Articles

Who Will Win The Great Gas Pipeline Stakes?

Five tough, resourceful utility titans are locked in a moltl-million-dollar international poker game for the rights to make fabulous fortunes piping natural gas from Alberta to the big cities in the east and west

ALAN PHILLIPS October 1 1953
Articles

Who Will Win The Great Gas Pipeline Stakes?

Five tough, resourceful utility titans are locked in a moltl-million-dollar international poker game for the rights to make fabulous fortunes piping natural gas from Alberta to the big cities in the east and west

ALAN PHILLIPS October 1 1953

Who Will Win The Great Gas Pipeline Stakes?

Articles

Five tough, resourceful utility titans are locked in a moltl-million-dollar international poker game for the rights to make fabulous fortunes piping natural gas from Alberta to the big cities in the east and west

ALAN PHILLIPS

FOR SIX YEARS, five men have been battling for the right to pipe natural gas west and east from Alberta. They have stood squarely in each other’s paths, hurling accusations that have often clouded the facts and obscured the issue.

The issue is clear-cut: which parts of Canada will get natural gas and when?

South of the border; gas pipelines are fanning out from the gas-rich southern states at the rate of fifteen thousand miles a year. Wherever gas goes, housewives clamor for it. It has twenty thousand industrial uses. The nation that has it is lucky.

We have it in Canada.

Most of the gas is discovered incidentally during the search for oil. Oil companies have now drilled more than three hundred gas wells in Alberta alone. Geologists place our total proven western reserves at the first of this year at fourteen trillion cubic feet, and our present discovery rate is two trillion cubic feet a year.

The oil companies who own and produce the ga$ want to sell it. Their capped gas wells represent several hundred million dollars of frozen capital. They haven’t made a nickel on this huge investment yet, and they won’t until they find a market.

The market must he big enough to pay the immense cost of a long-distance pipeline to the mass markets west and east of the source of supply. A line from Alberta to Montreal through the “bloody rocks and Christmas tree belt” north of Lake Superior would cost about three hundred million dollars.

About one-fifth of this would be raised by selling common stock—over fifty percent of it in Canada— and each pipeline company is backed by rival investment houses. The balance must be borrowed in twentyto thirty-million-dollar chunks from the

giant U. S. insurance companies like Prudential and Metropolitan Life. Before the insurance companies will lend such sums, their marketing experts must be convinced that the gas has enough potential customers to pay profits to the oil companies, the gas utilities companies and the pipeline company, which has to make enough to operate the pipeline, pay shareholders, set aside enough to repay the loan in twenty years or so, and meanwhile give the insurance companies about four-and-a-half percent a year in interest.

Obviously, two pipelines coming into the same area would divide the market, waste a vast amount of expensive capital and push costs away up. Since the consumer has to pay these costs, gas has been made a public utility. Which means that once a company gets a franchise it has no competition. The gas supply is assured, the market is assured. The profits' are limited by Alberta law to eight

percent, but eight percent on several hundred millions— even after taxes—is big money. As one oilman says, “A pipeline is a plum. You just sit back and let the millions roll in.”

Canada offers two of these hard-to-get pipeline plums, one east and one west of Alberta. Three Americans and two Canadians have been fighting bitterly for them in a long-drawn-out series of public hearings.

The struggle is finally approaching its climax. It begins to resemble an all-night game of poker, with each contestant in too deep to get out. Most of the players have more than a million dollars in the pot, and only two can walk away winners. The stakes they will take with them are staggering, not only for themselves, but for the nation. For the routes by which the winners take gas out of Alberta will decide who is served by gas for years to come.

