All proposals to transport Alaskan crude oil from West Coast ports to oil-short refineries in the Midwest by building new pipelines, have been blocked by a combination of environmental victories, political maneuvers and procedural delays.
These actions, many unrelated, have assured the West Coast of a huge oil oversupply that threatens to become a glut by early spring. And they have pitted companies that Jack refinery capacity on the West Coast; such as Standard Oil of Ohio (Sohio) against refinery-ladden companies such as Atlantic Richfield (ARCO).
And the effort to find a spot somewhere in the West to build such a pipeline has promoted open conflict between the Carter administration and that of California's Gov. Edmund G.(Jerry) Brown Jr. and also between the Washington congressional delegation and Gov. Dixy Lee Ray.
It is not certain whether any West Coast oil pipeline will ever be built. What is certain is that without one, Sohio, with 50 per cent of the production from the Alaskan pipeline, faces years of costly oil transportation by tanker through the Panama Canal to Eastern and Gulf Coast ports.
A high-ranking oil company official said last week that the emerging oil surplus would be even worse except for the "fortuitous accident" that severly damaged Pump Station No.8 on the Alaskan pipeline July 18.
This explosion sharply reduced pipeline production, which now is 700,000 barrels of crude oil a day. But when the pump stations reopened, probably in March, production will increase to 1.2 million barrels daily.
Even with Pump Station No. 8 shut down, the daily surplus on the West Coast is now 400,000 barrels of oil a day, most of which now reaches East Coast ports through the canal. With the increased output from Alaska and a small amount more from California, the surplus could be as high as a million barrels of oil a day by spring.
While the oil surplus grows, pipeline proposals have been killed, delayed or stalled on the drawing boards. Here is the status of the four existing proposals:
Trans Mountains Pipeline - This pipeline, which would have started at the Arco refinery at Cherry Point, Wash., near Bellingham and would have extended 714 miles through an existing line to Edmonton, Alberta, for redistribution to Midwest points, was the No. 1 target of the influential Coalition Against Oil Pollution because it would have increased tanker traffic in Puget Sound.
Trans Mountain died a quiet death Oct. 5 when Sen. Warren G. Magnuson (D-Wash.) slipped through an amendment to the Marine Mammals Protection Act that prohibited any new crude oil facility in Puget Sound east of Port Angeles. Only an unexpected veto of the bill by President Carter could resuscitate this pipeline plan.
Kitimat-pipeline - Washington State officials, anxious to export their potential problems, were optimistic for a long time that headache of the pipeline would be borne by Canada, where a consortium led by Koch, Murphy, Ashland and Continental Oil companies had proposed a pipeline extending from Kitimat, British Columbia, to Edmonton. But Koch, the largest participant, has pulled out and the application was recently withdrawn in the face of anticipated Canadian opposition. It is uncertain whether it will be revived.
Northern Tier Pipeline - With Trans Mountain dead and Kitimat on the critical list, this proposal to build a 1-500-mile pipeline from Port Anglese, Wash., to Clearbrook Minns., should be very much alive. But even Northern Tier's most ardent supporters in Washington State say they are puzzled by the company's failure to submit an amended application that meets zoning and environmental objections in Clallam County, where the pipeline would origniate. Northern Tier also faces a host of local and state objections and a possible veto by Gov. Ray, who is angry over Magnuson's amendment killing the trans-mountain project. In separate interviews, Ray and officials of the Coalition Against Oil Pollution, who agreed on nothing else, expressed doubt that this pipeline would be built.
Northern Tier is the brainchild of independent Montana oilman Michael Curran and of subsidiaries of Burlington Northern and St. Paul and Pacific Railroad companies. Public officials in Washington State are now saying openly that NorthernTier seems to lack either the interest, expertise or major oil company backing necessary to guide the project through its many legal and political obstacles.
"We were promised detailed photos and information on the pipeline routing by Northern Tier a year ago," says Alexander W. Mackie, a deputy prosecutor who is representing six Washington counties in the pipeline siting process. "We haven't heard a word from them since."
Sohio Pipeline - The California connection for sending Alaskan oil eastward would begin with a huge terminal in Long Beach and extend 800 miles to Midland, Tex., where refineries that now process high-sulfur oils from the Mid East are well-suited to processing the high-sulfur Alaskan crude oil. But the line that Sohio would use to transport this oil now brings natural gas to California, and the state id insisting on the assurances from the Carter administration that gas would be available from Canada to meet future needs.
Sohio, a subsidiary of British Petroleum (BP), has tied up on its Long Beach application for more than a year. Its stock has been under heavy trading pressure throughout the summer because of its problems in disposing of its West Coast surplus. Tom Quinn, the aggressive director of the California Air Resources Board, says that no permit will be approved unless the natural gas problem is solved and unless the federal govenment permits the state to regulate strictly oil tankers coming into California waters from Alaska.
