LETTER TO WILLIAM J. CASEY FROM L. FRANK PITTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01116R000700810007-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: February 18, 2011
• Sequence Number: 7
• Publication Date: March 5, 1986
• Content Type: LETTER

Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9
EXECUTIVE SECRETARIAT
ROUTING SLIP
ACTION
INFO
DATE
INITIAL
1
DCI
X
2
DDCI
3
EXDIR
4
D/ICS
5
DDI
6
DDA
7
DDO
8
DDS&T
9
Chm/NIC
10
GC
11
IG
12
Compt
13
D/OLL
14
D/PAO
X
15
D/PERS
16
VC/NIC
17
18
9
20
21
22
TO #14: Please handle as appropriate.
STAT
E cutive Secretory
1 Mar 86
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88G01116R000700810007-9
 Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9
PITTS OIL COMPANY
500 MEADOWS BUILDING
DALLAS. TEXAS 75206
March 5, 1986 r
The Honorable William J. Casey
Director
Central Intelligence Agency
Washington, DC 20505
Dear Mr. Casey:
Executive Registry
86" 0993X
Being an integral member of the Reagan Administration, I am sure you share the President's
conviction regarding the importance of a strong national defense to our country's security.
National security is the number one responsibility of the federal government.
The current dumping of oil on the world market by Middle East producers is a threat to our
national defense and our country's security. If it continues, it will dismantle our domestic
oil and natural gas industry, decrease our domestic production and increase, materially, our
dependence on imported oil.
Why is a material increase in our reliance upon imported oil a threat to our national security?
The answer is really quite simple. The only place we can turn to for substantially increased
volumes of oil is the Middle East and North Africa. While the rest of the world is producing
at near production capacity, this area has over 70% of the free western world's proven reserves.
Iran and the Arab States alone control over 80% of the unused production capacity in the free
western world. Overdependence on oil from this tinderbox area of the world, in the backdoor
of Soviet Russia, will cause our nation and the rest of the free world to be held hostage to the
political realities and uncertainties of the Middle East. Enclosed is a brochure prepared by
my company which, among other things, describes where our oil must come from in the event
our domestic production is decreased.
The current dumping of oil is a real and serious problem. Our domestic oil and natural gas
industry is already on its back. Left unchecked, Middle East producers have the clout to
dismantle, for years to come, our domestic industry. The infrastructure of our industry cannot
be rebuilt overnight, and, once it is, it will take 5-15 years to find, develop and produce new
reserves. The U.S. will, as a result, not only fail to discover much needed new reserves, but
will lose, forever, a substantial amount of existing production and reserves. A recent study
completed for the Interstate Oil Compact Commission reveals that, if crude oil remains at
the $15 price range, the U.S. could lose approximately 280,000 barrels per day of oil production
in the first year because 22.5% of all stripper wells in the U.S. would be prematurely abandoned.
The same study reveals abandonment of 40% of all U.S. stripper wells and a loss of approximately
640,000 barrels of oil production per day for the first year should the price of crude oil fall to
$10 per barrel. (See enclosed copy of Interstate Oil Compact Commission Release dated
March 2).
Middle East producers will have won. They can sell us their oil, if they want to and assuming
the sea lanes can be kept open, at whatever price they desire. We must, in the name of
national security, do everything feasible to quickly end this dumping of oil on the world market.
Should we fail in this important matter, history will classify our failure as one of the worst
and most unnecessary mistakes of our era.
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88G01116R000700810007-9
0, -1141-1~e
 Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9
INTERSTATE OIL COMPACT COMMISSION
HEADQUARTERS OFFICE: 900 N. E. 23RD STREET G P. O. BOX 53127 e
- TELEPHONE: [phone]
EDWIN W. EDWARDS
Chairman
Governor of Louisiana
W. TIMOTHY DOWD
Executive Director
For Further Information
Contact Betsy Fernandez
Telephone [phone]
FOR RELEASE SUNDAY 5:00 PM (March 2)
Oklahoma City, OK, February 27, 1986 -- If the cost of crude oil remains in
the $15 price range the U.S. could lose over 734 million barrels of oil, says a
study released today by the Interstate Oil Compact Commission (IOCC). Stripper
wells produce less than 10 barrels per day and because of their low production
rates are very sensitive to changes in the price of crude oil.
The study says this projected abandonment of 22.5 percent of all the
stripper wells in the United States would result in a loss of oil production
during the first year of close to 280,000 barrels per day, valued at $1.5
billion for that year. "Once plugged and abandoned, these wells will not be
redrilled due to economic reasons and their resources will be lost forever,"
said IOCC Executive Director W. Timothy Dowd.
The study, which was prepared for the IOCC by the RAM Group, Ltd., a
management analysis firm of Oklahoma City, covers the projected impact on
stripper wells in 22 oil producing states at various oil prices from $10 to
$25. The price refiners pay for oil has dropped since December from $31 per
barrel to $18. On the commodities market the price dipped below $14 last week
before making a slight comeback.
The numbers projected by the study are in addition to normal abando ment.
Annually, approximately 11,000 stripper wells are abandoned in the United States
because of old age.
