I think it was partly due to restriction put on "North Slope" production. Also at the time, 1969, there was a glut of Natural Gas in Southcentral Alaska. Not the case today, there is talk of building an LNG terminal to import Natural Gas into the Anchorage, Kenai & Mat-Su valley.
Well, there was also concern about capturing the natural gas that was created in the pipeline. LNG is going to be a big business and CONOCO will find use for their carriers whether in the Alaskan trade or elsewhere. I am just sure that BP had it's own financial motives in mind with the Canadian pipeline. They knew before they ever started on it that the Valdez route was preferred by the state.