Dealing with a Northern Sheik

Scarcely two years ago, at the height of the excitement over the huge oil strike on Alaska's North Slope, as many as 2,000 men swarmed around two dozen drilling rigs, preparing to tap the largest known oil reservoir in North America. This week, as the sun drops out of the northern sky, not to rise again for almost two months, fewer than 200 men are left, and only two rigs are rumbling in the icy darkness.

At Prudhoe Bay alone, almost 165 miles of 48-in. pipe lay stacked in seemingly endless rows of 60-ft. sections. The pipe is supposed to be used for construction of the 789-mile trans-Alaska pipeline by the Alyeska Pipeline Service Co., which was formed last year by seven oil companies. But the project remains mired in environmental controversy. Even if permission to build the pipeline is granted by the Department of the Interior within the next several months, as appears likely, the project stands to be delayed. A series of court injunctions won by such diverse groups as the Wilderness Society, Alaskan Eskimos and local fishermen could put off completion of the line until at least 1975.

More Credibility. Faced with waiting another four or five years before the state government can begin to receive oil royalties and taxes, Alaska's Democratic Governor William Egan recently made a startling proposal: that the state of Alaska should build and own the pipeline itself by raising the necessary $1.7 billion through the sale of bonds. Egan told TIME Correspondent Karsten Prager last week: "I simply don't see how we can consider such a huge movement of the people's oil through Alaska without making sure that the profits that arise from the transport go to the people."

In Egan's view, a state-owned pipeline system would enable Alaska to earn an additional $100 million a year, and might even make the whole idea of a pipeline more acceptable to environmentalists. "It could well be," he said, "that the state has more credibility with the groups that oppose the pipeline."

No state government has ever proposed to run such a project before, and a few of the stunned oilmen reacted as if they were dealing with the pressure tactics of a Middle Eastern sheik. A Humble Oil Co. spokesman charged that Egan's proposal was "particularly disturbing because it contradicts the basis of our competitive enterprise system," and the chairman of Sohio, Charles Spahr, warned that the plan had "cast a dark cloud over the future of private enterprise in Alaska." Last week, after meeting with Governor Egan in Juneau, top executives of the seven companies that own Alyeska agreed to provide the state with technical and engineering information about the pipeline --perhaps because they figured that the complexity of the problems could change the Governor's mind. They may also have reasoned that under a state-owned system, the state would still have to hire a private firm to build and operate the line. For his part, Egan said that he hoped to decide by year's end whether to press for state ownership; he will make up his mind soon after the results of a far-reaching state study of the ownership proposal reach his desk.

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