As this is written a kibitzer at the game, Toronto’s

Consumers’ Gas Co., has just knocked over the card table by arranging to get gas independently from Louisiana and thus remove from the market more than one-fifth of eastern Canada’s potential customers for Alberta gas—a step which has precipitated a first-class row involving Consumers’, which wants cheap gas now; the U. S. Federal Power Commission, which has okayed the export of gas to Toronto; President Eisenhower, who hasn’t at the moment yet signed FPC’s verdict; Hon. C. D. Howe, Canada’s Trade and Commerce minister, who favors an all-Canada line to the east; Ontario’s Premier Leslie Frost, who supports his political opponent Howe in this matter; and the backers of the all-Canada line, whose bankers want out if those million Toronto customers are lost. The pipeline people are hoping that Howe will keep Louisiana gas out of Toronto and thus permit the game to continue in its orderly cut-throat course.

The first man in this game was an eminent, elderly New York engineer named Faison Dixon. In the summer of 1947 Dixon came to Calgary. Leduc had come in a few months before and oil fever was jamming the brokerage houses. A score of new oil companies were being formed and hardbitten men with soft, southern drawls slipped in and out of the CPR’s plush Palliser Hotel.

Dixon, a slight, grey, quiet-spoken man, was conspicuous among them. He wasn’t interested in oil, but in building a gas pipeline from Alberta to the Pacific northwest states.

In Edmonton, a red-haired corporation lawyer, Horatio Ray Milner, read of Dixon’s plans with interest. Milner is a kingpin of the ProgressiveConservative Party, a former friend of R. B. Bennett, a big-business man who sits on the board of fourteen companies. Some people call him “Mr. Alberta” because as president of Anglo-Canadian Oil and owner of a cattle farm outside Edmonton he combines Alberta’s two major industries. He is also the hustling chairman of Canada’s two biggest gas companies: Calgary’s Canadian Western Natural Gas, and Edmonton’s Northwestern Utilities. Milner, too, was planning to get in the game—with a line to Winnipeg.

The Fighting Man From Peace River

Five hundred miles northwest of Edmonton, in the bush and farmland of Peace River, the third player, Frank McMahon, was sizing up his chances. McMahon is a typical Alberta oilman, easy-going, hard-driving, slow-talking, fast-thinking. Starting out fresh from college as a diamond driller he had punched holes all over the western prairie. He’d been up and down financially a half-dozen times.

Back in 1938 McMahon had merged several small companies to form Pacific Petroleums Ltd. During the war, when he moved into newspaper publisher John Southam’s big Calgary house, he hadn’t money enough to fix the plumbing. But McMahon had been Johnny-on-the-spot at Leduc.

It was his Atlantic No. 3, blowing wild and spewing a lake of oil over the prairie, that dramatized the oil boom in the eyes of the world.

The rules of the game seemed fairly simple in the late 1940’s. Gas is a natural resource, so Alberta controlled it within the province. As soon as the gas moved across the provincial boundary it would come under the control of the federal Transport Board. To cross the U. S.-Canadian border would require the consent of the Federal Power Commission in Washington.

In Alberta, Social Credit was firmly in the saddle, and Premier Ernest Manning held the reins of government in a tight grip. In Ottawa, the transport commissioners made their decisions under the astute and vigilant eye of Trade Minister Clarence D. Howe. The winning promoter had to get Manning’s permission to export gas from Alberta and Howe’s okay on his pipeline route. Then if he wanted also to sell in the States, he had to convince the U. S. Federal Power Commission that his plans were in the best possible interest of the American consumer.

As yet, however, no one knew how much gas Alberta had. In December 1947 C. D. Howe sent out the government’s chief geologist, Dr. George Hume, to find out. Manning gave a three-man Royal Commission the same assignment. They had to find out how much gas Alberta needed for her own homes and industries, and if there was a surplus,

whether the province Continued on page 81

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was better off to sell it or keep it.

McMahon, Milner and Dixon each nursed their openers and placed their bets. Each lined up backing among the big eastern bond houses. Each hired topflight geologists to survey gas reserves, engineers to survey their route, economists to survey the market for

gas, lawyers to weave these findings into an airtight argument.

