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Mr. MCCABE. A total of 12. Five years to start exploration and another 7 years to negotiate a contract.

Mr. HOSMER. Then if you have a 25,000-acre lease and you get one contract within 12 years you could keep the whole lease?

Mr. MCCABE. That would be my conception.

Mr. HOSMER. What will prevent any dillydallying from a reasonably full development of these 25,000 acres rather than just producing enough to hold the lease?

Mr. MCCABE. Well, my conception along that line is that the next 20 years, so far as the West is concerned, will have such a tremendous demand for power that if you had a 25,000-acre lease and brought in a well and in the next 7 years negotiated a contract, that the economic demand would create the development of the full potentiality of that land. We have seen that in the Geysers area, looking for full development of this economic resource.

Mr. HOSMER. Let me point this out, Mr. McCabe. You necessarily require a public utility as a customer. At the present time these organizations are generally forming their plans on new electric capacity at least 10 years ahead and up to 15 or 20 years ahead. They must plan not only in connection with their own system but in connection with neighboring systems with which they tie in, and these peripheral areas of capacity augmentation such as steam from the earth do not loom large in connection with the complete system. When you think of the interphasing between this peripheral type of either base or peaking capacity in a very large system, it seems to me a longer time element is involved either in production for a contract or the year period you are talking about that that lease would come to an end. Did in fact your recommendation involve consideration of these difficulties with the customers for steam? You are looking at it mostly from the producer's standpoint and not from the customer's standpoint.

Mr. MCCABE. Unfortunately, up to within the last year or so geothermal steam potentiality has been regarded by some of the public utilities, at least, as not being adequate in potentiality to take care of their massive requirements. I feel, however, that attitude is being changed and I feel in the coming years it will be radically changed. There is no doubt in my mind geothermal steam is the most-economical means of new power. Certainly in many areas that would be the case. And we feel this attitude on the part of certain public utilities is rapidly changing to an appreciation of the real potentiality,

and I would not be surprised to find in the next few years, at least, that the public utilities will give serious consideration to considering geothermal steam as making an important contribution to their require

ments.

Mr. HOSMER. Do you have any personal knowledge of any public utility attitudes other than P.G. & E. in this area?

Mr. MCCABE. Yes, I have. The Sierra Pacific Power Co. of Nevada is just praying we are going ahead with the development in Nevada to supplement their power requirements. They are very cooperative. Mr. AIDLIN. The Edison Co. is interested in Mammoth-Casa Diablo area too.

Mr. HOSMER. Which Edison?

Mr. AIDLIN. Southern California Edison.

per

Mr. HOSMER. Can you tell us in terms of mills what P.G.E.'s cost of geothermal-produced kilowatts is? Mr. MCCABE. I can.

Mr. HOSMER. What is it?

kilowatt hour

Mr. MCCABE. The new plant, 28,000 kilowatt plant, went on steam the other day. Testimony before the Public Utility Commission of the State of California was the total cost of power would be 4.2 mills. That includes their transmission system.

Mr. HOSMER. How much of a transmission system cost is involved here?

Mr. MCCABE. It is about $250,000. The line is 10 miles. Of all the thermal plants operated by the P.G. & E. Company, the operational expense at Geysers is the cheapest of all their plants, and that is for a comparatively small unit. So you can see the advantages of fuel cost and operational cost as compared to a conventional thermal plant. Mr. HOSMER. This 28,000 kilowatt generator, is that some piece of used equipment pulled out of an old ship or something?

Mr. MCCABE. No, it is brand new.

Mr. HOSMER. Do you know what temperature and pressure it operates at?

Mr. MCCABE. I do.

Mr. HOSMER. What is it?

Mr. MCCABE. Pressure of 65 pounds.

Mr. HOSMER. Temperature?

Mr. MCCABE. Would be about 320-330 Fahrenheit.

Mr. HOSMER. Mr. Aidlin, you termed the grandfather clause as essential, but you did not have an opportunity to state your reasons. Therefore, would you state them, please?

Mr. AILIN. The grandfather clause is essentially first because much of the development that has occurred to date, and therefore makes possible the early development of those areas that have been at least rendered as potentially good, involved some Federal lands which sort of intertwine between the fee lands and, therefore, in order to have any kind of integrated development, there has to be an ability of those persons who have those fee lands to tie to Federal lands because these fields are not completely outlineable like oil and gas.

