Approval of a massive terminal and pipeline to distribute oil from Alaska to the Midwest and East appears unlikely after a chilly reception by California energy and environmental officials.
The California Air Resources Board contends that the proposed terminal in Long Beach harbor would add pollution to the Los Angeles air basin equivalent to the daily exhaust emissions of 2.7 million cars. And Richard L. Maullin, chairman of the California Energy Commission, says that carrying oil through the pipeline, which now transports natural gas from Texas, would threaten the availability of California's future natural gas supplies.
This double-barreled attack appears to have doomed the long-sought terminal proposed by Standard Oil of Ohio (Sohio) as an alternative to costly transportation of the Alaskan oil through the Panama Canal.
"If the deadline to make a decision were today, the decision would have to be no," said Thomas Quinn, chairman of the Air Resources Board.
"Even if the air reduction standards are met - and they have not been met in what we've heard so far - we would have to turn down the Sohio proposal if it would cause California to lose natural gas supplies."
Curtailment of natural gas inevitably would result in both increased air pollution and unemployment, Quinn said. Some businesses would have to shut down, and others would be forced to shift to fuels that cause more air pollution.
Sohio, which is producing more than half of the Alaska pipeline oil, proposes to build a terminal capable of handling 500,000 barrels a day on a 42-acre site in Long Beach Harbor. The terminal would be the receiving point for Sohio's oil after a 2,200-mile, trip from pipeline terminus at Valdez in the company's fleet of 11 tankers.
Sohio proposes to distribute the crude oil through an existing 789-mile pipeline now used by El Paso Natural Gas Co. to transport gas from Midland, Tex. to California. An additional 237 miles would be built by Sohio to connect Long Beach with the line, which would be leased at low cost from El Paso.
California has helped to subsidize exploration of Mexican natural gas reserves, and state officials want the El Paso pipeline available to transport the newly discovered Mexican gas reserve to California.
"It is hard to identify a significant state benefit to be derived from the Sohio proposal, and we foresee some very high potential cost - not only from air pollution or the increased risk of oil spills, but in jeopardizing California's ability to acquire new supplies of natural gas." Maullin testified at a hearing Saturday.
The stand taken by Quinn and Maullin, both of whom are considered close to California. Gov. Edmund G. (Jerry) Brown Jr., disappointed to Sohio officials, some of whom came close to accusing the Air Resources Board of bad faith.
"We're been strung out on our application" said R. L. (Bob) Schaadt, vice president of Sohio.
Schaadt said that every time Sohio agreed to an environmental improvement Quinn asked for an additional change, so that the company now faces the distinct possibility of having to carry the Alaskan oil east through the Panama Canal. This is a cumber-some method, since the oil must be transferred from tankers used in the Alaskan trade to smaller vessels that can navigate the canal.
"By using the Panama Canal we'll burn a lot of good American oil in tankers that ought to be used in cars and homes," Schaadt said.
Fred Garibaldi, president of Sohio, testified that the proposed terminal "ascribes to the highest air quality standards of which we are aware in this country, if not in the world." He said the tankers from Alaska would use low-sulfur fuel oil to reduce sulfur dioxide emissions and follow a number of other approved procedures to reduce air pollution.
But the Sohio statements were challenged by the Air Resources Board.
Quinn said the company is assuming that federal tanker regulations will be enacted by Congress, and is also assuming that tanker captains will follow prescribed anti-pollution procedures at sea despite testimony that they rarely do. Also, Sohio computes tanker air pollution emissions from Point Mugu 60 miles from Long Beach, while the board computes them from Point Concepcion, 75 miles farther northwest. In between is the Santa Barbara Channel, site of a disastrous oil spill in 1969.
The different assumptions are critical, because the Air Resources Board uses a concept known as "tradeoff" in calculating air quality.
Under this premise, any business that introduces a source of air pollution must agree to reduce pollution in other ways so that there is a net benefit in air quality. Sohio accepts tradeoffs in principle, but disagrees with the board about the amount of pollution its terminal would produce.
The disagreement is vast. Sohio says the additional pollution would be no more than the equivalent of exhaust emissions from 38,000 cars, instead of the 2.7 million cars cited in the board's "most probable case."
Interwoven with the technical controversies is a continuing political suspicion between the Carter and Brown administrations.
The terminal poses a political dilemma for Brown, who is considered a 1980 election threat by some of Carter's advisers. If the Democratic governor's hand-picked Air Resources Board turns down the terminal, which is strongly backed by the Los Angeles Chamber of Commerce and some labor unions, this could be interpreted as evidence of an "anti-business" attitude that Brown is trying to overcome.
On the other hand, Brown could be politically vulnerable in his 1978 re-election campaign if California faces a natural gas shortage because the El Paso pipeline has been converted to oil.
The solution that would have been preferred by California officials is an oil exchange with Japan, but that was rejected last week by federal energy chief James Schlesinger on political grounds.
The rejected proposal called for the United States to provide Alaskan oil to Japan in exchange for Japanese purchased oil from the Middle East delivered to eastern U.S. ports. Maullin called it "the most timely, efficient and economic mechanism available to alleviate the West Coast surplus."
Schlesinger said the exchange was politically unacceptable since Americans would be unlikely to accept the administration's energy conservation campaign if they saw U.S. oil going to Japan.
Douglas Robinson, representing the Federal Energy Administration at the hearing, sidestepped a direct recommendation. He gave the impression that the federal government favored the Sohio terminal but said it should be built "onnly if it meets what we believe is an achievable goal of a net improvement in air quality."
Quinn said he hopes the air board will reach a decision on the terminal in September.