Alaskans deserve to know more about companies profiting from our natural resources, like Hilcorp
The trans-Alaska pipeline is seen on Sept. 19 in Fairbanks. This portion of the pipeline, 450 miles south of Prudhoe Bay, has been transformed into a visitor pullout and is a tourist attraction. (Photo by Yereth Rosen/Alaska Beacon)
On June 28, the Alaska Supreme Court will hear arguments on the city of Valdez’s cases related to the Regulatory Commission of Alaska’s approval of the BP-Hilcorp deal. Alaska Supreme Court oral arguments are open to the public and will also be livestreamed. Though the seduction of the summer outdoors is strong, Alaskans need to attend this particular court hearing in person to demonstrate to the powers that be that the public is still watching and cares about this issue.
In August 2019, BP announced plans to sell all of its Alaska assets to affiliates of Texas-based oil company Hilcorp Energy Co. This nearly $6 billion sale was unprecedented in the relatively short time since Alaska’s oil boom of the 1970s. BP is the first dominant Trans-Alaska Pipeline System owner to entirely exit our state under untested promises to remediate infrastructure at the end of TAPS, but it will not be the last. Moreover, unlike BP, a multinational and publicly traded company, Hilcorp and its midstream counterpart Harvest have not been required to disclose basic financial information to the public as limited liability companies. For this reason, as well as Hilcorp’s sketchy record of environmental and safety violations, the sale caused serious concerns within Alaska and raised eyebrows worldwide.
Despite the fact that a sale of this magnitude had both never happened before and never happened between a public and privately owned company, the Regulatory Commission of Alaska, or RCA, opted to let BP and Hilcorp keep confidential both details of the deal as well as Hilcorp’s financial health. The RCA inevitably approved the deal on this secret record in December 2020. Essentially kept in the dark, this meant that Alaskans effectively did not have real assurance that Hilcorp could either truly afford to become Alaska’s second-largest oil and gas operator or afford to respond appropriately in the case of an environmental disaster. If BP wanted out, state officials seemed to decide they could do nothing more than not make an enemy out of Hilcorp, so a green light based upon a secret record came as no real surprise.
Hilcorp’s business model is proudly “acquire and exploit.” Its strategy revolves around the practice of taking over operations on legacy oil and gas fields that are past their prime in terms of production, slashing expenses in operation and maintenance with “cost-saving” policies, and ultimately running a lean operation to keep potentially stranded assets and dying oil fields viable and profitable for as long as possible. Hilcorp had initially made a reputation in Alaska for scooping up Marathon and Chevron’s aging Cook Inlet assets in 2012. Paving the way for increasing Hilcorp dominance, Alaska was willing to trade market competition and diminished negotiation leverage for so-called gas “supply security” back then, and, even in our Cook Inlet gas crunch groundhog day today, we are on the verge of doubling down on a murky fossil future with Hilcorp.
In response to the RCA’s approval of the deal, Valdez filed an appeal against the RCA, BP, Hilcorp, and Hilcorp’s affiliate Harvest– arguing that the RCA’s interpretation of applicable law is wrong. Given the secret record at the RCA, it says the agency’s decision and proceedings violate fundamental free speech and due process rights under the state and U.S. constitutions.
Valdez has significant interest in safeguarding its community by ensuring any new owner of TAPS – including the Valdez Marine Terminal within its city boundaries – is financially able to operate such massive infrastructure safely. Valdez is also asserting that any such ownership must have the continuing financial wherewithal to respond to oil spills, conduct maintenance and perform dismantlement and removal of abandoned infrastructure at the end of the economic life of TAPS. While some might consider this a done deal, the RCA does continue to have the power to protect the public interest and set clear conditions ensuring the parties’ ongoing financial viability and transparency.
So why does this matter? Why care? Effectively, if the process of approving the BP-Hilcorp transfer on a secret record is ignored, it will set a regressive precedent for future sales and transactions of Alaska oil and gas. Alaskans deserve to know more about the multibillion-dollar companies making enormous profits from our natural resources. Alaskans cannot advocate for comprehensive fiscal policies, oil taxes or other legislation without the information necessary to create good policy. They can go to the courthouse on June 28 to support Valdez in the struggle for transparency.
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