On April 25th, Mr. Don Oliver of our Houston office was advised in a telephone call from Plastic Applicators that two investigators from the House of Representatives Subcommittee on Oversight and Investigation were at the office of Plastic Applicators, Inc. seeking certain information concerning the workover on Block A-76. We also have been informed that these gentlemen have contacted Kinley Caliper Company as well.

Enclosed for your files, please find a copy of a letter from Jack L. Ward, Area Manager, Plastic Applicators, Inc., a copy of a letter from the Honorable John E. Moss, Chairman of the Committee to Mr. Roy Witten, President of Plastic Applicators and a Xerox copy of the calling cards of the investigators.

Cloy D. Monzingo, Esq.

James D. Olsen, Esq.

Dave Henri, Esq.

-2

April 30, 1975

When contacted by the various suppliers involved, it has been this company's position to request their full Cooperation with the Subcommittee's investigation and that Cities Service Oil Company consents to the release of the requested information.

Mr. Mellenger:

JGG/bt

"I received a call from Mr. Ben Smethurst, House
of Representatives Commerce Committee, Investi-
gating Subcommittee, regarding flights from Port
O'Conner to Brazos A-76 Platform on July 26 or
July 27, 1974. He (Mr. Smethurst) was inquiring
if we had records pertaining to the persons called
to the Platforms. I told him that we did have
such records and his inquiry was regarding Mr.
Bill Huthnance; so I inquired as to the reason of
his call and told him I could not release the
records without an OK. I found the information
and forwarded it on verbally to Mr. Smethurst and
then sent a copy of the flight sheet on which
Mr. Huthnance's name appeared. (Mr. Huthnance
OK'd release of this information.)

This morning (May 2, 1975) I received another
call from Mr. Smethurst. He wants us to open our
files regarding the flights from Port O'Conner to
Brazos A-76 from April to August of 1974."

at this point he is no longer
interested in Mr. Huttnance,
now it is a lite is survice function.

Mr. Moss. There being no further questions, the witnesses are excused for the time being, but remain subject to recall under the subpena.

At this time the Chair would like to call to the witness stand Mr. David Schwartz.

Mr. Schwartz, the Chair wants to apologize for holding you here until late last evening before excusing you, and then scheduling you without first determining your own schedule of availability for this morning.

I appreciate the understanding and the cooperation you have shown. Mr. Schwartz has a statement that I think should be on each Member's desk at this time.

Will you raise your right hand to be sworn? Do you solemnly swear that the testimony you are about to give the subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. SCHWARTZ. I do.

Mr. Moss. Will you identify yourself for the record and give your Occupation and residence.

TESTIMONY OF DAVID S. SCHWARTZ, WASHINGTON, D.C.

Mr. SCHWARTZ. My name is David S. Schwartz. I am adjunct professor with Michigan State University. My business address is 4600 Connecticut Avenue NW., Washington, D.C.

Mr. Chairman, what is your pleasure with regard to the statement? Would you prefer that I read the statement or that I summarize? Mr. Moss. Mr. Schwartz, as I understand it, you have had great experience appearing as a witness in an expert capacity before many hearings. I leave it to your judgment as to how best to present your

views.

If it is your desire to summarize, we will admit the statement into the record at this point and you may proceed in that fashion.

Mr. SCHWARTZ. In light of the time I feel perhaps it would be best if I hit the main points of the statement.

Mr. Moss. Without objection, the statement will be placed in the record at this point in its entirety.

Hearing none, that will be the order.
[Testimony resumes on p. 975.]
[The statement referred to follows:]

STATEMENT OF DAVID S. SCHWARTZ⭑
MICHIGAN STATE UNIVERSITY

Hearings Before The

Subcommittee on Oversight and Investigations
of the

Committee on Interstate and Foreign Commerce
U. S. House of Representatives

June 26, 1975

Initially, I wish to express my thanks to the Chairman and members of the Committee for providing me with the opportunity to appear before you to present testimony concerning the validity and reliability of AGA reserve estimates. I have been asked to explicitly address the criticisms of Joseph P. Mulholland and Joanne Salop of the deficiencies reported by the FTC Bureau of Competition with respect to AGA reserve reporting. The essential question raised by the two members of the Bureau of Economics in their differences with the Bureau of Competition is whether the AGA proved reserve estimates are dependable and reliable as a basis for policy decisions.

In assessing the general question of the reliability of AGA reserve reporting, it is important to realize the critical importance

of valid proved reserve estimates because:

a.

b.

C.

They are key elements in the measure of productivity
which is used by the FPC in its new gas costing;

The proved reserve estimates reflect supply availability;
and

Accurate information is essential in the formulation of
energy policy.

The views and opinions expressed in this statement are entirely personal and are submitted in an individual capacity.