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A PACIFIC TRIBUNE EXPOSE

The great

By SID ZLOTNIK

ONCLUSION of the deal to
build a natural gas -pipeline
in British Columbia has been
hailed by the daily press as both
a personal victory for B.C.-born
Frank McMahon, president of
Westcoast Transmission Company,
and a successful completion of
the fight to establish a line to
serve B.C. industrial and con-
sumer needs.

Westcoast Transmission is the
so-called Canadian
which has just signed an agree-
ment with its erstwhile competi-
tors, El Paso Natural Gas Com-
pany of Tulsa, and Pacific North-
west Pipeline Corporation of New
York to construct a $100,000,000
line from the Peace River to the
U.S. border. At Sumas the pro-
jected B.C. line will hook up with
a USS. line to California.

The full terms of this agree-
ment are being withheld by the
Social Credit government, al-
though it has already bestowed

its unqualified blessings upon
them,
Nevertheless, one shocking

central feature has already been
disclosed. Westcoast is commit-
ted to deliver 300,000,000 cubic
feet daily to the U.S. as against
a total of 15,000,000 cu. ft. daily
in the B.C. lower mainland in
the initial stage.

While the figure for total B.C.
consumption is not yet available,
it is clear from these figures and
previous statements of the com-
panies concerned that it will be
not more than twenty and may
be as low as ten percent.

* ‘

The fact that the bulk of our

' gas going through the line will

be used to satisfy U.S. needs for

industrial expansion, and that B.C.

will get only the very inadequate

.surplus, is not so surprising on
investigation.

Westcoast Transmission is reg-°

istered as-a Canadian company,
put it is U.S.-controlled. Behind
the Canadian front provided by

. Frank McMahon, are powerful
U.S. interests...

Four of the nine directors of
Westcoast are Americans, and a
fifth, company vice-president C.
R. Hetherington, although his
home is Calgary, is a senior en-
gineer for Ford, Bacon and Davis

..Company of New York, one of
the two companies reportedly bid-
ding on the contract to construct
the line.

C. C. Whittelsey of New York
City is conveniently both a di-
rector in Westcoast and a vice-
president of Ford, Bacon and
Davis. :

Probably the most influential

director on the board is L. S. Gil-.

mour of New York, a senior part-
ner in the New York firm of East-
man, Dillon and Company, and
director in half a dozen other
great corporations linked to this
steal of our natural gas.

Control of the $10,000,000 com-

mon stock of Westcoast is vested
in its sponsors, Pacific Petroleum

and a group of affiliated compan-°
ies. Five of Westcoast’s direc-

company —

This map shows the route of the proposed pipeline.

tors are also directors of Pacific
Petroleum. Among Pacific’s sub-
sidiaries are Peace River Natural
Gas Company, Canadian Atlantic
Oil Company, Oil Ventures Ltd.,
Bear Oil Company Ltd., and
Transmountain Oil Pipeline Ltd.

Pacific Petroleum is an oil pro-
ducing and developing company
with an interest in 73 oil wells
in Alberta and in natural gas

rights in the Prairie provinces,

B.C. and North Dakota. It holds
interests in 6,500,000 acres and
has proven wet gas reserves of
1% trillion cubic feet.

Most revealing is the new agree-
‘ment entered into by Pacific Pet-
roleum’s subsidiary, Canadian At-
lantic Oil Company and Southern
Production Company of Fort
Worth, Texas, reported in the
Vancouver Sun of December 20,
‘1954. ;

The Texas firm agrees to spend
$10,000,000 (of which it has al-
ready spent $3,000,000) on oil and
gas exploration in B.C. and Al-
berta in return for a quarter in-
terest in all holdings of Canadian
Atlantic and its associates; this
interest will increase to half on
any project on which it brings in
a commercial well. Southern
Production is closely connected

’ through interlocking directorates
with the $200,000,000 Southern
National Gas Company with oper-
ates 3,000 miles of pipeline in
such southern states as Georgia.

This latest agreement brings
Westcoast even more tightly un-
der the thumb of U.S. control.

x

Great concern was expressed in
the House of Commons in April
1949 when the Pipe Lines Act
was being debated. Spokesmen of

all political shades expressed fear
that our resources would be fun-
nelled off to the U.S.

Howard Green, Conservative
MP for Vancouver-Quadra, was
particularly emphatic.

“The point I am making, Mr.
Speaker, is that this oil and gas
should be used to the greatest
possible extent within our own
country. I cite as an example
that these two,companies piping
natural gas to the Pacific Coast
may be piping it primarily to
the western U.S. rather than for
BiG as

‘T believe that this opens the
dodr, or places some obligation
upon the dominion government
to help the provinces conserve
these resources.

“The third consideration, and
this is a very important one, is
that this development of oil and
natural gas must bring down the
cost to the Canadian consumer.

. .. There is not much use in
Canada’s developing vast quanti-
ties of oil and natural gas if our
people are not going to get any
benefit by way of reduced prices
for those commodities.”

