the short time required before possible commencement of TAPS construction and the urgent need for North Slope oil in the United States, we can hardly afford the years required for final action on a Canadian pipeline. Due partially to the industry's inability to transport Alaskan oil to the lower 48, we have been forced to turn increasingly to foreign oil to fill the domestic production gap. If this trend continues the NPC estimates that the percentage of our total annual oil consumption consisting of imports could increase from about 10 percent in 1970 to over 60 percent in 1985. If such were to come to pass, our balance of trade deficit for energy fuels alone in that year could reach $31.7 billion. Accordingly, if we cannot soon act to insure prompt delivery of Alaskan oil to our markets, prospects for relief from the already critical balance-of-trade problem in energy are dim indeed. It is important to assure that the total economic and energy security interests of all the people of the United States are served by getting as much American-owned oil as possible to the U.S. market as soon as possible. The trans-Alaska pipeline would accomplish just that. I trust that the testimony heard during these hearings will bring this fact into clearer focus. Thank you, Mr. Chairman. Chairman JACKSON. Thank you, Senator Fannin. Senator HASKELL. I have no opening statement. Chairman JACKSON. Senator Bayh, we are delighted to welcome you to the committee. I believe you are joined with Senator Mondale and some others in cosponsoring S. 1565. We are delighted to have your statement. STATEMENT OF HON. BIRCH BAYH, A U.S. SENATOR FROM THE STATE OF INDIANA Senator BAYH. Thank you, Mr. Chairman. Mr. Chairman, I appreciate this opportunity to testify in support of S. 1565, the North Slope Energy Resources Act, which Senator Mondale and I introduced on April 12 with six cosponsors. Since that time, three additional Senators have asked to be listed as cosponsors of this legislation. I want first to emphasize my hope that we can see rapid, effective, economic and environmentally responsible use of Alaska's oil and gas resources. Moreover, because of the magnitude of this issue, because how the oil and gas are transported can be as important as their actual use, it is my judgment that the Congress should make the final decision on how that oil and gas should be transported to the lower 48 States. I shall not dwell on the obvious energy shortage which confronts us today and which will be with us for some time. Mr. Chairman, you understand this issue as well as any Senator and you have provided valuable leadership in responding to the imbalance between energy supply and demand. In fact, I was pleased to join as an original co sponsor of your National Energy Research and Development Policy Act which has the worthwhile goal of once again making this country energy self-sufficient. Let me first review my concerns about the proposed Alaskan land and sea route for delivering oil from Prudhoe Bay to the lower 48 States. One, the Pacific region, which would be the prime beneficiary of an Alaskan pipeline, currently provides most of the petroleum it consumes. The situation in the Midwest is quite different, with demand many times local supply. I have here a census regional chart relating to where petroleum is produced and consumed, so we have a supply picture as we study where the pipelines should be located, which I would like to have put in the record. Chairman JACKSON. Without objection it will be so ordered. [The chart referred to follows:] FIGURE 1.-U.S. PETROLEUM PRODUCTION & CONSUMPTION 1 Data from "An Analysis of the United States Oil Import Quota," Burrows & Domencich, Heath Lexington Books, 1970 Numbers are for 1966; percentages are computed and approximate current distributions. 2 Includes Indiana. Note. The difference between consumption and production is imports. The percentage being imported is currently about 27 percent of demand, about twice the rate implied by the older figures in the table. Alaskan oil would, when fully developed, provide about 12 percent total petroleum demand. Senator BAYH. Because of this a barrel of crude oil currently costs 64 cents less on the west coast than in the Midwest. If the Alaskan land-sea route is adopted that price discrepancy will more than double to $1.43 per barrel. On the other hand, if an all-land trans-Canadian route is used to deliver the oil, the present discrepancy will be halved to 32 cents. Two, since it is generally agreed that the natural gas from Prudhoe Bay would have to transverse Canada, it would make sense to explore fully the possibility of a single corridor for the oil and gas with significant cost savings in rights-of-way, parallel road construction and other expenses associated with the construction and operation of fuel pipelines. Three, there have been authoritative reports that the oil companies involved in the venture are contemplating the sale of as much as 500,000 barrels per day-25 percent of the oil from Alaska-to Japan. To export oil at a time when there is a serious shortfall between domestic supply and demand strikes me as ludicrous and I have been concerned by the absence of adequate assurances from the oil companies that none of the Alaska oil would be exported. Four, while recognizing that it will be impossible to utilize Alaskan oil and gas without incurring