Some Relief on the Distant Horizon

A bit of good news flickered last week amid the generally bleak reports of shuttered factories, mass layoffs and shivery households caused by the nation's natural-gas shortage. After more than 19 months of exhaustive hearings, a Federal Power Commission official supported one of three competing proposals to construct a new pipeline that would funnel huge reserves of gas from Alaska's North Slope to the Lower 48 states. The system would outrank the nearly completed Alaskan oil pipeline as one of the biggest private construction projects in history. When completed in five years or so, it would transport 6% of present U.S. consumption, or nearly 2.5 billion cu. ft. of gas daily.

FPC Administrative Law Judge Nahum Litt endorsed the plan submitted by Arctic Gas, a consortium of 16 American and Canadian energy and utility firms. His 430-page decision, based on 45,000 pages of testimony and 1,000 or so exhibits, by no means settles the matter, which touches on such highly combustible issues as money, nationalism and environmentalism. Lilt's finding is not binding on the full FPC, which by law must recommend a pipeline route to President Carter by May 1. The President then has until Dec. 1 to accept the recommendation or choose another plan; his decision will open the way for construction to begin, unless either the House or Senate rejects it. In addition, if the plan involves shipping gas through Canada, it must get the approval of that country's National Energy Board and Prime Minister Pierre Trudeau.

The stakes are enormous. Alaska's proven gas reserves, concentrated around Prudhoe Bay (see map) total 22 trillion to 26 trillion cu. ft. That is about 10% of all the known gas in the nation. Moreover, new finds in the area could increase reserves by 15 times that much. Thus supporters of the three rival systems will push hard for their projects at each step in the decision-making process --though Litt's recommendation clearly gives Arctic Gas a leg up on its competitors, the El Paso Natural Gas Co. and Alcan Pipeline Co.

The Arctic plan proposes laying over 4,000 miles of underground pipe, at a cost of about $8.5 billion, from Prudhoe Bay east along the Yukon coastal plain to the Mackenzie River delta, where it would pick up additional gas from Canadian fields. The system would then continue south through tundra, bush, lakes and streams to a spot in Alberta, where it would split, with one leg delivering gas to Pacific markets and the other servicing Midwestern and Eastern customers in Canada and the U.S.

Litt found the Arctic plan "clearly superior" to the other proposals. For one thing, the Arctic system would direct more gas than the other lines to the most scantily supplied sections of the U.S. --the Midwest and the East Coast. Then, too, the FPC estimates that transportation costs for the Arctic plan would be about $1.60 per 1,000 cu. ft., v. $1.91 for the Alcan route and $2.15 for the El Paso system. The main criticism of the project is that it could tear up the delicate environmental balance of the region.

The El Paso proposal, an all-American project, calls for piping gas on a route parallel to the oil pipeline, from Prudhoe Bay almost due south across Alaska to Gravina Point. There it would be liquefied, loaded on tankers, shipped to California, deliquefied and pumped into existing pipelines. Alaska state officials vigorously support the El Paso system, which would bring jobs and investment for liquefaction plants to the area. One key drawback to the plan is that the West Coast already has an ample supply of gas. Another is the possibility of tanker mishaps. The Alcan application, which proposes laying a pipeline alongside the Alcan highway, was dismissed by Litt as inefficient. He indicated that the line might not be big enough to handle the volume if, as expected, new discoveries are made in the rich Alaska fields.

Though top energy experts in Ottawa and Washington seem to favor the Arctic route, it still faces formidable hurdles. One is that the Canadian government almost certainly will have to come to some agreement over land rights with the Indians and Eskimos of the Northwest Territories.

Whatever the difficulties, however, this winter's natural-gas crisis is making a powerful point: the energy crunch has plainly arrived, and neither Canada nor the U.S. can afford the kind of wrangling among special-interest groups that held up construction of the Alaskan oil pipeline for nearly four years.

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