President Reagan plans to ask Congress to waive several restrictions on ownership and financing of the proposed $30 billion Alaska natural gas pipeline that were intended to protect gas consumers, the White House announced yesterday.
Even if Congress approves the waivers -- both houses must do so within 60 legislative days on up-or-down votes and with no amendments -- there is no certainty that the pipeline consortium planning the $30 billion project will be able to obtain private financing, administration officials said.
The 4,800-mile pipeline is supposed to carry gas from Alaska's Prudhoe Bay -- where about 26 trillion cubic feet have been found, about 10 percent of all proven U.S. gas reserves -- through Canada to the lower 48 states. One leg of the pipeline would take gas to the Midwest, the other to the West Coast. The western leg is already carrying gas produced in Canada, and the eastern leg is under construction.
White House press secretary Larry Speakes said President Reagan is seeking the waivers "believing it is a move toward greater energy independence and better cooperative energy relations with Canada."
The president wants to waive the following three principal restrictions in the 1977 law that authorized construction of the pipeline:
Gas producers, principally Exxon, Atlantic Richfield and Sohio, could not own any part of the pipeline. Reagan wants them to be allowed to own 30 percent of the huge project.
A $4 billion gas conditioning plant at Prudhoe Bay would be built by the gas producers and not considered part of the pipeline project, and thus not paid for directly by gas users. Now the plant would be part of the overall project in return for having the producers help build and pay for it.
Gas users could not be billed for any portion of the cost of the project until it was completed and in use. With the proposed waiver, gas users could be billed when any one of the three parts of the project -- the Alaska segment of the pipeline, the Canadian segment and the gas conditioning plant -- is finished. Furthermore, if any of the three parts were completed but the others were not, gas users would still have to pay for the completed portion.
Danny Boggs, a Reagan aide responsible for energy matters, estimated that customers of the pipeline companies participating in the project could see their bills go up by $1 a month before they began getting any gas from the project.
The administration, after consultation with members of Congress, decided not to seek all of the waivers the pipeline consortium sought. The consortium, headed by Northwest Energy Co. of Salt Lake City, wanted to be free to bill users of the pipeline when "identifiable" parts of the line were finished within Alaska. This would have allowed virtually continuous construction financing by pipeline users, officials said.
Bankers have not been willing to give assurances that private financing of the project would be possible even with all of the waivers the consortium wanted. With less generous terms, financing is even more in doubt, the officials explained.
Significant opposition is expected on Capitol Hill, particularly in the House. Several members of the House Commerce Committee, which will hold hearings on the waivers after they are formally submitted, will fight their approval, including a number of influential conservative Republicans.
Rep. John Dingell (D-Mich.), the committee chairman, Rep. James T. Broyhill of North Carolina, the ranking Republican, and Rep. Clarence J. Brown of Ohio, the ranking Republican on the Fossil and Synthetic Fuels subcommittee, all oppose the waivers.