Pipe Dreams: Would We Build an Alaskan Oil Line Today?

In Valdez Arm, not far from Bligh Island, was Middle Rock. Back in the 1970s, when the first oil from Prudhoe Bay was shipped through the Trans-Alaska Pipeline to the port of Valdez, author Robert Douglas Mead asked an Alaskan official about the dangers of Middle Rock to oil tankers.

Middle Rock was a real can-opener, said Chuck Champion, the state pipeline coordinator.

“The most probable catastrophic occurrence I can think of is Middle Rock at the entrance to Valdez Narrows, a can-opener sticking up. You’re talking about a 1-million-barrel oil spill if you rip one of those tankers open,” Champion said in Mead’s “Journeys Down the Line: Building the Trans-Alaska Pipeline,” published in 1978, the year after the line opened.

Well, it was not Middle Rock, but Bligh Reef. And not a million barrels. Only about 260,000 barrels of Prudhoe crude gushed from the Exxon Valdez on March 24. But that was enough to mar a thousand miles of wilderness coastline and wildlife habitat in the kind of accident the oil companies and their allies said would not happen.

Given the magnitude of an accident that was not supposed to happen, there has been relatively little “I-told-you-so” talk since March 24. Former Alaska Gov. Jay Hammond, certainly, is not one to say such things. But he recently recalled taking political heat for even suggesting further study of an all-land pipeline route from the Alaskan North Slope through Canada to the northern Midwest. An all-land pipe, of course, meant there could not be a tanker disaster.

But this is history, and there are many possible would-have-been scenarios about Alaskan oil and the Exxon Valdez. Even so, there may still be pipeline-related lessons to learn as the Bush Administration assembles a national energy plan and considers major oil projects.

Back in the late 1960s, there was substantial Alaskan interest in keeping the entire pipeline in Alaska. Alaska, already rich from the $900-million leasing rights to state lands at Prudhoe Bay, was giddy about the prospects of a like amount being spent in the state for construction work. In fact, the final bill rose to $8 billion and the project brought Alaska incredible riches, and not a little grief.

But the record indicates that as far back as April, 1968, before the geologists had even figured out the full extent of the Prudhoe discovery, the oil companies had drawn a straight, 800-mile line from Prudhoe Bay to Valdez. That was where the pipeline would go. And that is where it went. There were a variety of studies of the longer Canadian route for an additional five years, but Mead concluded that none of them were taken seriously.

“What counted finally was simply that the oil companies were not prepared to invest money in any of these possibilities, and it was, on the whole, their money that was at issue,” he wrote.

While state and federal governments played major roles in overseeing the pipeline construction, both were essentially reduced to the role of captive partner in the basic concept and routing decision. Seemingly, the only real alternative was for the federal government to build the project itself; but Congress had little interest in that costly idea.

The oil companies’ determination to use the Alaska route and to send the oil down the West Coast by tanker was basically an economic one, as such decisions tend to be. The three big holders of Prudhoe reserves were Arco, British Petroleum and Exxon. There is some irony in the fact that Exxon was in no rush to build the pipeline. The giant firm had substantial cheap oil reserves in the Middle East, according to both Mead and Anthony Sampson, writing in “The Seven Sisters.”

Exxon even spent millions investigating the possibility of shipping oil directly from Prudhoe Bay through the Northwest Passage by giant tanker-icebreakers, but that route was not considered practical. And there was no great enthusiasm for the pipeline project from other firms, including Standard Oil of California (now Chevron), which feared the competition of Alaska oil in the rich California market, Sampson said.

But both Arco and British Petroleum urgently wanted to move the oil to the refineries. Arco, short of crude, needed the Alaska oil to feed California demand. BP had gambled big on North Slope Alaska oil as a means of cracking the North American market.

After delays caused by court challenges, Congress authorized the companies’ plan. As for the Canadian alternative, Mead wrote that the firms acted as if they were being asked to build a pipeline through enemy territory in wartime. With the all-Alaska route, the companies would build and operate the line themselves through the consortium known as Alyeska Pipeline Service Co. They would be in total control. Major portions of an all-land line would have to be built and run by Canadian firms at a time when Pierre Trudeau’s government was exerting independence from the United States.

Curiously, just four years later, the Carter Administration approved a natural-gas pipeline from Prudhoe Bay to the Lower 48 through Canada, rejecting a proposal to pump gas down a pipe paralleling the oil line and then to ship it liquefied to California in ocean tankers. Suddenly the Canadians were welcome as partners--although the project, for economic reasons, has yet to be built.

Would the Alaska oil pipeline decision be made the same way today? No one can say. Environmental regulation is much more comprehensive and sophisticated. The public is more sensitive to such issues. Surely the tanker portion of the project would have received more attention and perhaps the government would have insisted on double-hull or double-bottom tankers, as were promised. But the basic energy-development decisions, while often cast as vital to national security and involving public resources, are still left to the companies. The government too often serves merely as expediter and overseer.

Under the 1969 National Environmental Policy Act, there is supposed to be a complete evaluation of all possible alternatives, including the option of having no project at all. Too often, the alternatives get only superficial study. Emphasis is put on mitigation of potential environmental damage and risk under the “preferred” alternative. Recently, though, the courts have rejected environmental-impact reports on offshore drilling projects that did not sufficiently balance the need for the oil against the potential environmental damage.

As the Bush Administration drafts an energy policy and ponders the future of offshore drilling in California and Alaska, it needs to take a critical look at this decision-making process. These are national assets held in trust for all Americans. Government should be a full partner from the very outset, to ensure protection of the national interest.