McMahon, the Peace River oilman, told the Royal Commission his Westcoast Transmission Company was prepared to spend a hundred million (revised upward later) on an eighthundred-mile pipeline from Peace River to Vancouver, then down to Seattle and Portland. His main argument had a political twist: a Peace River pipeline would develop northern Alberta at no expense to Calgary and Edmonton, which were already getting cheap local gas.

Faison Dixon, the eminent New York engineer, called and raised. Alberta’s biggest gas field was Pincher Creek in the south. Dixon’s company—Northwest Natural Gas—would take Pincher Creek gas to Spokane, Seattle and Vancouver.

Dixon was betting that his southern gas supply was closer to the consumer market and more plentiful than McMahon’s northern supply. His route was easier and less costly. He could therefore give consumers lower rates and Alberta’s oil companies higher prices. His argument carried weight,

especially since Alberta owns ninetythree percent of its oil and gas rights, and Manning’s policy on leases makes the province a fifty-fifty partner in the oil business.

Ray Milner, Edmonton’s wealthy lawyer-businessman, held a curious hand. He didn’t want to see his two Alberta gas companies bidding against a pipeline company for a barely-adequate supply of gas. But if he wanted to own a pipeline he had to show that Alberta had surplus gas.

Milner’s argument turned what at first appeared to be a weak hand into a strong one. There wasn’t enough gas, he declared, for large-scale export. If demand were allowed to outstrip supply it might push Alberta’s gas rates up.

There was enough gas, however, his argument ran on, for his company— Western Pipelines—to lay a short seven-hundred-and-ten-mile line along the CPR tracks to Winnipeg. It would cost only forty-nine million and would serve four hundred and ninety thousand “prairie neighbours.” Any surplus could be sold through a branch line to St. Paul and Minneapolis.

Not only did the players oppose each other; they had powerful adversaries on the sidelines. The Western Canada Coal Operators’ Association claimed a pipeline would replace the equivalent of seventy-five carloads of coal every day. Some two thousand miners would be thrown out of work. Canadian railways would lose some seven million dollars a year in freight. A Montreal chemical engineer named J. R. Donald testified: “If exported gas is available in large quantities south of the border, the U. S. chemical industry won’t come here.”

Statements like these made Alberta citizens apprehensive. The town council of High River passed a resolution opposing export. “Only a small portion (actually, forty percent) of the province is served with natural gas,” they wrote, “and many farms . . . villages and towns are without its use.” Edmonton’s Chamber of Commerce asked that export of gas be deferred for five years.

The Tycoons Turned Shy

Milner’s ominous warning on gas rates was the most alarming point of all. In most Alberta towns with more than three hundred people, home owners cook, heat their water, house and garage with gas for an average $67.50 a year. Albertans have one of the smallest fuel bills on the continent, and they want them to stay that way.

The situation was charged with political dynamite, and Manning took no chances with it. His Royal Commission cautiously recommended export “in principle.” He put through a bill requiring all pipeline plans to be passed by Alberta’s Petroleum and Natural Gas Conservation Board. Later, he said no gas would go out of the province till Alberta had enough to last thirty years.

The anti-export propaganda kept snowballing, and the oil companies did little to counter it. Most of them were American-owned, uneasily reminded that they were in a foreign country by occasional anti-American editorials in the Alberta papers. The companies leaned backward to avoid any appearance of putting pressure on the Government. Their only counter was exploration.

All through 1949 and 1950 their portable drilling derricks lumbered across the plains. Drilling for oil in 1949, they made twenty-three separate natural gas discoveries, and almost doubled that in 1950. “We stumbled on to these,” said an oilman. “Wait till we really start looking for gas!”

By 1950 news of the game had

reached down into Texas and now the last two players dragged up chairs and dealt themselves in.

The first, Ray Fish, is a handsome, flamboyant promoter from Houston, a builder on the great new Texas-New York gas line.