And again, in October 1949, :

Green put the question pointedly.
“Somebody in Canada must de-

cide as a matter of policy, wheth-
‘er this oil or gas should be piped

to the U.S. rather than be used
in Canada to build up industries
here and give employment. I
should like to know whether there
is anybody, from the prime min-
ister down, who is at the moment
exercising any control over that

question as to whether or not this
Canadian oil and gas is to be
piped to the U.S. rather than
used in Canada?” -

Transport Minister Lionel Chey-
rier replied:

“I am afraid I cannot satisfy
my honorable friend. All I can
tell him is what the board of
transport commissioners does and
what this department does in con-
nection with an application (to
build a pipe line) such as that.”

And Green’s retort was: “The
government must decide whether
or not, as a matter of policy, this
Canadian product is to go into
the U.S. rather than be used in
Canada.”

Today, when the very type of
agreement Green objected to is
being carried through on the

* B.C. gas pipe line, neither he

nor any of the other members
who spoke up then, have said one
word in,public to oppose the sell-
out of our gas.

*

The Pipe Lines Act gave the
green light to the great U.S. mon-
opolies and their Canadian junior
partners. No safeguards are pro-
vided to ensure the conservation
of Canada’s oil and gas resources.
Canadian industrial development
and consumer hopes for cheap
fuel are left to the indelicate
mercies of U.S. corporations.

The gas pipe lines are specifi-
cally exempted from being com-
mon carriers. The pipeline com-
panies therefore can lay down

_the law as to which suppliers

may use the lines (by far the
cheapest way of transporting
gas). This gives the big pipeline
companies and their associate pro-
ducers, in this case Westcoast
Transmission and the Pacific Pet-
roleum group, the power of life

and death over the smaller inde-
pendent producers.

The federal government has
the authority to refuse to export
power across the boundary. But

-once it issues a permit to a com-

pany to construct a pipe line to
the U.S. border, it is not going to
refuse permission for the com-
pany to pipe gas to the U.S. And
the U.S. companies will strive to
see that no government which
threatens their monopoly comes
to power.

‘

The provincial governments
cannot deny their responsibility
also in this matter. Alberta re-
served the right to issue export
licences on its gas. The B.C.
government, which has given its
blessings to the Westcoast deal,
has the authority to call a halt
to this plundering of a vital pro-
vincial resource.

* \

What about the problem of dis-
tribution? The B.C. Electric has

boasted it will reduce the price

of natural gas 25 percent below
the current price of manufactur-
de gas. However, Vancouver has
had bitter experiences in respect
to B.C. Electric generosity, and
many people are asking if we are
going to enjoy the benefits of
cheap natural gas in our homes if

Valley,

gas steal

the B.C. Electric maintains con-
trol over distribution, as\is now
planned.

In 1952 Westcoast testified it
could bring gas to Vancouver at
a cost of 29.2 cents. A fair esti-
mate of the maximum cost of
delivery from the Peace River to

‘Vancouver today would be 35

cents.

Yet the B.C. Electric has al-
ready stated through company
vice-president Mainwaring that

-the price of natural gas will be

25 percent less than the price
of manufactured gas. That means
over $1 per 1000 cubic feet.

In other words, the B.C. Elec-
tric will charge twice as much to
deliver it from the main line at
Vancouver to our homes as it
costs to bring it all the way from

» the Peace River to Vancouver!

One of the positive provisions
of the Pipe Lines Act gives the
Board of Transport Commission-
ers “the power to order a com-
pany operating a gas pipeline to
extend or improve its transporta-

tion facilities and to sell gas to
any person or municipality en-
gaged in the local distribution of
gas to the public, and for such
purpose to construct branch lines
to communities immediately ad-
jacent to its pipelines if the
board finds no undue burden will
ne placed on the company there-
NAeg

To prevent the municip&lities
from taking advantage of this,
the Propane Gas affiliates of
Westcoast are moving in to take
over the franchise of the Fraser
Okanagan and Island
centres, so as to be able to con-
trol the distribution of natural
gas when the line is finally built.

‘The question of public owner-
ship, then, is an important. mat-
ter for Vancouver and the other
municipalities. ; :

The decisive issue, of course, —
is control of the main line and
related to that, use of the main
supplies coming through the line.

If the present ratio of supply
between U.S. and Canada is main-
tained, then there is going to be
very little volume on our side of '
the border to worry about dis-

-_tributing.

Of the 300,000,000 cubic feet
going to the U.S., California will
take 250,000,000 cubic feet per
day. But the California demand
is now well over a billion cubic
feet per day, and rapidly grow-
ing. So the pressure is going to
be on us to increase the supply
to the U.S. as greater capacity is
developed on the line.

The great volume going initi-
ally across the line will enable
the U.S. to develop new secon-
dary industry, while our inade-
quate supplies will prevent us
from doing likewise. Establish-
ment of U.S. industries ‘will make
it even more difficult for us to
establish competitive industries
in the future, even if sufficient
gas supplies were made available
to us at that time.

There is no doubt the present
policy will stunt the future indus-
trial development of B.C. and
deprive thousands of Canadians
of jobs. The people, defending
the national interest’ which the
government is selling to the U.S., .
must. compel the policy to be
changed before it is too late.

PACIFIC TRIBUNE — DECEMBER 24, 1954 — PAGE 9