Canada

A pipe dream come true

IAN URQUHART September 19 1977
Canada

A pipe dream come true

IAN URQUHART September 19 1977

A pipe dream come true

Canada

OTTAWA/WASHINGTON

It was quarter-to-nine on a Friday night in Ottawa. Allan MacEachen, the government House Leader, and James Schlesinger, the United States energy secretary, had been facing each other over a bargaining table forclose to seven hours. Now they had finally reached agreement on an Alaska Highway pipeline to carry Alaskan natural gas across the Yukon and then down through the western provinces to the gas-hungry United States. “Well,” said a weary MacEachen to an equally weary Schlesinger, “I guess we make the ‘allsmiles’ exit.” Together they walked out of the bargaining room, beaming, to meet the press and report their success. “Not all the small details have been worked out,” said Schlesinger, “but the fundamentals have been.”

The following week, after meeting in Washington, Prime Minister Pierre Trudeau and President Jimmy Carter removed any doubts by jointly announcing their approval of the deal. Declared the two leaders: “We have decided to embark together on this historic project, which holds the promise of great benefits to both countries and which confirms anew the strength of the ties that link us.”

Thus ended the final chapter of the Great Pipeline Debate, which began back in 1968 when natural gas and oil were first discovered at Prudhoe Bay on Alaska’s North Slope. There will be an epilogue: parliament and Congress must still approve the deal between the two governments. But their approval is now considered a fait accompli, especially since Alaska Senator Mike Gravel, a key backer of the rival El Paso project, which would have used gas tankers to bypass Canada

completely, threw in the towel following the Carter-Trudeau statement. That would remove the last roadblock in the way of the Alaska Highway pipeline, to be built by a joint Canadian-American consortium led by Foothills Pipe Lines Ltd. of Calgary and Northwest Pipeline Corp. of Salt Lake City. The pipeline, when it is completed, supposedly by the end of 1982, will be 2,700 miles long, including 2,000 miles in Canada, and cost an estimated $10 billion—one of the most expensive projects ever undertaken by private enterprise.

Is it a good deal for Canada? Trudeau and the government certainly believe so. And although Walter Baker, the Conservative House Leader, was talking of a “sellout” even before the negotiations were completed, NDP Leader Ed Broadbent was quick to remark after the Trudeau-Carter announcement: “I’m

pleased to say the government did a good job for a change.”

MacEachen personally took over the negotiations in the final stages from Basil Robinson, the civil servant in charge. Shrewd and intelligent, the veteran cabinet minister seemed the perfect choice for the job. Says one associate: “MacEachen never gives away anything without a string attached.” One person miffed with his appointment, however, was Energy Minister Alastair Gillespie, who wanted the job himself and seriously considered quitting when he was passed over. Another person who could have done without MacEachen was Schlesinger, who was reportedly exasperated by his counterpart’s intransigence. MacEachen, in turn, was annoyed by Schlesinger’s frequent references to the wishes of “the President.”

The deal does not give Canada ready access to its Mackenzie Delta gas. The National Energy Board had recommended that the pipeline be rerouted to the northeast through Dawson, the gold-rush city, which would bring it within 500 miles of the delta. Instead, as originally planned, it will follow the Alaska Highway, at its closest about 650 miles from the delta. But the United States has agreed to pay a substantial part of the cost of any spur pipeline from Whitehorse, on the Alaska Highway, to Dawson, which would accomplish the same end as rerouting the main pipeline, at less expense. The United States has also agreed to a provision whereby the pipeline consortium will put up $200 million to offset the social costs to the Yukon of the pipeline project, an expense that will be passed on to the American consumer in the form of higher gas prices. But the $200 million will be deductible from any property taxes on the pipeline. An unanticipated hitch developed late in the negotiations when British Columbia demanded compensation on the scale of $400 to $500 million to offset social costs for the 540 miles of pipeline across its territory, BC was politely rebuffed.

So the Americans will get gas they badly need at a cost far below that involved in the El Paso project, which would have meant liquefying the gas at Valdez, on the Alaska south coast, and sending it south by tanker. (The estimated saving is six billion dollars over 20 years.) Canada gets a major public works project with the option of using the pipeline for its own gas in the future, although the government may decide the small amount of gas discovered in the delta is not worth the effort. If both the main pipeline and the delta spur are built, the government estimates 100,000 jobs will be

created directly or indirectly. Even without the spur, says the government, there would be 68,000 man-years of work.

Canadian nationalists, who urged the government to use the pipeline as a lever for a phase-out of Canadian gas exports, and environmentalists, who opposed any pipeline at this time, were angered by the deal. “Canada has missed a glorious opportunity to try and work itself out of some of the frightening energy shortages that face us in the future by bargaining for a cut in our gas exports,” remarked Bruce Willson, chairman of the Committee for an Independent Canada.

Another negative vote was registered by spokesmen for the Yukon Indians, whose lives will be most directly affected by the pipeline. They are still calling for a sevento-10-year moratorium on construction, to allow time for the settlement—and payment—of their traditional land claims. Although an agreement in principle is expected on the claims within the next few months, the Indians want much more time to prepare for the social and political upheavals ahead. What is more, while they now accept grudgingly that there will some day be a pipeline along the Alaskan Highway route, they remain fixed in their opposition to the spur pipeline, which they say will cut through the migration route of the Porcupine caribou herd. The tiny traditional community of Old Crow depends on that herd for its sustenance, and Daniel Johnson, chairman of the Council for Yukon Indians, has promised to use “any means available” to protect his people.

Northern whites, on the other hand, have no complaints. Elected members of the territorial council see the huge revenues from the pipeline as a bridge to greater autonomy for the Yukon.

But the squabbling up north has been largely overshadowed by the positive

views of the western provinces, which see the pipeline as a major boon, and business and labor, which covet the profits and jobs promised by the pipeline and spin-off projects such as manufacturing the pipe. The biggest Canadian winner, though, is the upstart Canadian partner in the project, Foothills Pipe Lines, the company that outfinessed a big, Bay Street-backed consortium, Canadian Arctic Gas, to get the go-ahead for pipeline construction. Foothills president Bob Blair had praise for the Canadian negotiators and enthused: “We are ready to get on with this good job and show how it is an attractive development within Canada.”

IAN URQUHART