Backers of the proposed Alaska gas pipeline said yesterday they plan to build a new oil pipeline from southern Alaska through Canada that would bring Alaskan oil directly to the Midwest.
If built, the pipeline could alleviate the current West Coast oil glut resulting from Alaskan oil now being sent from the North Slope to Valdez by pipeline, then loaded on ocean-going tankers for shipment to the lower 48 states. Roughly half goes to the West Coast, while the rest is shipped uneconomically through the Panama Canal to the Gulf of Mexico and then on to East Coast markets.
Darrell MacKay, vice president of Northwest Energy, the principal U.S. sponsor of the 4,800 mile Alaska gas pipeline, said the new oil line would cost about $1 billion and take up to two years to build. "Our application [to the Interior Department] will go in Dec. 8," MacKay said.
The proposed pipeline would carry half a million barrels of oil a day -- about the same amount of the current West Coast glut -- 720 miles from Skagway, Alaska, to Alberta, Canada, where the oil would be transferred to existing pipelines that would carry it to Midwestern states.
John McMillian, president of Northwest Energy said building the Alaskan gas pipeline and the oil pipeline would create an "energy corridor" linking Alaska and Canada with the lower 48 states.
Other major backers are Alberta Gas Trunkline Co. Ltd. and Westcoast Transmission Co. Ltd., Canadian sponsors of the Alaskan gas line.
Announcement of the application for the new oil pipeline comes at a time when there are still significant doubts in the financial community as to whether the $14 billion Alaskan gas pipeline can be built with private financing as required by law and President Carter's directives to the Energy Department.
The application, which will be filed with the Interior Department for the required right-of-way over federal lands, touchs off a prickly set of decisions for Interior Secretary Cecil D. Andrus. Andrus is already weighing an application filed in April, 1977 from a competing syndicate, Northern Tier Pipeline Co., to build a 1,550 mile line from Port Angeles, Wash. to Clearbrook, Minn.
Northehn Tier is a consortium of seven companies including U.S. Steel and Burlington Northern Inc. Since Northern Tier's application was filed, Congress passed the National Energy Act which requires Interior and the administration to expedite the selection of a line.
John E. Latz, a Northern Tier executive said, "Our application is still valid and viable." Interior officials said Andrus is expected to meet with Northern Tier executives soon on their application and on the completion of the required Environmental Impact Statement.
If completed, the Northern Tier line would cost about $1.2 billion and would have an initial capacity of 700,000 barrels a day. The Northern Tier Line has had vigorous support in Congress from Sen. John Melcher (D-Mont.) and Sen. Henry Jackson (D-Wash.).
Another line that has been proposed to help sop up the West Coast oil has been offered by Sohio, Standard Oil of Ohio, to carry Alaskan oil from Long Beach, Calif. to Midland, Tex.
The major oil companies producing oil in Alaska favor exports to Japan because it could sharply increase their profits, but Congress has barred such exports. Last year Energy Secretary James R. Schlesinger Jr. proposed that Carter ask Congress to allow exports, but Carter overruled him.
One irony about the new Alaskan oil pipeline application is that it returns a years-old controversy to Interior. In 1972, Interior Secretary Rogers Morton selected the Trans-Alaska Pipeline over an overland Canadian route, arguing that the oil was needed on the West Coast. Andrus now must select yet another route to move Alaskan oil to the Midwest, where it is needed.