the basic location of the gas line will be about 60 feet minimum from the crude line, but there is considerable—that is a general statement-numerous site-specific locations where agencies are proposing moving the gas line a considerable distance away from the crude line.

Mr. YOUNG. Do you have offhand, the agencies recommending that?

Mr. MOOLIN. No, sir, I do not, but again I will submit that with my supplemental testimony.

Mr. YOUNG. It would be my feeling that the closer proximity with the safety factors that have been established with previous experience, that line should follow that pad, working facilities and corridor, as closely as possible to the TAPS line unless there is real good sound reason for it. Hopefully you can name those agencies so we can ask them to come down and appear before us.

Mr. MOOLIN. Yes, sir.

Mr. YOUNG. On the snow pad, I happen to agree with you. I personally think it is the greatest grass-cutting project in the world, Mr. Chairman. It is like cutting grass. You have seen these make-work projects; you cut the grass and you say you are employed; of course the grass grows back and you have to cut it again. It is a great way to put people to work; you never finish the job. Building a snow pad is similar-in the springtime it thaws out, there is no more snow pad-I am not sure they protect the environment. Next year you build it all over again. It is a great way to build.

Thank you.

Mr. RUNNELS. Thank you.

Mr. Lagomarsino.

Mr. LAGOMARSINO. I do not have any questions. I just wanted to comment that although the witness skipped through his testimony very quickly, I have been reviewing some of the additional comments here and will read the whole thing. I think there is some very good material here that will be of help to the committee in making its evaluation.

Mr. RUNNELS. Thank you. Did you state that you believe most of the gas pipe line will be underground?

Mr. MOOLIN. Yes, sir.

Mr. RUNNELS. Would you state for the record why you say it should be underground rather than aboveground?

Mr. MOOLIN. Yes, sir, it is very simple.

Building aboveground pipeline is many times more expensive than building belowground pipeline. The TAPS crude line was placed aboveground only when it became necessary. It carries hot oil and whenever the pipeline would have to be placed in what is called thaw-unstable soils-in other words, the hot oil would cause the soil to thaw and settle excessively-the crude line would be placed aboveground. The gas line is going to be chilled, operate at below the freezing point of water.

Mr. RUNNELS. Could you tell us how you are going to freeze or chill this line?

Mr. MOOLIN. The gas will be chilled at the compressor stations. So the gas in essence, technically the hurdles are a lot lower in

Mr. RUNNELS. We are trying to get a little education as to the difference between gas and oil pipelines.

Mr. MCMILLIAN. If the chairman pleases, I would like to comment.

We are going to have about 26,000 horsepower at each compressor station for the compression of gas. Since it is a gas, it can be frozen and chilled and we are having 7,000 to 13,000 horsepower of refrigeration at each compressor station to chill the gas. So gas will be chilled at each compressor station to complete any degradation. But additional problems of putting the gas line aboveground-I know in your experiences you have watched a gas line blow-and if you have ever watched a gas line blow aboveground, it is an awesome experience.

If you put that belowground where it is protected from sabotage, where it is firmly emplaced, you have an additional safety factor putting it underground. Then in a real cold environment, such as we will be passsing through, when it gets to 60 below zero the heat exchange of the extra coldness created in that atmosphere aboveground will cause problems with liquids falling out and liquid slugs created in the line that cause operational problems. There are all kinds of reasons for us to be belowground.

Mr. RUNNELS. Thank you.

Mr. Moolin, what is the single most uncontrollable cost in building a pipeline?

Mr. MOOLIN. In my experience the single most uncontrollable cost and yet unidentifiable costs are going to be the requirements of governmental agencies.

Mr. RUNNELS. Requirements of Government agencies?

Mr. MOOLIN. Yes, sir.

Mr. RUNNELS. You had a lot to do with the supervision of the TAPS pipeline. You were in on the planning and the construction. Can you tell me how in the world a pipeline system such as TAPS escalated from $900 million to $9.3 billion?

Mr. MOOLIN. I am glad you asked that question.

