Background of the Oil Lease Cases

February 11, 1924

Report Outline
Back Ground of the Oil Lease Cases
Naval Petroleum Reserve, No. 1
Naval Petroleum Reserve No 2
Naval Petroleum Reserve No. 3

Back Ground of the Oil Lease Cases

The Senate Public Lands Committee's oil lease investigation was originally authorized under a resolution by Senator LaPollstte directing an investigation of “the entire subject of naval oil leases with particular reference to the protection of the rights and equities of the Government of the United States.” The Senate adopted the resolution by unanimous vote, April 30, 1922, but the investigation did not get under way until October 22, 1923.

The oil lands in question were withdrawn from public entry in 1909 and subsequently set up as naval petroleum reserves by Presidents Taft and Wilson. In addition to the three reserves under consideration by the Senate Committee there are two oil shale reserves in Colorado and Utah, each estimated to contain 50,000,000 barrels of oil, and a recently created reserve in Alaska, about which there is little accurate knowledge. The Alaskan reserve contains some 32,000 square miles above the Arctic Circle.

Points in Dispute

The proceeds of royalty oil received by the government from leased lands on the naval reserves are required by law to go into the miscellaneous receipts of the Treasury, except when the Navy elects to take royalty oil in kind. The oil requirements of the Navy are in the neighborhood of 7,000,000 barrels annually. The legality of contracts under which royalty oil is exchanged for tankage and other construction works is questioned in the Senate and the legality of President Harding's executive order of May 31, 1921 transferring the administration and custody of the naval oil reserves from the Navy Department to the Department of the Interior is fairly generally denied.

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