,

The other thing is that the persons who have to this date identified themselves in this business and who have indicated an interest, an ability financially, or a desire to spend money, financially, and some knowhow-although none of that know-how is patentable, but some knowhow should be encouraged to continue that development so the public can get the benefit of it without further delay, and these are the people who have made claims for this land and who would like to get at developing these lands.

Mr. EDMONDSON. Will the gentleman yield for a question?

Mr. HOSMER. Yes.

Mr. EDMONDSON. Does the gentleman feel so strongly about the grandfather clause, if we do not have a grandfather clause in this bill he prefers we do not have a bill?

Mr. AIDLIN. As far as Magma is concerned, I would say yes, because, if we cannot get a grandfather clause, we cannot possibly compete with the large companies for the lands which we have spent our money proving. We are concerned with very little land and that land surrounds fee lands. Two types of lands.

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Mr. EDMONDSON. If the grandfather clause were confined to a 2,500 acre lease, would it meet your requirements?

Mr. AIDLIN. You mean one lease for 2,500?

Mr. EDMONDSON. Yes.

Mr. AIDLIN. No, it would not, but we can live with the limitation which is contained in the bill now, which is 12,800 acres, I believe, which is the maximum convertible under the grandfather clause in all

areas.

Mr. EDMONDSON. Thank you for yielding.

Mr. HOSMER. Thank you, I am through, Mr. Chairman.

Mr. EDMONDSON. The gentleman from California, Mr. Reinecke. Mr. REINECKE. Mr. Aidlin, regarding the cost of the power being produced, or perhaps Mr. McCabe, do you know what that cost would be without transmission line?

Mr. MCCABE. Roughly 4 mills.

Mr. REINECKE. As I walked into the room late and I apologize for that you were commenting that you were agreeable to the idea of this conversion of placer claims only where steam was filed as the soughtafter commodity.

Mr. MCCABE. Yes.

Mr. REINECKE. Do you feel where other people have prior claims to minerals or oil or gas or mining claims, they should be discarded and only the placer claims should be honored?

Mr. AIDLIN. I have no dispute with the other people in the industry who utilize the oil and gas lease means or the application of development of minerals under the Mineral Leasing Act. I have no quarrel with their argument that they, too, are entitled to conversion rights because they used this particular means for the same purpose and in the same good faith we did. So I say that the grandfather clause should embrace all of us.

However, because you see, listening to the testimony here the last couple of days, I realize for the first time that one of the major concerns of the Department of the Interior is the inability to inventory how much land will be blanketed in in terms of a grandfather clause.

Now, in order to assure them, allay that fear and assure them this is a miniscule amount, we informally totaled the whole thing to total probably not to exceed 50,000 acres maximum. I feel that their main concern is that if we do not limit the kind of placer claim that can be converted, there is no way of inventorying placer claims or mining claims. Therefore, we should specifically provide that the claims that are convertible are those claims that were taken out for steam or associated geothermal resources, and then any other claims, and then we will have to prove that was our purpose and we spent money for that purpose in that area just as the bill provides.

That will enable the Department to immediately inventory how many oil and gas leases there are in these known potential areas, how many applications for phosphate sodium permits, and they will then see there is very little land involved.

And one of the arguments in the veto message will then have been met, which was that this is a grab and so forth. This is not a grab at all. This is an essential enterprise matter, essential industry matter. That would help, I believe, substantially. I have suggested that amendment in my statement.

Mr. REINECKE. You mentioned 50,000 acres. Would that be for the total industry or for your company?

Mr. AIDLIN. The 50,000 is the total industry. That is my estimate and I think it is a very, very good close estimate. I have checked it, incidentally, with others.

Mr. REINECKE. You also mentioned if there were no grandfather clause, you would not be able to compete with the larger industries. Mr. AIDLIN. That is correct.

Mr. REINECKE. For the record, would you expand on that a little bit, why you cannot compete?

Mr. AIDLIN. We have been in this for 12 years; we have spent millions of dollars. We do not have the kind of cash available to compete on a cash basis for lands in areas which we have developed on fee properties. It would be a simple matter for a large oil company to come in and make a very, very substantial cash offer which we could not meet. We would not even try to meet it. We simply would forget public lands except to assert our rights under these placer claims, which we would assert. We would go to court if necessary to try to establish that that was a proper way of obtaining that land. Mr. EDMONDSON. Will the gentleman yield?