Fish and his right-hand man, R. R. Herring, told the Alberta Conservation Board they would build a line from Texas to Vancouver, and down from Pincher Creek to Spokane, linking the west in a vast international network. On paper, it looked good. And Fish was said to have influence in Washington; this would be helpful if permission to import gas into the U. S. became a factor.

The second Texan, Clint Murchison, is a short, thick-set, shy, homely man. He didn’t seem very impressive walking in his shirt sleeves into the office of Nathan Tanner, Alberta’s Minister of Mines. But Tanner wasn’t deceived. Down in Dallas, Texas, where they aren’t easily impressed, Murchison is fast becoming a legend. A long career of intricate, daring, highly imaginative business coups has made him immensely wealthy. Starting as a smalltown trader in horses and cattle, he made his first five million in Texas’ rough-and-tumble oil and gas boom. He branched into banking, utilities, chemicals, newspapers, railways, and now owns a personal empire of more than one hundred companies.

Murchison was proposing the world’s longest pipeline—it would run 2,240 miles along the CPR’s main line, cut through a thousand miles of rock and muskeg north of the Great Lakes, swing south to Toronto and on to Montreal and Ottawa.

The following September, flamboyant Ray Fish made his next move. He flew to Washington, then Toronto, to talk to Ontario’s Premier Leslie Frost. When he returned to Calgary, Fish proposed an exchange deal with the U. S. If Alberta would let Pincher Creek gas go south to the U.'S., Fish would have U. S. gas in Ontario and Quebec within a year—by extending the present Texas-Detroit gas line.

To some it looked like a grandstand play, but actually many top-level oilmen favor north-south, boundaryignoring pipelines as the best and cheapest way to serve the continent.

Premier Frost had reason to be cautious of an exchange deal. Once before Ontario had agreed to buy Texas gas. Washington had broken the contract in 1945 when U. S. communities along the Texas-Buffalo route complained they needed the surplus gas themselves. It had thrown twenty thousand men out of work in Ontario.

Now, however, Frost wanted Manning to move as soon as possible. He sent his fuel controller, A. R. Crozier, out to Calgary to testify that Ontario’s need was vital.

The hearings dragged into 1952, inexorably carrying Premier Manning

toward a choice among the quintet of big-time pipeline gamblers.

To make Premier Manning’s decision more difficult, Alberta’s elections were set for August 1952. Harper Prouse, the Liberal leader, made gas a political issue. Farmers were told that if they exported gas to outside industries these industries would have no reason to come to Alberta. “Before we allow export,” the politicians thundered, “every Alberta hamlet must be served first!”

About the only public figure who dared to champion gas export without reservation was publisher Carl Nickle, the young Tory MP for Calgary West. In his Daily Oil Bulletin, the Bible of the industry, and his column on oil in the Calgary Herald, Nickle pointed out the following facts:

First, it was silly to talk about saving gas till every Albertan had it. For twenty years the little town of Vulcan had sat thirty miles from a gas field, but didn’t have natural gas. There were farms within one mile of a natural gas line, yet the farmer couldn’t afford to tap it. Why? Because even a smalldiameter pipe cost seven thousand dollars a mile. The size of the market determines how far gas can be piped.

Next, it was silly to talk about keeping gas from going to outside industries. Gas is only really cheap beside a gas field. Every thousand miles roughly triples the cost. Any industry where fuel is an important cost would still have to come to Alberta for cheap fuel.

Finally, most natural gas is “wet” gas. Besides methane, the part we burn, it contains butane, the raw material for rubber, nylon, alcohol and plastics; ethane, used for making the popular plastic polythene; natural gasoline, scarce sulphur, and propane or “bottled gas.”

Before the dry gas can be exported cross-country, these byproducts have to come out. If Gulf Oil, for example, had an export market for its Pincher Creek gas, it would build three petrochemical plants costing twenty million dollars. Over thirty years, these plants would turn out gas and byproducts valued today at more than half a billion dollars. Far from stifling industry, Nickle concluded, export would boost it.

