Santa Fe Industries is a company which is uniquely involved

in meeting the challenges of an energy-short economy. We are a producer of energy, a major user of energy, and a transporter of energy.

At the present time our energy production is primarily in

The

Santa Fe

the form of oil and gas with Santa Fe subsidiaries daily producing approximately 46,000 barrels of crude oil and 33,600 MCF of natural gas. production now is in California, Texas, Colorado, New Mexico, Wyoming, and Montana; and recently we have expanded our activities to include exploration on Federal leases off shore Texas and Louisiana. subsidiaries are also the owners of more than 370 million tons of coal in the San Juan Basin of New Mexico, and we are in an advanced stage of negotiations to sell an appreciable portion of that coal to a major electric utility.

As a transporter of energy, Santa Fe's major activity involves its Railway subsidiary, although we do also have ownership interests in petroleum products pipelines. Last year the Railway handled over 98,000 carloads of petroleum products and about 45,000 carloads of coal. Part of the coal handled was in unit train service between York Canyon, New Mexico and Fontana, California. This particular unit train originated in 1966 and regularly makes the 2,200 mile round trip on a four-day cycle with eighty-four cars each capable of carrying 100 tons of coal. It is one of the first, and-. --we believe--the most efficient unit coal train operations in the West.

In addition to the previously mentioned 370 million tons of

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Santa Fe-owned coal in the San Juan Basin of New Mexico, there is estimated additional mineable coal in excess of 1.5 billion tons, and much

of this coal should also move by rail out of the Basin to electric utilities and other major users in the West and Southwest.

Additionally,

large volumes of coal will move into Santa Fe territory from Montana and Wyoming mines, and we will be directly involved in making the delivering end of unit train movements of this coal to Santa Fe served electric utilities.

As a user of energy, the Railway also plays an important role in solving the nation's energy problems. Although in times of normal business the Santa Fe Railway uses almost one million gallons of diesel fuel every day, the inherent efficiencies of rail transportation permit us to transport over four times the freight that our trucking competitors can handle with an equal amount of fuel.

This lengthy recitation of our involvement with energy production and use is intended to emphasize the complexity of the energyrelated decisions facing Santa Fe Industries and other individual companies. If a single company like Santa Fe is confronted with a complex series of energy-related problems, the much larger set of problems facing the government and this Committee certainly is not subject to easy solution.

Insofar as Santa Fe Railway is concerned, the type of legislation proposed in Senate Bill 1777 should not greatly change the plans we are already making to transport coal. Although there may be

a few new generating plants designed for oil and gas consumption now under construction because of planning that preceded the energy crisis, our market research indicates that coal will be the economic fossil fuel of the late 1970's and beyond for electric utilities in our territory. This move to coal has been a part of electric utility planning for several years--not because of government fiat, but because of the stability of coal supply and the competitive price advantage it will have over natural gas and oil if the basic supply and demand function acts as the pricing mechanism.

By 1985, in Kansas, Texas, New Mexico, and Arizona, the annual requirements of new coal-fired generating plants are estimated to be in excess of 15,000,000 tons. Santa Fe contemplates no difficulty in handling this additional tonnage. Because of the high

standards of maintenance Santa Fe has traditionally set coupled with the more than $2 billion in capital improvements which we have made since World War II, our main line could accommodate this tonnage without difficulty. Because of this predicted increase in coal usage, however, Santa Fe Railway is now planning the needed capital investment in new rail gathering lines and in track improvements to provide necessary service into the coal fields and to the generating facilities. We are also budgeting for the necessary locomotive power and rolling stock for this coal movement. While critics of the railroad industry have questioned whether it is physically and financially capable of moving the required coal, in our territory there is certainly no problem. Moving coal is no more difficult than moving grain, potash, or

other bulk commodities, and last year Santa Fe handled over 167,000

carloads of grain, 70,000 carloads of potash and about 1.5 million carloads of other products.

All of the additional coal now being projected to be moved

in our territory should not require a substantial increase in our locomotives, cars and equipment. For example, we are now in the process of negotiating a new unit train arrangement which will be so efficient that we will be able to move over three million tons annually over a moderately short distance to a single customer with the addition of only 160 gondola cars and twelve diesel units. With the present tax laws relating to investment credit and the predicted liberalization of depreciation schedules, Santa Fe should have no financial difficulty in providing necessary transportation for all of the coal required by generating plants in our territory. In fact, at the present time the primary problem we foresee in furnishing both the coal transportation and a portion of the coal is the time, money, and effort it now takes to satisfy all of the various government regulations which must be complied with before a major transportation or mining expansion can commence.

The basic forces of the free market seem to favor coal as the fossil fuel of the future to the extent that legislation like S. 1777 appears to be superfluous. Power companies are moving away from oil and gas without a government mandate just as the railroads require no particular urging from the government to provide the equipment and facilities necessary to transport the coal. In a situation like this, where the

need for legislation seems questionable, we think the government should be