Battle over Arctic Gas

After years of debate and controversy, construction on the first stretch of the oil pipeline between Alaska's North Slope and the Lower 48 states is scheduled to begin later this spring. Now-- a new battle is shaping up over the North Slope's other treasure: natural gas. Corporations, environmentalists and politicians in the U.S. and Canada have begun jostling for position on the question of how best to transport the gas to market --or whether to bother at all.

The first round began last week when Canadian Arctic Gas Pipeline, Ltd., a consortium of 27 American and Canadian energy firms, filed a 7,000-page application in Ottawa and Washington. The group is seeking permission to build a 2,600-mile pipeline from Alaska's Prudhoe Bay and Canada's Mackenzie River Delta, across the barren Mackenzie Valley and into the U.S. (see map). The pipeline could eventually provide some 2.25 billion cu. ft. of gas a day for customers in Midwestern and Pacific Coast states--about 3.6% of present U.S. consumption--and an equal volume for Canadians. Bearing a projected price tag of $5.7 billion, the pipeline would likely be the largest privately financed construction project ever undertaken. Consortium officials say that the gas line could be completed in 1979 if all goes well.

That is hardly likely. The project faces stiff competition from a shorter, all-U.S. pipeline that will be officially proposed this summer by El Paso Natural Gas Corp. Beyond that, the Mackenzie Valley Pipeline, as last week's proposal is sometimes called, involves complex and perhaps insoluble problems. Unlike the controversy over the Alaska oil pipeline, the battle for Arctic natural gas will be fought mostly over economic and political considerations, not environmental dangers.

Spokesmen for the consortium argue that Canada has only about seven years of proven natural gas reserves left before it may have to rely on the untapped Mackenzie Delta deposits. A pipeline to the delta would be too massive a financial undertaking for Canada alone. But by hooking up with U.S. gas fields in Alaska, the Canadians can share the costs. The consortium has thoughtfully proposed that the 48-in.-wide pipe be buried, the surface above it revegetated, and the gas refrigerated to prevent melting the permafrost that it would traverse.

Joint Venture. But many Canadians do not like the idea of sharing control of the pipeline--and hence, of a precious natural resource--with Americans. Moreover, some U.S. Government officials privately question the political wisdom of a massive joint venture now that Canadian nationalism is on the rise.

Some Canadian economists note that the proven Mackenzie Delta gas reserves are not now large enough to justify Canada's proposed 50% share of the program's cost. And settling claims with the Eskimos and Indians whose ancestral lands the pipeline would cross could cost billions of dollars. "This is essentially a project to transport Alaskan gas to American consumers," says McGill University Economist Eric Kierans.

"Building a pipeline that will last 50 to 70 years when the total known resource will be exhausted in 25 years is an expensive proposition."

Consortium officials will answer those objections in another application to be filed by next fall. Hearings will probably be held in both countries next year, and neither government is expected to make a decision much before 1976.

Just about the only indisputable observation on the future of the Mackenzie Valley Pipeline is that the debate now beginning will be as dramatic and complicated as the project itself.

This file is automatically generated by a robot program, so viewer discretion is required.