MEMBER STATES: ALABAMA ? ALASKA - ARIZONA - ARKANSAS ? CALIFORNIA - COLORADO ? FLORIDA ? ILLINOIS . INDIANA ? KANSAS . KENTUCKY
LOUISIANA - MARYLAND ? MICHIGAN . MISSISSIPPI ? MONTANA - NEBRASKA . NEVADA ? NEW MEXICO . NEW YORK - NORTH DAKOTA . OHIO
OKLAHOMA ? PENNSYLVANIA ? SOUTH DAKOTA - TEXAS ? UTAH - VIRGINIA - WEST VIRGINIA ? WYOMING
ASSOCIATES: GEORGIA - IDAHO ? NORTH CAROLINA ? OREGON . SOUTH CAROLINA ? WASHINGTON
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9
 Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88G01116R000700810007-9
Page Two
"The loss of stripper well production at $15 represents a $1.5 billion
contribution to the trade deficit because every barrel that is not produced
in the U.S. is one that has to be imported," said Dowd. "Our consumption will
not change, simply the source of the crude oil," he said.
At $15 per barrel, the loss would be greatest in Texas, where an estimated
28,500 stripper wells would be abandoned, resulting in lost production of 92,000
barrels per day during the first year.
Oklahoma's loss would be very significant because stripper wells account
for nearly 60 percent of the state's production. At $15 per barrel, the state
would shut down almost 19,000 stripper wells which collectively produce close to
57,000 barrels per day, or nearly 13 percent of Oklahana's total oil production
f ran all wells.
At $15 prices, an estimated 10,000 stripper wells would be abandoned in
Kansas, costing the state's oil production 30,000 barrels per day.
Additionally, the study examines the effect on stripper wells if oil prices
fall to $10 per barrel. Over 40 percent of U.S. stripper wells would be aban-
doned if prices fall to this level. This would mean a production loss of
640,000 barrels per day in the first year, valued at-$2.3 billion for the year.
Close to 185,000 stripper wells would be abandoned.
In the first year at $10 per barrel, Texas would lose over 210,000 barrels
per day, valued at $767 million. This would mean a loss in reserves of 860
million barrels.
Oklahoma would face the abandonment of 34,000 or 40 percent of its stripper
wells. The production lost in the first year would amount to almost 130,000
barrels per day and over $470 million.
The impact that would take place on stripper wells at oil prices of $20
per barrel amounts to over 100,000 barrels per day lost in the first year
nationally, valued at $778 million.
In 1984, stripper wells accounted for approximately 15 percent of the
nation's total oil production and about 70 percent of the total number of U.S.
oil wells.
For further information or a copy of the study, call [phone].
-- 30 --
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88G01116R000700810007-9
 Total Stripper Wells
Average Barrels per Day
At 110/Bbl:
Wells Abandoned
Production Loss
(first year, BPD)
Value of Production Loss
(Millions)
Total Reserves Lost
(Millions of Barrels)
At $15/Bbl:
Wells Abandoned
Production Loss
(first year, BPD)
Value of Production Loss
(Millions)
Total Reserves Lost
(Millions of Barrels)
At 120/Bbl:
Wells Abandoned
Production Loss
(first year, BPD)
Value of Production Loss
(Millions)
Total Reserves Lost
(Millions of Barrels)
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9
Interstate Oil Compact Commission
Impact of Oil Price Reduction on Stripper Wells, Selected States
U.S.
Arkansas California Illinois Indiana
Kansas
Louisiana New Mexico
Mew York
Ohio
Oklahoma
Penn.
Texas
W.Virginia Wyoming
-----------
---------
-----------
---------
--------
---------
----------
-----------
---------
--------
---------
--------
---------
-----------
--------
184,547
1,932
10,868
12,210
2,501
18,656
6,729
6,015
1,848
10,248
33,615
7,968
51,465
6,199
2,047
638,046
7,778
78,637
35,733
6,054
67,036
13,543
20,646
936
14,678
129,503
5,805
210,343
4,516
9,782
12,328.869
f 28.388
f 287.027
1130.424
122.097
1244.692
1 49.431
1 75.359
1 3.415
153.575
1472.686
121.189
1767.753
1 16.482
135.706
2,610.880
31.026
321.184
146.217
24.772
274.311
.55.417
84.484
3.829
60.062
529.925
23.754
860.723
18.478
40.030
101,958
1,067
6,004
6,746
1,382
10,307
3,717
3,323
1,021
5,662
18,572
4,402
28,433
3,425
1,131
277,090
3,378
34,151
15,518
2,629
29,112
5,881
8,966
406
6,374
56,240
2,521
91,347
1,961
4,248
11,517.065
.1 18.493
1 106.974
1 84.96b
114.394
1159.390
1 32.200
$ 49.090
1 2.225
134.900
1307.916
113.803
1500.127
$ 10.737
123.260
733.812
8.945
90.440
41.096
6.963
77.098
15.575
23.745
1.076
16.881
148.940
6.676
241.914
5.194
11.251
45,390
475
2,673
3,003
615
4,589
1,655
1,479
455
2,520
8,268
1,960
12,658
1,525
504
106,586
1,299
13,136
5,969
1,011
11,198
2,262
3,449
156
2,452
21,634
970
35,138
754
1,634
1 778.077
1 9.485
1 95.896
1 43.575
1 7.383
1 81.748
1 16.515
1 25.177
1 1.141
117.899
1157.925
1 7.079
1256.507
1 5.507
111.929
92.783
1.131
11.435
5.196
0.880
9.748
1.969
3.002
0.136
2.134 ?
18.832
0.844
30.588
0.657
1.423
Sanitized Copy Approved for Release 2011/04/05: CIA-RDP88GO1116R000700810007-9