his invention to others by publication of a patent, the inventor is given a limited monopoly (17 years) on its use. In practice the inventor almost always has been willing to license his technology, under the patent system, but the chance that a competitor may devise a better mousetrap usually has spurred others on to research and innovation. Requiring that patents be assigned to the Federal government and that all results of research be immediately made public will remove the most powerful competitive force that can be brought into oil shale development.

It is suggested by the regulation, and by public expressions of the Secretary, that granting ownership of the technology to the public is a necessary compensation for the opportunity to use the publicly-owned oil shale resource. I submit that royalties commensurate with the value of the product and its cost of production should be the means of direct compensation to the public.

I further submit that every means should be taken to insure the maximum degree of technological competition, for from this competition will flow the greatest benefit of all to the public-an ample supply of products at the lowest possible cost.

FIGURE 3.-Depths, thicknesses, and averaged grades of dawsonite, nahcolite, and oil shale in the lower part of the Joe T. Juhan sodium core hole 4-1, SW1⁄4ÑE sec. 4, T. 2 S., R. 98 W., Rio Blanco County, Colo. Grade of oil shale based on unpublished shale oil assays by the Laramie Petroleum Research Center, U.S. Bureau of Mines.

RESOLUTION OF FEDERATION OF ROCKY MOUNTAIN STATES, INC., TO THE UNITED STATES SENATE SUBCOMMITTEE ON ANTITRUST AND MONOPOLY, SENATOR PHILIP A. HART, CHAIRMAN

Whereas the development of oil shale and associated minerals is a matter of vital national importance, and

Whereas the technology of the recovery of oil from oil shale is a complex research problem necessitating broad cooperation between the private and public sectors, including universities, and

Whereas the research necessary in oil shale development is large, complex and of long duration, and in order for private cooperation must have the promise of commercial return within a reasonable time: Now, therefore be it

Resolved, That the Federation of Rocky Mountain States urges upon the federal government the formulation of an immediate policy for the leasing of oil shale and associated minerals which would encourage the particiaption of private industry with government in research, development, and exploitation of these resources and at the same time protect the public interests. Further, that efforts be directed to resolve all legislative, legal, and judicial problems at the earliest possible date.

April 20, 1967 at Cheyenne, Wyoming.

EXCERPTS FROM MINERAL LANDS AND MINING ACT

§ 184. Limitation on number of leases to one person; combinations or unlawful

trusts

No person, association, or corporation, except as herein provided, shall take or hold coal, phosphate, or sodium leases or permits during the life of such leases or permits in any one State exceeding in aggregate acreage two thousand five hundred and sixty acres for each of said minerals; no person, association, or corporation shall take or hold at one time oil or gas leases or permits exceeding in the aggregate seven thousand six hundred and eighty acres granted hereunder in any one State, and not more than two thousand five hundred and sixty acres within the geologic structure of the same producing oil or gas field; and no person, association, or corporation shall take or hold at one time any interest or interests as a member of an association or associations or as a stockholder of a corporation or corporations holding a lease or leases, permit or permits, under the provisions hereof, which, together with the area embraced in any direct holding of a lease or leases, permit or permits, under sections 182-184, 185-194 of this title or which. together with any other interest or interests as a member of an association or associations or as a stockholder of a corporation or corporations holding a lease or leases, permit or permits, under the provisions hereof for any kind of mineral leases hereunder, exceeds in the aggregate an amount equivalent to the maximum number of acres of the respective kinds of minerals allowed to any one lessee or permittee under such sections. Any interests held in violation of such sections shall be forfeited to the United States by appropriate proceedings instituted by the Attorney General for that purpose in the United States district court for the district in which the property, or some part thereof, is located, except that any ownership or interests forbidden in this subchapter which may be acquired by descent, will, judgment, or decree may be held for two years and not longer after it acquisition: Provided, That nothing herein contained shall be construed to limit sections 227, 228, and 251 of this title or to prevent any number of lessees under the provisions of sections 182-184, 185–194 of this title from combining their several interests so far as may be necessary for the purposes of constructing and carrying on the business of a refinery, or of establishing and constructing as a common carrier a pipe line or lines of railroads to be operated and used by them jointly in the transportation of oil from their several wells, or from the wells of other lessees under such sections, or the transportation of coal or to increase the acreage which may be acquired or held under section 226 of this title: Provided further, That any combination for such purpose or purposes shall be subject to the approval of the Secretary of the Interior on application to him for permission to form the same: And provided further, That for the purpose of more properly conserving the natural resources of any single oil or gas pool or field, permittees and lessees thereof and their representatives may unite with each other or jointly or separately with others in collectively adopting and operating under a cooperative or unit plan of development or operation of said pool