some environmental damage and risk, I think we must minimize that risk, even as we consider economic factors, consumer requirements, national security, delivery dates and the overall national energy situation. Despite my reservations regarding the proposed Alaskan land-sea oil delivery routes, I recognize that there are unanswered questions about the alternative, an all-land trans-Canadian route through the Mackenzie Valley. I am satisfied that our legislation would provide the answer to those questions, permit the Congress to resolve this matter when a full body of knowledge has been developed, and not delay to any significant degree the ultimate utilization of the Alaskan resources. I want to see the full development of that Alaskan oil. I want to see the way that we can use it most efficiently and with the least amount of environmental impact. After this information is available it could be in the national interest in the next year to build two pipelines. One proposal supported by the chairman of this committee and one addressed in the bill that Senator Mondale and I and others had introduced. So I think we need more information before we proceed. Much has been said, despite the glaring absence of proper bilateral negotiations, about what conditions would or would not be acceptable to Canada if we want to have our oil transverse that country. We do know that the Canadian Minister of Energy, Mines, and Resources said only 6 weeks ago: If the Americans came back and said to us, look, we've had second thoughts on that trans-Alaska pipeline, we would like to take you up on your willingness to entertain an application about the oil line through the Mackenzie route, I think the interests of the west coast-of Canada-would dictate that the Government of Canada should enable that kind of application to go ahead. Mr. Chairman, that appears to be a very open-minded statement. There are others like it on the record over a 2-year period. To get at the answers about the feasibility of a Canadian route, our bill would request that the Secretary of State immediately open intensive negotiations with Canada, negotiations to be completed within 9 months. Quite importantly, one point for negotiations would be the willingness of Canada to step up oil exports to the United States while construction went ahead. Here we could well find a short-term solution to our energy shortage. The recently completed feasibility study by Mackenzie Valley Pipeline Research Ltd., composed of affiliates of virtually all the major oil companies, was not available when this Government made its commitment to the Alaskan route. Even with this study, there is the need for an independent body of information on the economic, environmental and other implications of a trans-Canadian oil pipeline. Our bill would help develop that body of information by directing the National Science Foundation to undertake just such a study. Here, Mr. Chairman, we come to the crucial point of our bill. This study may be adopted, under the terms of the legislation, by the Sec retary of the Interior as an environmental impact statement, or as part of such a statement, under the terms of the National Environmental Policy Act. This in no way subverts NEPA, about which I know you are justly concerned and for which you may take much of the credit. Nor does it discharge the issue from the courts, something which would be most unwise. But this would expedite matters regardless of how Congress ultimately decided to transport the oil. I am impressed by the time concern expressed by the distinguished chairman of this committee and both Senator Mondale and I am concerned about that and for that reason wrote this provision into our bill. If the Congress favored the Alaskan route, this study could well remove the major remaining point of litigation against the Alaskan pipeline, that being the adequacy of the consideration of alternative routes under the terms of NEPA. And, if the Congress ultimately favored the Canadian route, the impact study would be in hand, forestalling further delay, and letting the Government move forward to distribute that valuable oil supply where it is needed most. The results of the negotiations and the NSF study would be provided to the Secretary of the Interior, to this committee, and to the corresponding committee in the House of Representatives within 9 months. Within 2 months after that the Secretary of the Interior would bring to the Congress specific recommendations for rights-ofway across public lands for Alaskan oil and gas. As stipulated in the legislation, the Congress would have the responsibility to act expeditiously to approve those rights-of-way for transporting oil and gas which the Congress, weighing all information, felt most advisable. Let me make it clear that our proposal should not delay significantly actual use of the energy reserves, since it could remove the main point of litigation against the Alaskan route. Also, any construction delay associated with the Canadian route might well be wiped out through increased exports from Canada. Finally, Mr. Chairman, a brief word about the rights-of-way problems resulting from the Supreme Court's decision of April 2. Consistent with what we believe to be the goals of this committee, we would authorize the Secretary of the Interior to grant necessary rights-ofway across public lands, except