With the flick of a switch Alaska moved into the big-time energy business today as the first crude oil from the huge Northern Slope reserves here began flowing down the 800-mile trans-Alaska pipeline.
After a jittery start and some minor spillage, a pump station technician named Fred Moore pushed the button that started the oil flowing into the 49-inch pipeline. Pipeline control technicians cheered as the world's biggest --privately funded construction projects opened for business.
It will take at least 30 days for the oil, traveling at 1.1 miles per hour, to reach Valdez, the southern terminus, and fill the line to its 9.04 million-gallon capacity. Meanwhile, the oil will be paced by two company walkers checking to see nothing goes wrong, a clanking one-ton plastic "pig" designed to move through the pipe ahead of the oil and mark its progress, and the rapt attention of several thousand state residents who have bet on the oil's arrival date in Valdez in a giant pool run by an Anchorage Catholic church.
Despite all this hoopla, officials of the Alyeska Pipeline Service Co., the consortium of eight firms which built the line, watched the whole thing today with a studied nonchalance.
"Just another ordinary operational day," said an Alyeska spokesman. "There's plenty of time for a celebration after it's all operating smoothly."
Nevertheless, there was excitement here as the "pig", a bullet-shaped device designed to give off radio signals and audible clunks inside the line as the oil progresses, moved away down the line.
The delivery of the oil into the pipeline marks the completion of a nine-year project that even its critics concede is something of an engineering marvel.
From Prudhoe Bay to Valdez the line twists and turns through three Arctic mountain ranges, crosses four active earthquake fault zones and passes over nearly 800 rivers and streams. It goes through places only a handful of men ever visited before and crosses some of the most ecologically delicate landscape in the world.
But if the environmental impact of the pipeline has been enormous, the effect it has had on life in this sparsely populated state has been nothing short of explosive.
Because of it, packs of prostitutes descended on sleepy Alaskan towns like Valdez and Fairbanks, glassy skyscrapers and traffic jams appeared in Anchorage, and Eskimos, some of whom had only the slightest acquaintance with the outside world before landed high-paying construction jobs that let them buy color television sets and sit by the Arctic Ocean watching reruns of "Mary Hartman, Mary Hartman."
"We can never be the same," said Clark Gruening, the 34-year-old grandson of the late Alaskan Sen. Ernest H. Gruening and a member of the state House of Representatives from Anchorage. Last year Gruening led a successful drive to set up a permanent state fund to handle 25 per cent of Alaska's North Slope oil revenue. He estimated that by 1985 the fund will contain somewhere around $6 billion.
"The 20th century has moved in here very fast," said Gruening. "We're going to have to be very aggressive and very vigilant as a state to guard our interests."
The physical completion of the pipeline has by no means ended the controversy it has generated. Among the more pressing pipeline-related issues still to be resolved are:
How much of a "tariff," or pipeline service charge, on the oil will Alyeska be allowed to charge? Alaska's oil revenue is based on the well-head price of its 12.5 per cent ownership of Prudhoe Bay oil reserves. Wellhead price, in turn, falls when tariffs set by oil companies rise, and the eight Alyeska oil companies have requested permission from the Interstate Commerce Commission to set high tariffs on North Slope oil because of a huge cost overrun on the pipeline. A one-cent tariff increase, state officials say, can cut $1 million annually from the state's oil revenue.
What will Alaska's oil and gas revenues be spent on? "Alaska could survive forever on the revenue from Prudhoe if it is properly managed," said Victor Fischer, senior analyst with the University of Alaska's Institute of Social and Economic Research. By 1985, oil revenues will constitute about 70 per cent of all Alaska's income, Fischer said. "We've got people already coming here like encyclopedia salesmen trying to sell us everything," said Gruening.
What is the future of the pipeline "haul road" that was cut by Alyeska through the wilderness from the Yukon River to the Arctic Ocean at Prudhoe? It is the first time the Yukon has been bridged and there is increasing pressure on the state -- which will assume control of the road when the pipeline opens -- to open it to the general public. "It's the only landway into an untouched area," said James Barnett, chairman of the Alaska chapter of the Sierra Club. "Over the long run," he said, "the haul road is going to be the most environmentally damaging part of the pipeline project."
The tariff issue has raised a series of charges against Alyeska that the company permitted the pipeline cost overrun through deliberately lax management. The cost of the line grew from an original 1969 estimate by Alyeska's owners of $900 million to the present $9 billion figure (including interest and amortization) with a strong possibility that it could go to $10 billion before all construction work is over.
In a sharply worded report to the ICC last week Washington, D.C., attorney Terry F. Lenzner, who was hired as special consultant to the state's Alaska Pipeline Commission last year after allegations of Alyeska mismagement, charged political considerations had caused excess cost overruns of more than a billion dollars. Lenzner accused the Alyeska owners of deliberately avoiding early planning that could have substantially cut the size of the overrun.
Quoting a staff interview with Peter DeMay, a senior Alyeska official, the Lenzner report says: "From a political standpoint they (the owners) didn't want to make it appear that they were going ahead with the project full blast while they were having all of these problems in Washington and telling congressmen and senators, "Look, fellows, unless you guys get off of this we are not going to build this project."
Alyeska has denied the charges.
The companies that operate the line have filed requests with ICC for tariffs of from $6.04 to $6.44 a barrel.
The ICC will issue a set of interim tariff rates for the pipeline June 29 and a permanent rate sometime in the fall of 1978, state officials said.
A major item causing the excess costs, according to the Lenzner report, was the huge labor charge to the pipeline builders. Lenzner estimated Alyeska paid $848 million in excess labor charges. While these charges were never mentioned by name in the report, sources familiar with the investigation noted that most of the excess money went to the Alaska Teamsters.
Perhaps no group has benefited so singularly from the pipeline as the Alaskan Teamsters. According to a Pulitzer Prize winning series of articles by the Anchorage Daily News in 1975, the Teamsters Local 959, grew from a relatively minor organization with assets of around $500,000 in 1970 to the most potent political and economic force in the state.
With the opening of the pipeline, however, unemployment in Alaska has shot to more than 15 per cent -- and much of it is ideal Teamster labor left over from the pipeline.
Unemployment has become so bad in Fairbanks, where most of the pipeline hiring was done during peak employment two years ago, that when a local agency advertised for a dog catcher 70 applicants showed up. "Most of them were unemployed pipeline workers," said an agency spokesman.
The fear -- voiced across the state and expressed in periodic news stories --from the pipeline has not proved to be a lasting concern here. Prostitutes hung out in gaudy street-corner packs in Fairbanks and Anchorage during the height of the boom. But most are gone now. "I can't remember when I last saw a prostitute," said Susan Fison, director of the Impact Information Center in Fairbanks.
In the end, the coming of the pipeline has left scars but no mortal damage here. Income in real dollars -- after accounting for inflation -- actually dropped, according to state economists. Population growth, up from 302,000 in 1970, is about 440,000 this year, less than anticipated.
"We all survived and on the whole there were more gainers than losers," said Victor Fischer of the Institute of Social and Economic Research.
"The real tough questions are going to come up as the oil money comes in." Fischer predicted. "It's going to change Alaska, and if it's not handled correctly, it could destroy us."