The view of political pundits in Alberta was that Manning favored export personally but was too smart to take a chance with an issue as politically volatile as gas. Four months before elections his Conservation Board recommended that central and southern gas fields be held in reserve (Pincher Creek until 1968). Manning agreed by declaring that Alberta’s only surplus gas was in Peace River, and he gave an export permit to Frank McMahon. The Alberta oilman had won the first big pot.

In the first flush of disappointment, his rivals issued bitter statements to the press. But no one felt more injured than Gulf Oil. Gulf’s Pincher Creek wells were costing a million dollars each to drill. Papers all over Canada carried Gulf’s criticism of Manning’s cautious gas policies. Gulf threatened to abandon its plans to spend three hundred and sixty-five million dollars in Alberta over the next ten years.

Premier Manning and Mines Minister Tanner hastened to answer the criticisms and placate the oil companies. Their first duty, they said, was to safeguard Alberta consumers, but that didn’t mean that southern gas-field owners wouldn’t be allowed to export eventually—long before 1968.

Oil stocks had bounced upward at Manning’s first announcement, for it looked like the long-awaited start of profitable gas export. But stocks

settled back as the oilmen took a closer look at Peace River. McMahon had only three hundred billion cubic feet of gas, a trifling three years’ supply. It looked as though Manning had merely made a neat political gesture. McMahon’s permit didn’t settle a thing. Gas export seemed as far away as ever.

This was the view of Henry Geliert, president of the big Seattle Gas Company, a “must market” for any pipeline west. He pointed out that it took big money to change over from manufactured to natural gas. It meant new equipment for the company and new or converted appliances for the customer. This huge investment made no sense at all, Geliert said, unless he could count on twenty years’ supply of gas at least.

Ray Fish, the aggressive Texas promoter, pounced on this opportunity. He dropped his plan to pipe Pincher Creek gas to the U. S. west coast and laid a new scheme before the FPC in Washington—to bring New Mexico gas to Seattle. If FPC passed Fish’s plans, it would kill McMahon’s pipeline. Peace River and British Columbia would both be left high and dry. Alone, the B. C. market couldn’t possibly pay for a hundred-million-dollar pipeline to Vancouver.

Frank McMahon was on the spot. He had to have a permit from Canada’s Transport Board and the U. S. Federal Power Commission. FPC would meet in the fall of 1952, and unless McMahon had gas enough to supply the U. S. west coast, they would toss his application out, and Fish would go unopposed. McMahon had about six months to prove up at least five times as much gas as he had now.

It was time for McMahon’s big play, and the Alberta oilman was ready. Over the past four years, he’d been leasing oil and gas rights from the Alberta and B. C. Governments to build up a Peace River kingdom of two million acres. Now he rushed eight drilling rigs up the Alaska Highway, and most major companies followed him into the Peace River area. McMahon was betting a million dollars a month in men and machinery that he would find enough gas fast enough to beat Fish.

Manning won the August election hands down. Voters could look around and see the big new industries enticed to Alberta by plentiful gas as raw material .and cheap fuel: cellulose,

sulphur, chlorine, caustic soda, plastics, fertilizers, metals. Manning could take some credit for this. He had kept Alberta’s reserves attractively high by not letting gas go out of the province too soon. Indeed, he had handled the hot gas issue so carefully that many oilmen still didn’t know where he stood on export.

With the election over, political pressure dissipated. The question now was whether Alberta would lose to Fish that rich U. S. west coast market.

In October 1952, before FPC in Washington, Fish argued that McMahon’s application should be dismissed; he didn’t have the Canadian Government’s okay for his pipe line, just Alberta’s.

But just as Fish’s motion for dismissal came up, so, with perfect timing, did McMahon’s Canadian federal government permit. Dr. George Hume, the chief federal geologist, revealed that McMahon and the companies who had followed him to Peace River had found two and a half trillion cubic feet of gas—more than enough to supply the west coast for twenty years. McMahon had made good on his gamble.