Because the Los Angeles basin is one of the most air polluted areas in the world, the air resources board also has required that Sohio make "tradeoffs" for the air pollution the terminal might cause through evaporating hydrocarbons and oil spills.
Early in September, Quinn defined the principle tradeoff as the installation of a "scrubber" and ammonia-injection equipment at a Southern California Edison power plant in Los Angeles County. So far, Sohio has balked at the cost, which has been estimated at $90 million, including operational costs.
The fact that the long delayed Sohio terminal proposal is alive at all at such a potential trade-off cost is testimony to the $2-a-barrel cost of transporting oil through the Panama Canal where the oil must be transferred from big ocean-going tankers to smaller ships which can negotiate the canal's narrow locks. Costs of meeting the air pollution tradeodds required by California have been estimated 21 from 25 cents to $1 a barrel, depending on who is doing the estimating.
"We need a long-term solution to the supply problem, and it's certainly not the Panama Canal," said Sohio President J.D. harnett in an interview last week. Officially, at least Harnett expresses optimism that the terminal ultimately will be approved.
Lacking West Coast refineries, Sohio is caught in a double crunch between competing oil companies and the political infighting of the Carter and Brown administration.
ARCO, with a fifth of the Alaskan oil production, has few worries about the surplus which ARCO vice president Lud M. Cook last week described as "not a glut but a happy situation." That's because ARCO has ample West Coast refinery capacity.
Exxon, with another fifth of the Alaskan pipeline production, has negotiated an agreement with Standard Oil of California to take a substantial portion of its Alaskan crude at its Benicia, Calif., refinery.
Sohio's application has the backing of Energy Secretary James Schlesinger, but this has not been of particular help in California where Brown often acts as if his state were a sovereign nation. Some politicans think the problem had been complicted because Quinn, who managed Brown's 1974 gubernatorial campaign, was considered for a high energy post in the Carter administration and reportedly rejected because of his ties to Brown.
Carter administration officials tend to view any action of the Brown administration as reflecting the motivations of a governor whom they believe to be running for president and who defeated Carter in every primary where the two men faced in 1976. Brown administration officials say that Carter neither understands nor cares about a region of the country that was swept by President Ford.
Both beliefs are caricatures which contain a grain of truth. But in the case of the crowded Long Beash harbor, where an oil tanker exploded last Dec. 17 with 59 casualites, there is little doubt that Quinn's opposition is genuine as well as political.
"I won't feel good if this project is approved," Quinn said in an interview." To allow these oil companies to make a few more dollars at the expense of the health and well-being of hald the people in California is outrageous. Creative people in Washington just wouldn't want to locate an oil terminal in Long Beach."
Quinn traces the problem to the rigid original approval of the Alaskan oil routing to Valdez in 1973. One option then consdiered was a route across Canada to the oil-hungry northern Midwest. But at President Nixon's resistence, Vice President Agnew broke a tie in the Senate in favor of an [WORD ILLEGIBLE] Alaska pipeline on the grounds that the West Coast needed the oil and national security would be jeopardized if it didn't get it. Midwestern senate who lost the battle were led by Walter F. Mondale of Minnesota.
"This is a classic example of a government-created disaster, which a new adminreated disaster, which a [WORD ILLEGIBLE] administration in Washington has failed to correct." Quinn said."
Indeed, from the West Coast point of view, the new administration made the problem much worse when Carter on political grounds rejected the solution favoured by the oil companies of selling Alaskan oil to Japan in exchange for Japan-bound oil imports on the East Coast.
As in most issues involving the oil companies, the fundamental issue is one of costs and profits. Sohio has been unwilling to solve its surplus problems by sharply reducing the price of Alaskan oil. Its apparent concern is that any sharp discount would advertise the West Coast oil glut and start a price competition that one analyst described as "the moral equivalent of a gasoline price war."
"The problem is that oil companies are trying to institutionalize their profit margins at a time of high supply," said anothe knowledgeable industry source.
Environmentally-conscious West Coast politicans at this point seem unconvinced that the region they represent should become the dumping ground for Alaskan oil. Here in Washington, Magnuson is a hero for putting in the amendment which stopped Trans Mountain. Some of Ray's supporters think she could enhance her popularity by blocking Northern Tier.
The plain truth is that nobody wants an oil port," says Peter L. Buck, the Seattle attorney for a coalition of environmentalists, labor unionists and businessmen who are fighting the Port Angeles oilport that would be used by Northern Tie. "It's dirty facility with no benefit to the community where it's located."
Or, as Thurston County (Olympia) deputy prosecutor Mackie puts it in recounting a concern that the Northern Tier pipeline might create an oil spill hazard near the waters of the Olympia brewery at Tumwater:
"What are they supposed to do? Change their slogan from "It's the Water" to "It's the Goo"? That kind of question is a real concern up here."