for Alaskan oil and gas, for 2 years. However, after the first year, the Secretary would have to provide the committee with the information enabling you to draw together a coordinated national policy on rights-of-way across public land. It is not my intention to take an inordinate amount of the committee's time. I wanted simply to share with you the reasons we offered our proposal. We feel it is the most responsible course for us to take. I reiterate that we are not seeking to delay utilization of the greatly needed energy resources in Prudhoe Bay. In closing, let me urge the committee to protect for the Congress the final decision on this question of great moment. And to protect it in a fashion which will enable us to make a thoughtful decision with all the necessary information before us. I thank you, Mr. Chairman. [The prepared statement of Senator Bayh follows:] STATEMENT OF HON. BIRCH BAYH, A U.S. SENATOR FROM THE Mr. Chairman, I appreciate this opportunity to testify in support of S. 1565, the North Slope Energy Resources Act, which Senator Mondale anl I introduced on April 12 with six cosponsors. Since that time, three additional Senators have asked to be listed as cosponsors of this legislation. I want first to emphasize my hope that we can see rapid, effective, economic and environmentally responsible use of Alaska's oil and gas resources. Moreover, because of the magnitude of this issue, because how the oil and gas are transported can be as important as their actual use, it is my judgment that the Congress should make the final decision on how that oil and gas should be transported to the lower 48 States. I shall not dwell on the obvious energy shortage which confronts us today and which will be with us for some time. Mr. Chairman, you understand this issue as well as any Senator and you have provided valuable leadership in responding to the imbalance between energy supply and demand. In fact, I was pleased to join as an original cosponsor of your National Energy Research and Development Policy Act which has the worthwhile goal of once again making this country energy self-sufficient. Let me first review my concerns about the proposed Alaskan land and sea route for delivering oil from Prudhoe Bay to the lower 48 States. One, the Pacific region, which would be the prime beneficiary of an Alaskan pipeline, currently provides most of the petroleum it consumes. The situation in the Midwest is quite different, with demand many times local supply. Because of this a barrel of crude oil currently costs 64 cents less on the west coast than in the Midwest. If the Alaskan land-sea route is adopted that price discrepancy will more than double to $1.43 per barrel. On the other hand, if an all-land transCanadian route is used to deliver the oil, the present discrepancy will be halved to 32 cents. Two, since it is generally agreed that the natural gas from Prudhoe Bay would have to transverse Canada, it would make sense to explore fully the possibility of a single corridor for the oil and gas with significant cost savings in rights-of-way, parallel road construction and other expenses associated with the construction and operation of fuel pipelines. Three, there have been authoritative reports that the oil companies involved in the venture are contemplating the sale of as much as 500,000 barrels per day25 percent of the oil from Alaska-to Japan. To export oil at a time when there is a serious shortfall between domestic supply and demand strikes me as ludicrous and I have been concerned by the absence of adequate assurances from the oil companies that none of the Alaskan oil would be exported. Four, while recognizing that it will be impossible to utilize Alaskan oil and gas without incurring some environmental damage and risk, I think we must minimize that risk, even as we consider economic factors, consumer requirements, national security, delivery dates and the overall national energy situation. Despite my reservations regarding the proposed Alaskan land-sea oil delivery route, I recognize that there are unanswered questions about the alternative an all-land trans-Canadian route through the Mackenzie Valley. I am satisfied that our legislation would provide the answers to those questions, permit the Congress to resolve this matter when a full body of knowledge has been developed, and not delay to any significant degree the ultimate utilization of the Alaskan resources. Much has been said, despite the glaring absence of proper bilateral negotiations, about what conditions would or would not be acceptable to Canada if we want to have our oil transverse that country. We do know that the Canadian Minister of Energy, Mines, and Resources said only six weeks ago: "If the Americans came back and said to us, look, we've had second thoughts on that trans-Alaska pipeline, we would like to take you up on your willingness to entertain an application about the oil line through the Mackenzie route, I think the interests of the West Coast (if Canada) would dictate that the Government of Canada should enable that kind of application to go ahead." Mr. Chairman, that appears to be a very open-minded statement. There are others like it on the record over a two year period. To get at the answers about the feasibility of a Canadian route, our bill would request that the Secretary of State immediately open intensive negotiations with |