McMahon and Fish were now playing their final hand for that rich U. S. west coast market. Whoever won the

decision from FPC in Washington would rake in the pot.

McMahon’s big new gas reserves gave him the edge over Fish, whose New Mexico route to Seattle was also longer than McMahon’s route from the Peace River. But Fish was a tough man to beat. He turned on McMahon in Washington the arguments McMahon had used against him in Calgary: that the Albertan’s Peace River pipeline would put the U. S. consumer at the mercy of a foreign power who could cut off delivery in an emergency.

It seemed possible, though not likely, that neither Fish nor McMahon would get a permit from FPC. In that case, Manning might change his mind about letting southern Alberta gas go west. The race west would begin all over again with Dixon as the favorite. But if FPC gave either Fish or McMahon the nod, the only market left for Alberta’s southern and central gas would lie somewhere east of the province.

Dixon weighed his chances, found them wanting, and eyed the terrain to the east. He chose, characteristically, the cheapest, shortest route: south of the lakes and back into Canada at Sarnia. Lawyer Ray Milner, Alberta’s big-business man, stood pat with his line to Winnipeg, St. Paul and Minneapolis. Fish now slipped into the eastern game with a route similar to Dixon’s. His rivals were calling Fish “The Bouncer” now. Clint Murchison, the legendary free-wheeling Texan from Dallas and now boss of the Canadian Delhi Co., was more than ever sure an all-Canadian line from Alberta to Montreal was possible.

Murchison’s bold proposal to build the world’s longest gas line appealed to Canadian pride. Here was an epic of engineering that would rival the St. Lawrence Seaway. Editorial writers began comparing Murchison’s TransCanada Pipe Line to the building of the CPR. A few months before the federal elections, Tory leader George Drew

stepped to Murchison’s side, unfurling the banner “Canada First.”

Murchison’s rivals called his TransCanada Pipe Line a pipe-dream. Who, they asked, would buy the gas in northern Ontario? A few pulp and mining centres. And, they argued, consumers in eastern Canada would have to pay the shot: some twenty-odd million dollars more in pipeline costs which would certainly be reflected in higher eastern gas bills.

The Calgary publisher-MP Carl Nickle, spokesman for the oil companies, argued that the very existence of coal and oil made a subsidy unthinkable.

Until this point—it was now March 1953—Trade Minister Howe had said little to indicate that he was concerned with gas. But he had been in correspondence with Alberta Mines Minister Tanner, most of the pipeline gamblers had been to see him, he had met several times with Ontario’s Premier Frost and Alberta’s Manning. Away back in 1947, chief government geologist George Hume had told a Calgary friend: “When the time comes, Howe will decide where the gas is going.”

Now the time had come. Howe seemed nettled by Drew’s “Canada First” stand, which carried the implication that Howe put Canada second. In the House of Commons in March he hurled a dictum: Alberta gas will come to eastern Canada before it goes anywhere else—and come by an all-Canadian route. .

Every contestant respected Howe, but they claimed that this time he was playing politics. Howe had let Imperial Oil’s Interprovincial oil line go south through the States instead of north through Port Arthur and northern Ontario. It would not be surprising if Howe was afraid to do it again, five months before the federal election.

Both Dixon and Fish thought Howe might change his mind after the elec-

tion. The New Yorker and the Texan still wanted to take gas east through the States.

Milner, the Alberta lawyer, still sincerely thought the eastern Canadian market by itself was too small to pay for an all-Canadian line. He still wanted that short, profitable WinnipegSt. Paul line and to his original plan he had simply added a cautious rider. While he was laying his pipeline to Winnipeg, the market in eastern Canada could be building up with Texas gas (by adding another eighty miles to the present Texas-Buffalo line). Then “if and when” the eastern market proved big enough, Milner would extend his line to the east.