That would require a lot more time than I am sure you are going to give me. But certainly the numbers thrown out in 1968 when oil was discovered at Prudhoe Bay by building a pipeline across Alaska, some offhand comment about an $800 million project, it was about a project talking about apples and oranges, comparing it with watermelons. The original concept in the minds of people that gave that number was digging the pipeline, placing a pipeline as you do in west Texas or east Texas; you take a ditch, you put the pipeline in the ditch, you take the stuff that you dug out of the ditch and dump it back around the pipeline. That is not the case. Actually, when you compare the cost increase, if you want to compare an apple with apple, apples with apples basis on the crude line you would have to be looking at a $5.3 billion project which was the first definitive estimate of the project, based on having about half the project aboveground. I have to say placing a pipeline aboveground varies anywhere from 4 to 7 to 10 times more expensive than placing a pipeline belowground.

Mr. RUNNELS. Could the same thing happen with this gas line that happened with the oil pipeline?

Mr. MOOLIN. No, sir. I think people recognize many of the issues that impact the total cost of a program of this size. Some of the actions that have already been taken to get the definitive-to get a detailed definitive design prior to start of construction, No. 1, but second, getting the Federal inspector or involvement in the project at an early stage, these are going to go a long way to preventing

overruns.

For all the reasons I indicated, the lack of infrastructure Alyeska was subjected to, also remember it was talked about in 1968 and the project completed in 1977, so the impact of inflation was certainly substantial. But not only the impact of inflation, the cost of maintaining a large organization, keeping a large organization alive for an extended period of time in itself creates or contributes significantly to the total cost of a program.

So to answer your question, the bottom line, I cannot see this $800 million to $7.8 billion type of increase occurring. There can be cost increases but certainly we understand how to control them

now.

Mr. RUNNELS. On page 9 of your statement, you say that in over 4 years and over 200 meetings with governmental representatives at all levels, you did not recall a single instance where a Government representative ever mentioned the cost effect of any particular requirement or course of action recommended by the Government. What do you think is the real reason for this and was this ever brought to the attention of any congressional committee? Mr. MOOLIN. I do not believe that Government ever perceived its role in the crude line project as being one to insure the most costeffective construction of the line. Government perceived its roleand I think this was reported to the Congress in the GAO report to Congress about the completion of the crude line-I think the GAO report indicates that Government perceived its role as being one of insuring pipeline integrity and making sure that the environmental stipulations were complied with. It did not in fact see its role one of controlling costs, although the stipulations, the agreement between Alyeska and the Government say that the parties shall balance environmental amenities and values with economic practicalities and technical capabilities to be consistent with applicable national policies.

Mr. RUNNELS. On page 16 you state that the Government has recommended that camps be relocated due to fuel oil leakage. What additional cost and what additional environmental impact or damage can be done by from moving these camps?

Mr. MOOLIN. I do not know what the additional cost would be except it is certainly the multimillion-dollar range, less than $5 million but certainly more than $1 or $2.

Certainly any time in Alaska you attempt to build a new camp at a new location, there is additional environmental impact than there would have been if you had continued using the same camp. Mr. RUNNELS. On page 30 you refer to the Alyeska syndrome whereby people continue to study, explore and continue to ask different questions without ever making engineering judgments regarding the significance of the questions that they ask. Is this trait particular to the Government agencies or is it present in the

Mr. MOOLIN. No, sir. It certainly is not present in the project companies. Certainly it is in the best interests of the companies that own or operate these pipelines that they be technically complete, that they be able to operate these pipelines. It is not in the best interest of anyone owning these pipelines that there be troubles with the operation because obviously it affects the bottom line of the operation.

The so-called Alyeska syndrome came about with Alyeska because of a very large number of agencies interfacing, individually in some cases, but in many cases in an uncontrolled way and impacting or stipulating and applying conditions that had to be met by Alyeska. These were the additional studies that never seemed to be satisfied and questions that never seemed to be answered.

Mr. RUNNELS. You further state that this can only be brought under control, by firm direction from Northwest management and from regulatory agencies.

Do you think the structure of the Federal inspector's office will completely solve this problem?

