PANAMA UNREST HIGHLIGHTS NEED FOR ALL-US OIL ROUTE

PANAMA UNREST HIGHLIGHTS NEED FOR ALL-US OIL ROUTE

The turmoil in Panama brings into sharp focus the lack of an all-U.S. route to bring Alaskan crude oil to Gulf Coast refineries.

Almost 10 years after Standard Oil Co., Cleveland, abandoned its proposal to build a pipeline to carry Alaskan crude from a terminal at Long Beach, Calif., to Texas, the oil industry relies heavily on a pipeline through Panama as well as the Panama Canal.But a Los Angeles company, Pacific Texas Pipeline Co., which is trying to revive the trans-U.S. project, hopes the crisis will help give it the final push it needs to start construction on the 1,030-mile, 42-inch diameter, $1.7 billion pipeline.

The line would take 900,000 barrels a day of Alaskan crude that would be delivered to Los Angeles Harbor by ship and carry it to Midland, Texas, where it would connect with 14 other pipelines that service more than 100 refineries in the Midwest, the East and the Gulf Coast, Pac-Tex says.

All the environmental clearances are in, all the required permits have been received, said a Pac-Tex spokesman. He said the company had signed a transportation agreement last August with an oil company he declined to name. As soon as another is lined up, the financing will be available, he said.

The oil could be flowing within 12 months after ground is broken, the spokesman said.

In the mid-1970s, Standard Oil of Ohio, now Standard Oil Co., a British Petroleum subsidiary, wanted to build a line from Long Beach to Midland that would carry 500,000 b/d.

About five years later, citing a quagmire of federal and state regulation, Standard threw in the towel.

Today, Standard has perhaps the greatest exposure should the trans-Panama route be disrupted. Of the 2.1 million b/d produced from the prolific oil fields in northern Alaska, Standard owns about 850,000.

About two-thirds of that, or 566,000 b/d, crosses Panama for refineries in the eastern United States. Other companies taking Alaska crude move smaller amounts of oil across Panama.

The tankers that carry the oil from Alaska are too large to pass through the canal. About 550,000 b/d are taken off the ships on the Pacific Coast, pumped through the pipeline and reloaded onto smaller ships on the Atlantic side of the isthmus for delivery to Gulf Coast refineries.

About 100,000 b/d are lightered onto smaller ships that can transit the canal.

A spokesman for Northville Industries Inc., Melville, N.Y., the U.S. oil company that is the managing partner of the Petroterminal de Panama pipeline, said the company had never seen operations disrupted, even during other periods of turmoil, and he didn't anticipate any problems now.

Alternate routes are limited. One is to lighter all the oil onto smaller ships and sail them through the canal, assuming canal operations are not disrupted.

The other would be to sail the large ships around the tip of South America and up to the Gulf Coast. The problem is it would take about 90 days for a ship to make the round trip, and it is questionable if sufficient U.S.-flag vessels could be found. Under federal law, Alaskan oil must sail in U.S.-flag ships.