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panacea for the Nation's problems, but they are an important means of reducing them by a significant amount. Until we can get underway with its development and begin to recover our investment, my company's resources-both financial and human-will be committed to a successful conclusion of this project thereby precluding us from developing and bringing to fruition other sorely needed projects to produce energy.

Other members of the oil industry are also plagued by uncertainty and delay-uncertainty of crude oil supplies, political actions, and environmental considerations affecting facilities and products. It seems to me that we are handicapped and hobbled and unable to do what cries out to be done while the Nation's energy situation, with all of its ramifications, becomes ever more critical. To me, all the signs point toward a difficult 5 to 6 years, at least, just ahead, with growing dependence on foreign supply sources and less and less flexibility at home. The situation cannot be remedied overnight. Oil must be found and that takes years. Transportation facilities must be built and that takes years. Refineries must be built and that takes years if one can find suitable sites and obtain construction permits. Of all the problems facing us, the solution for one, TAPS, is readily available subject to the implementing action of the Congress of the United States. I appreciate your listening to my views and will be most happy to discuss them further with you if you so desire. Thank you.

Senator FANNIN. Thank you, Mr. Spahr, and we would like to have questions. First, with your permission, we will hear from Mr. Ream. [The report, and summary referred to by Mr. Spahr follows:]

95-903 -73 - pt. 4 - 13

REPORT BY

THE STANDARD OIL COMPANY

(AN OHIO CORPORATION)

SUBMITTED TO THE

SUBCOMMITTEE ON PUBLIC LANDS

OF THE

HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

ON

PROPOSED LEGISLATION REGARDING

PIPELINE CONSTRUCTION ACROSS PUBLIC LAND

DETAILED REPORT ON MATTERS RELATED TO
A TRANS-ALASKA OR TRANS-CANADA PIPELINE

APRIL 19, 1973

SUMMARY

TRANS-ALASKA OR TRANS-CANADA PIPELINE

The following conclusions are based upon a thorough analysis conducted by The Standard Oil Company (Ohio)

TRANS-ALASKA

vs.

TRANS-CANADA

Today a pipeline through Canada is regarded
as the only viable alternative to the Trans-
Alaska pipeline. The Trans-Alaska route is
superior. Furthermore, the benefits cited
by the advocates of the Trans-Canada pipe-
line will not materialize.

TIMING

DEPENDENCE
ON IMPORTS

MIDWEST OIL
SHORTAGES

North Slope crude oil production would be delayed for nine to ten years after a decision prohibiting construction of the TransAlaska pipeline and the exhaustion of all appeals. This delay is the inevitable result of the need to prepare a detailed design and route analysis; longer construction time; and an understandable desire on the part of the Canadian Federal and Provincial Governments to carefully review proposals, to consider alternatives, and to determine appropriate stipulations.

A Trans-Canada pipeline would delay reduc-
tion of our dependence upon imported oil
and corresponding improvement of our inter-
national balance of payments.

A decision to build the Trans-Canada pipe-
line might severely aggravate Midwest supply
shortages in the period prior to completion.
Existing pipeline facilities will not mo ve
sufficient crude oil or products into the
Midwest during this period. New facilities,
if constructed, would be of questionable
value upon the completion of the Trans-Canada
pipeline. Consideration of this dilemma, as
well as consideration of large capital re-
quirements and product shortages in other
parts of the country, could delay the action
required to meet Midwest demand.

Trans-Alaska or Trans-Canada

- 2

MIDWEST GAS
DELAY

PRICE OF
CRUDE OIL

A Trans-Canada oil pipeline will delay North
Slope gas deliveries to the Midwest beyond
1983. Construction of a gas pipeline across
Canada cannot commence until completion of
the oil pipeline, if the Canadian route for
oil is selected. The Canadian economy can-
not assimilate the financial impact of
simultaneous construction of two United
States energy projects of this magnitude.

A Trans-Canada pipeline, delivering North Slope crude oil to the Midwest, will not affect the price of crude oil or products in that area. Prices will be set by the much greater volume of oil, including Middle East, which will be moving from the Gulf Coast into the Midwest. The North Slope will not be a cheap source of crude oil.

ALASKA NATIVE CLAIMS

SETTLEMENT

More than half of the Alaska Native Claims
monetary settlement is to be funded with
proceeds from North Slope oil royalties.
The five to seven years of additional delay
in production of North Slope crude oil
associated with a Trans-Canada pipeline
will diminish the intended equity of this

settlement.

WEST COAST
SUPPLY-DEMAND

By

The nation's economic interest is best
served by the Trans-Alaska pipeline.
1978, the West Coast supply gap will absorb
North Slope crude production. Oil delivered
by either a Trans-Canada or a Trans-Alaska
pipeline will displace Middle East crude,
which can be delivered from the Persian Gulf
to either the Gulf Coast or the West Coast
at approximately the same price. The unit
transportation cost advantage of the Trans-
Alaska/U.S. Flag tanker system relative to
the Trans-Canada pipeline is greater than
the unit cost of moving Middle East crude
from the Gulf Coast to the Midwest. The
North Slope crude oil displaces Middle East
crude at greater savings to the nation if
delivered to the West Coast rather than the
Midwest. Moreover, the West Coast is the
best world market for North Slope crude oil.

Trans-Alaska or Trans-Canada

ENVIRONMENT

MARITIME
INDUSTRY

April 27, 1973

-3

The much longer Trans-Canada pipeline is not environmentally superior to the TransAlaska pipeline constructed in accordance with stipulated safeguards.

A Trans-Alaska pipeline will strengthen the U.S. merchant marine and shipbuilding industry.

Additional copies of the detailed report may be obtained from

The Standard Oil Company (Ohio)

Corporate & Financial Planning

1626 Midland Building

Cleveland, Ohio 44115

Phone: (216) 575-5465

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