Mr. MOOLIN. I think that the Federal inspector, everything I have seen so far, tells me that directionally this is the right way to go. And I think time will tell. It is going to take time, of course. The Federal inspector is new in his role, but everything I have seen so far and what I have read that the Federal inspector has said leads me to believe that the Federal inspector certainly understands how important this is to control the cost; that Government itself has a big impact on cost and schedule and he understands this.

Mr. RUNNELS. Thank you, Mr. Moolin, for your fine statement. Is there any other statement you or Mr. McMillian would like to make at this time?

Mr. MOOLIN. No, sir.

Mr. RUNNELS. Mr. McMillian, could you stay? If there are any questions later would you feel free to answer anything that comes up?

Mr. MCMILLIAN. Yes, I will be available through the entire hearing.

Mr. RUNNELS. Tomorrow also?

Mr. MCMILLIAN. Tomorrow also.

Mr. RUNNELS. I want to thank you both for being here.

[Additional written questions submitted to Mr. McMillian by the subcommittee, with responses, may be found in the appendix. See table of contents for page number.]

Mr. RUNNELS. Our next witness will be Mr. John Sproul, Pacific Gas & Electric Co.

[Prepared statement of John A. Sproul may be found in the appendix.]

STATEMENT OF JOHN A. SPROUL, EXECUTIVE VICE PRESIDENT, PACIFIC GAS & ELECTRIC CO.; AND CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, PACIFIC GAS TRANSMISSION CO.; ACCOMPANIED BY DANIEL E. GIBSON, GENERAL COUNSEL, PACIFIC GAS TRANSMISSION CO.

Mr. SPROUL. Thank you, Mr. Chairman, and members of the committee.

Mr. LAGOMARSINO. If I might interrupt the witness, I wanted to note for the record Mr. Clausen does intend to be here later. I am sure he would want to be here, Mr. Sproul.

Mr. SPROUL. I am an executive vice president of Pacific Gas & Electric Co. and chairman of the board and chief executive officer of the Pacific Gas Transmission Co.

With me here today is Mr. Daniel E. Gibson, the general counsel of Pacific Gas Transmission Co.

I have submitted a prepared written statement for your consideration which I will, as you requested, summarize in, I hope, a reasonably brief manner.

P.G. & E. and its subsidiary PGT have been designated by President Carter to build the western leg of the Alaska Natural Gas Transportation System (ANGTS).

In addition, P.G. & E., through another subsidiary, Calaska Energy Co., is participating in the partnership that will build the Alaska portion of this system. P.G. & E. will also purchase Alaska North Slope gas to serve the 9.1 million people in our service area in northern and central California.

We have entered into a contract with the Exxon Corp. to purchase one-third of its share of the gas production from the Prudhoe Bay field. Thus, you can see that P.G. & E. and PGT are deeply involved in and strongly committed to this overall project. We believe it to be the single most important domestic energy project on the Nation's agenda today.

We propose to loop or parallel our existing pipeline by installing about 882 miles of new 36-inch diameter pipe side-by-side with the existing line. We will need no new compressor stations or additional horsepower to carry the initial volume of North Slope gas along with roughly 1 billion cubic feet of gas we are carrying now. The authorized western leg design is blessed with the virtue of simplicity. Conventional pipeline design and construction techniques will be used throughout, relying on known, proven technology. The potential for unforeseen problems and difficulties is vastly reduced by the fact that the western leg expansion is essentially a replication of the existing pipeline and, of course, this in itself will minimize disturbance to the environment.

The authorized western leg design can provide for delivery of approximately 30 percent of the initially expected North Slope natural gas. That is about 600 to 700 million cubic feet of gas per day to markets in California, the Pacific Northwest and other Western States, including Arizona and New Mexico.

PGT's portion is estimated, in 1978 dollars, to cost approximately $417 million. P.G. & E.'s portion is estimated on the same basis to cost $212 million. Thus, the total western leg capital cost is estimated at $629 million. These amounts, while sizable, are within the financial abilities of P.G. & E. and PGT.