As the game went into summer, a wild card came up that brightened Milner’s hand considerably. Consumers’ Gas of Toronto bought some Louisiana gas wells and asked the U. S. Federal Power Commission for permission to bring this gas to Ontario through the Texas-Buffalo line. Late in August Consumers’ received this permission, and is now planning to run a pipeline from Toronto to the middle of the Niagara River where it will join an extension of the Buffalo line. The Toronto company claims its charter

does not permit the federal government to prohibit its import of gas, and that it needs only routine permits under the Navigable Rivers Act and from the Niagara Parks Board to get its pipeline going.

Consumers’, like other gas-manufacturing utilities, is caught in a tight cost squeeze. It needs lower-priced natural gas. It can’t modernize its plant until the lower-cost gas is in sight. Its owners are tired of waiting for Manning to make up his mind to sell. They weren’t even sure they wanted his Alberta gas through a hardto-maintain all-Canadian line. (“What! Two thousand miles and us wriggling on the end of it?”)

Consumers’ attitude towards the bombshell it has dropped on Murchison’s all-Canada pipeline plan is that the line would take five years to build instead of the estimated two, and that Consumers’ has to go about its business of building up gas use by getting cheap gas now.

The Murchison reaction is that Howe will never permit one million Torontonians to deprive four million other Canadians of natural gas—as would happen if Montreal, Ottawa and other Ontario-Quebee cities were deprived of

gdfe. Murchison’s spokesmen admit that the removal of Toronto from the eastern gas market would make financial backing difficult to get. He is moving heaven, earth and Ottawa to try to stop Consumers’ getting gas from its own wells in Louisiana.

Whatever the outcome, events in Toronto have been another indication that Manning can no longer pick and choose his market. The U. S. Federal Power Commission can wipe out his west coast market by giving permission to Fish to pipe New Mexico gas up to Seattle.

Other events are piling up on Manning. A major oil and gas area is shaping up next door in Saskatchewan’s Williston Basin. More than a hundred companies have already proved up a trillion cubic feet of gas, and Saskatchewan Resources Minister Brockelbank is frankly wooing them with a liberal, clear-cut gas policy. So if Manning waits too long to okay export he can also lose the midwest market: Winnipeg, St. Paul and Minneapolis.

Manning’s job is to keep Alberta’s oil development high. When development lags, so does the flow of dollars into the province’s coffers. “Development is lagging now,” an official of the Petroleum Association said last May. Another oilman explains the relation

of oil to gas this way: “You know it’s going to cost you a hundred thousand to half a million dollars to drill. If you don’t get oil, it’s a dead loss, but if you’ve a chance of getting gas, it’s a second string to your bow, and it makes you a lot more willing to gamble.” When Manning gives them a market for gas, the oil companies will start gambling high again.

The all-night poker game is almost over. Dixon, first in the game, now ailing, has tossed in his chips, though he says he will come in again if the west coast game is reopened. As this is written, the U. S. Federal Power Commission is meeting to decide who gets the U. S. west coast market: Texas promoter Fish with his New Mexico gas, or Frank McMahon, Alberta’s Peace River pioneer. All British Columbia’s hopes for gas ride with McMahon.

McMahon has a strong hand. He hasn’t as far to come as Fish. His gas supply is big and getting bigger. Fish’s gas supply, on the other hand, seems uncertain. California centres say their fast-growing industries need the New Mexico gas Fish would like to take north. But Fish has the backing of gas companies in Tacoma, Spokane and Seattle. A decision can come anytime, perhaps before this is published. If McMahon wins, he’ll have Peace River gas in Vancouver at the end of one full construction season.

In the east, Clint Murchison, the legendary, free-wheeling Texan from Dallas, seems to hold the winning cards—if he can prevent the TorontoLouisiana deal going through. He is still the only pipeline promoter who wants to build an all-Canadian line. ★