Imperial Valley press., 1943-12-02
by
Peter
Edison

D
BY a stroke of the widest kind OF
prospector'S luck, one of the War
Departments worst scandals - the
S134 million Canol oil development
project III Northwest Territory,
Canada-may be converted into a
postwar bonanza. The outcome OF
this strange turn of events, which
would make heroes out of public
figures who might otherwise be
cmtmartialed, may be known soon,
following disclosures on tll the real
extent of the Norman Wells oil
lields, Just under the Arctic Circle,
cast of the Alaska Canada boun-
Diary in the vicinity of Great Bear
Lake; and (2l the conclusion Of
new agreements between the U. s.
and Canadian governments, cover
ing postwar disposal of the oil and
the War Departments investment
in developing the field, pipelines,
refinery and access roads, nearly
all of which are on Canadian terri
tory and blanket or compete with
Alaskan resources.
Should the Norman Wells field
turn out to be one of the biggest
pools on the North American con-
tinent, as has been predicted by
some oil interests, it will relieve the
War Department from one OF its
most embarrassing scandals.
In three days of public hearings
before the Senate Truman Com
mittee investigating the war effort.
following several months of secret
Investigations, the whole fantastic
story of the Canol project has been
disclosed in sorry detail.
Under Secretary OF War Robert
Patterson belligerently defends the
Armys handling of the project as
necessary to national defense and
IS considered essential by the joint
chiefs of staff, who have ordered
the work completed, regardless Of
cost. From an economic point OF
view, however, Canol- deriving its
name from a telescoping of Cana
dian Oil-has now been shown to be
almost indefensible
Up to Nov. l, over $50 million had
already been spent, but the end is
aot yet in sight Before it is conf
pleted, next year, it is estimated
that the total costs will be Sl34
million-for waterways. prospecting,
moving refinery from Texas TO
Whitehorse, a four inch pipeline
from Norman Wells, and for storage
and distribution lines.
For this investment, the Army
will eventually get, out of a de-
veloped crude production of 5000
barrels a day at this time, high
octane gasoline production OF only
iT9 barrels a CAV, which is nothing.
The pipeline won't be completed till
next February, the refinery till
spring. If everything goes well,
there may be usable products by
July /. Until then, and even after
ward, the bulk OF the petroleum
products used in Alaska will have
20 be supplied by tanker.
The whole enterprise is tre-
mendous gamble with public funds.
That being the case, what are the
chances of getting any OF the
money back?
The oil rights are owned by I'm
perial Oil of Canada, which is 81
per cent owned by Standard Oil of
New Jersey. The ArmyS contract
With Imperial provides for the sale
If the first million and half bar
rels of crude at SIPS a barrel al
the well. After that, the Army will
pay only so cents a barrel to cove!
cost of producing the oil, putting
he remaining IS cents in another
pocket TO retire the War Depart
neDt'S investment of SIT million in
lrilling and developing the produc-
ng field
This would take about 13 years,
at present rates of production, but
If production were brought up to
merely the present potential OF the
field, 10000 barrels a day, by the
building of another, bigger pipe
line TO Whitehorse, the time would
De reduced to two years. Refined
products, it is estimated, can be
produced at Whitehorse at about sc
barrel, as against $3.50 a barrel
cost for delivery by tanker from
the States. So. it's still bad bar
gain.
The Army'S contract now runs
until only six months after the end
Of the war. For the other millions
going into pipelines, refinery, and
50 on, the Canadian government
now has first option TO buy at the
then appraised value. If Canada
does not exercise the option, the
properties may be sold privately at
lot less than value. So there is a
ong chance that most of the
MOI ey may be recovered. And if
the Norman Wells field turns out
TO be another East Texas. then the
investment will be as good as the
War Departments other "boner" in
biIildinp tt1e ilcan HIGHWAY itself