3. A Canadian pipeline would require a dollar outflow of several billion dollars during the construction period.

4. The Alaska pipeline would reduce our first round balance of trade outflows by about $2.3 billion per year over and above whatever balance of payments savings might be made possible by the Canadian pipeline. In view of our present and projected monetary problems, such a reduction of future cash drains could be vital to our economic health. 5. In the event of a major foreign supply disruption

we can assume that emergency conservation procedures would be initiated to reduce demand. With the Alaska pipeline any surplus in District V (the West Coast) resulting from reduced demand could easily be transported through the Panama Canal and distributed through the existing pipeline network to points of need in the U. S. East and Midwest. Conversely, with a trans-Canadian pipeline, any

surplus in District II (the mid-Continent) resulting from reduced demand during an emergency could not be readily distributed to points of need in District I (the East Coast) and District V. Since pipeline flow is unidirectional, the existing transportation network would not allow the

transporting of any surplus crude in District II to District I or District V.

6.

Opponents of the Alaska pipeline contend that

there is a greater need for Alaska oil in District II.

This, of course, depends upon the definition of need. Without Alaska oil, the percentage of imports into District V would be as high, or higher than, into Districts I-IV. It is also argued that with an Alaska pipeline, the output of Alaska and California would exceed demand, resulting in a surplus in District V and a severe shortage in other areas of the country.

This would have been true if construction of the Alaska pipeline had started in 1970 and been completed in 1973, as originally contemplated, but it is clearly not a valid argument today. The earliest we can now expect to complete an Alaska pipeline is mid-1977 or early 1978. By then, demand in District V will most likely exceed supply from California and southern Alaska by more than the capacity of the Alaska pipeline.

7. An Alaska pipeline would provide greater

employment benefits to the United States.

8. An Alaska pipeline would produce earlier and substantially greater economic benefits to Alaska. It would allow a greater North Slope production, yielding large royalty payments. A Canadian pipeline would have to be looped to permit the same capacity for U. S. crude as an Alaska pipeline, and we have no assurance that the Canadians would permit looping of a line through Canada. Arguments that a trans-Canadian route would provide

greater benefits to Alaska because it would allow a higher

95-903 73 - pt. 4-9

field price for crude oil are not valid. Out cost estimates indicate no significant difference in field price for North Slope crude, regardless of which route is selected.

9. With respect to the environmental matters,

Secretary Morton has stated that the greater earthquake and water leg risks of the Alaska route are offset by larger unavoidable damage and increased risks to permafrost zones and at river crossings in the much longer Canadian route. A Canadian pipeline route would cross over twice as much permafrost and muskeg area as the Alaska pipeline. Thus, about twice as much gravel would have to be mined and used for the berm to carry the pipeline over the frozen Arctic.

Largely as a result of environmental concerns reflected in the Interior Department's environmental impact statement, the Alaska pipeline has been redesigned, at a threefold increase in projected costs. As now contemplated, the Alaska pipeline is the most carefully designed pipeline, environmentally, ever conceived.

In both routes, the lines would be constructed to prevent thawing of the soil in permafrost zones. In the seismic active areas along both routes, special designs would be utilized to withstand even the most severe earthquakes. Safety requirements that have been imposed in the maritime oil transport from Valdez to the West Coast

particularly

double-bottom tankers

will significantly reduce

the risk to the West Coast from accidental tanker spills. In fact, if we don't ship our oil from Alaska, in specially designed U. S. ships, foreign oil will enter the West Coast in foreign flag vessels that will not be subject to the same rigid standards.

I am not minimizing environmental risks. I do believe, however, that the past delays and resultant research have greatly reduced the magnitude of these risks, and that the overall hazards at this time are not sufficient to further delay construction of the Alaska pipeline.

The above considerations, in my opinion, demonstrate that the Alaska pipeline is clearly superior to the Canadian in terms of economic benefits, balance of payments, security, and employment opportunities. Only in the environmental area does the Canadian route appear comparable, and here the risks and possible damage from either line have been significantly reduced by research during the past few years. Eventually there may be a need for a Canadian line, but all evidence points out that we should move forward on the Alaska pipeline now.

In view of the urgent necessity for early Alaska production, I strongly recommend Congressional action to allow construction of the Alaska pipeline at the earliest possible date.

Now I should like to amplify some of the statements

I have made.

Timing

If Congress moves expeditiously to amend the existing law to allow a wider pipeline right-of-way across government lands, environmental hearings and administrative procedures could perhaps be completed so that construction of the Alaska pipeline could commence during late 1974 or shortly thereafter. The Alaska pipeline could then be completed by late 1977 or early 1978.

The earliest a Canadian pipeline could be completed is 1980. More likely, it would take several additional years. The need to prepare detailed design and route analyses, a longer construction period, and the logical desire of Canadian Federal and Provincial Governments to review carefully the pipeline proposals will cause inevitable delay.

United States governmental approval of a Canadian route would be required and would be subject to the same types of objections and delays as the Alaska pipeline. The major sequential steps that would be followed in obtaining

Canadian permission, and constructing a Canadian pipeline are as follows:

1. Final denial of the Alaska pipeline.