Mr. REINECKE. Yes.

Mr. EDMONDSON. Would a company doing this be faced with the necessity of acquiring your fee lands that are adjacent to these public lands just as definitely as you feel it is necessary for you to acquire the public lands that are interlaced in the area?

Mr. AIDLIN. It might be possible that they might have to deal with us. It might be possible, but we would not want to deal with them. Mr. EDMONDSON, Does not the plate turn over the same way? Mr. AIDLIN. Yes; it does.

Mr. EDMONDSON. Is not the unitizing of the area an essential whether you begin with the public lands or you begin with the private lands if you are going to have economical development?

Mr. AIDLIN. Yes, but we have problems with fee lands in our early leases. And one of them was at Geyser and one was at Mammoth. And we have no provision for the right to unitize as far as fee lands are concerned.

So we could not compel our fee owners to go into a unit and take the reduced royalty. We would have that problem.

Mr. EDMONDSON. I thank the gentleman.

Mr. REINECKE. Then the only difference you have shown here is the ability to put up cash. Is it your feeling these fee bids will require a substantial amount of cash?

Mr. AIDLIN. If they would not, I would see no reason for having competitive bidding. That is the purpose of competitive bidding, to try to get some cash. If not, then I presume competitive bidding serves no purpose.

So we must assume we have to bid for cash.

Mr. REINECKE. What is your idea as to what the bid would consist of then?

Mr. AIDLIN. In bidding on oil and gas leases-I do not recall whether the bill provides the base for the bid, but the regulations on oil and gas are cash bids. The royalty is fixed. It is all cash bids.

Mr. REINECKE. You do not feel that the royalty would pose any problem? It is based on production.

Mr. AIDLIN. Yes; the royalty is based on production.

I do not know whether you were here when Mr. McCabe suggested a formula for renegotiation of royalties. In his statement he suggested a formula.

Mr. REINECKE. I read the statement, thank you.

Mr. AIDLIN. That we feel we could live with because we will have a period of time to do some amortizing of costs before the royalty gets too high.

Mr. REINECKE. No further questions.

Mr. EDMONDSON. The gentleman from Utah.

Mr. BURTON of Utah. Thank you, Mr. Chairman.

I would like to talk to you about this 50,000-acre estimate you have, Mr. Aidlin. As you know, the Department of the Interior initially made a withdrawal for 86 million acres which they thought were possibly productive, and they have cut that down to 1,051,000 acres. I am advised by Mr. Fishman back there that about 640,000 acres involved are now considered known quantities.

If we could be assured that 50,000 acres is about all that is involved and the Department of the Interior felt that is all that is involved, we might have a different bill than we might otherwise have.

Can you tell us how you arrived at your figure?

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Mr. AIDLIN. Yes. We, of course, are the oldest and were the most active until recently; that is, Magma Power Co. Magma Power Co. is concerned with approximately 2,000 acres of fee lands in the Geysers area as to why there have been reservations of minerals. These are patented lands with reservations of minerals. And we and a partner are concerned with approximately 7,000 acres in the Casa Diablo area of Mono County, Calif., and 640 acres in Randsburg, San Bernardino County, Calif.

That is all we are concerned with. We are not interested in anything else at this moment in terms of Federal lands or under the grandfather clause.

Mr. BURTON of Utah. But you mentioned that this 50,000 acres was your estimate for the entire industry.

Mr. AIDLIN. Yes. I checked with Mr. Emmet Wolter, who is manager of lands for Signal Oil Co., a company very active in the last couple of years in acquiring lands, and now drilling a well, and Signal Oil, and I think with a partner has considerable oil and gas lease filings.

I checked with Mr. Wolter and we compared what they have. I know what Earth Energy, a subsidiary of Union, has practically nothing. I think they have 640 acres of fee lands involved where there is a mineral reservation. I know substantially what Geothermal Resources and Mr. George Rowan independently or with Occidental Oil has, and we have been together and have totaled it and just day before yesterday, sitting here, Mr. Wolter and I totaled it again and we said it could not exceed 50,000 acres.

Mr. BURTON of Utah. Do you feel you can speak for the industry then on this?

Mr. AIDLIN. I would say that if there is any difference, all the persons who are active are here with the exception of Morton Saltand I do not think Morton Salt has very much interest except in connection with the Salton Sea, and that has to do with a wildlife refuge.

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