US-Canada gas pipeline gets helping hand from Reagan-era regulators
Aberdeen, S.D. — The leap in the US oil-import bill from $28 billion in 1974 to $83 billion in 1980 is a visible measure of the nation's need for new domestic energy supplies.
One answer to that need came May 5 in a flat South Dakota wheat field with a black-tie symphony orchestra playing both the Canadian and US national anthems. The music was prelude to a string of immense machines beginning work on an underground pipeline to connect American consumers, via Canada, to 26 trillion cubic feet of proved natural gas in Alaska's Prudhoe Bay.
Alaska may have 225 trillion cubic feet of natural gas, according to some estimates. But the true importance of plugging US consumers into more Alaskan energy may lie not in the gas, but in new cooperation between government and the energy industry.
Once the orchestra stopped and before the parked pipelaying equipment roared into action, President Reagan's choice for chairman of the Federal Energy Regulatory Commission (FERC), Michael Butler, praised the pipeline project. He told government and energy industry officials from both the United States and Canada that the successful launching of this massive project by private initiative "reflects the very underpinnings of this administration's national policy." By replacing confrontation with cooperation, South Dakota Gov. William J. Janklow (R) said, the pipeline "is one of the first steps that North America has taken since 1973 to throw off the yoke of energy slavery thrown around our necks by countries that all too often are unfriendly to us."
The pipelaying begun at Aberdeen is part of a $1.5 billion first-phase operation that will deliver surplus Canadian natural gas to the Midwest within 18 months. The overall 4,800-mile Alaska Natural Gas Transportation System (ANGTS), scheduled for completion in 1985-86, at an estimated cost of $15 billion, will replace about 400,000 barrels of imported oil per day. ANGTS will supply "about 5 percent of our nation's gas needs for the 25-year life of the project," according to government estimates. By linking with existing pipelines in Illinois and the Pacific Northwest, ANGTS will be able to pump into every part of the US.
But meeting stringent federal regulatory requirements postponed the Midwest section of the pipeline. And now the Alaskan section is waiting for government approval.
Mr. Butler, who will be responsible for the final permits as FERC chairman, told the Monitor he expects the Reagan administration will act "with diligence and dispatch" to get the entire pipeline and other vital energy projects under way. He explained that the administration is "sensitive to the fact that administrative delay means increasing costs in an age of inflation, and I don't think our mission is to impose unnecessary costs on the consumer."
For Nebraska-based InterNorth Inc., one of the major energy corporations behind the pipeline project, the key to avoiding mistakes of the past may be the unique Office of the Federal Inspector. This special, independent unit of the federal government was set up in 1979 to oversee the entire ANGTS project.
After two years at work as federal inspector, John Rhett told the Monitor, "My job is to minimize government while still making sure that the consumer gets what he is supposed to get." So Mr. Rhett and his staff, which will reach 200 during peak construction, are watching every phase of the pipeline project to ensure that design, construction, safety, environmental, social impact, minority hiring, and other standards are met.
Rhett explained that "we are simplifying the regulations" to remove costly delays. "We are set up to expedite the project," he added. This means settling disputes at all levels, including federal, state, local, and landowner.
"We have got to shorten the time frame for energy projects," Rhett told the Monitor. "There has to be some system set up, some authority that can expedite national energy projects."
Rhett's own post is an experiment created solely to deal with ANGTS. The Office of Federal Inspector disappears under a sunset provision one year after the pipeline begins operation. But Rhett is confident that the government has learned from costly mistakes of the past, such as on the crude oil pipeline from Alaska, and from the success of the first stages of the ANGTS project.
Some federal system will emerge to expedite vital energy projects, he predicts, through providing:
* "Central decisionmaking authority."
* "The ability to schedule permits and assure that the different [federal, state, and local] agencies are meeting that schedule."
* "Someone available on an unbiased basis to report to the President and to Congress on overall progress."
* "The minimum of necessary government."
Harold Millican, the administrator of the Canadian government's Northern Pipeline Agency, explained that Canada is moving in the same direction of "trying to bring common sense to the regulatory process."
The US will depend on Canadian gas from the pipeline at first and only later pump Alaskan gas across Canadian soil. But Mr. Millican said he expects a continuing Canadian gas surplus and good relations with the US. "As long as there is any surplus," Millican said, "first call obviously goes to our longstanding client and good neighbor."