Pipeline Goldstream Hills

The trans-Alaska oil pipeline crosses the Goldstream Valley on Wednesday, Sept. 1, 2010.  Sam Harrel/News-Miner file photo

As the Hilcorp acquisition of BP Alaska makes its way through its first regulatory hurdle, questions are being raised about Hilcorp’s ability to deal with a large-scale oil spill from the trans-Alaska oil pipeline, which runs through the Fairbanks North Star Borough. 

The Regulatory Commission of Alaska is gathering comments on the transfer of ownership rights of three pipelines, including the trans-Alaska pipeline, from BP to Hilcorp. The pipeline transfer is part of a larger deal in which Hilcorp is acquiring BP Alaska’s assets for $5.6 billion. The transaction is expected to close next year.

The RCA comment period ends Friday, though the agency is being asked to extend commenting after reports of glitches with the online comment form. A handful of written comments have been posted on the RCA website.

A coalition of environmental groups opposing the deal is holding an information meeting at 5:30 p.m. today at the University of Alaska Fairbanks Murie Building. Phil Wight is an organizer for the Fairbanks Climate Action Coalition, which is sponsoring the information meeting. The groups are offering to help people draft and submit public comments to the RCA.

“TAPS is the most important energy infrastructure for the Alaska public,” said Wight, who wrote a dissertation on the pipeline. “What assurances do we have as Alaskans that they are actually going to be able to clean up a mess?” he asked.

Hilcorp public affairs Vice President Justin Furnace was asked by email what kind of insurance Hilcorp would carry on the pipeline, and he answered: “Hilcorp is working with appropriate government agencies to ensure the acquisition meets all regulatory requirements, which includes spill response plans. Across all of our operations, Hilcorp has always been, and will continue to be, fully committed to safe and responsible development and related transportation. We have extensive operational experience in Alaska and we’re excited about the opportunity to expand our operations in such a special place.”

Commenters to the RCA also expressed concern about a request by Hilcorp to keep financial statements confidential. The company filed the confidentiality request with the RCA on Sept. 27, stating that Hilcorp is a privately-held company and as such, it does not disclose financial information to the public because competitors and potential contractors could gain unfair advantage.

Jenny Bell-Jones, of Fairbanks, addressed the issue in her comments saying Hilcorp “will be playing a very significant part in Alaska’s economy in the near future.”

“We all need to know if they have the financial ability to meet their new responsibilities in all areas,” she wrote.

Rick Steiner, of Oasis Earth in Anchorage, also called for public disclosure of financial statements. He said Hilcorp needs to demonstrate that it carries enough insurance to cover $20 billion in oil spill damages.

The Alaska Public Interest Research Group, in a joint white paper with the Fairbanks Climate Action Coalition, called for coverage to pay for a $7.5 billion disaster, which the group said is comparable to the cost to clean up after the 1989 Exxon Valdez oil spill in 2019 dollars.

The RCA has also been contacted by the Prince William Sound Regional Citizens’ Advisory Council, a nonprofit corporation whose mission is to promote environmentally safe operation of the Valdez Marine Terminal and associated tankers. Executive Director Donna Schantz called for the RCA to extend the comment deadline saying more time is needed for the public to digest a business deal of this magnitude.

Wight said the pipeline is too important to the health of the state economy to take this deal lightly. Hilcorp is on track to assume a leading role for pipeline maintenance decisions.

“That pertains to not only environmental concerns but worker safety,” Wight said.

He added that Hilcorp should also explain why BP is reserving the liability for dismantling TAPS.

Jeremy Price, chairman of the Alaska Oil and Gas Conservation Commission, said Hilcorp’s acquisition of BP Alaska impacts multiple state agencies.

Alaska Oil and Gas Conservation Commission regulations “require documentation to be submitted for approval when there is a change in ownership and/or change in operator. A bond is required to be furnished as well. The amount of the bond depends upon how many wells an operator holds,” Price wrote in an email.

The oil and gas commission does not regulate the trans-Alaska pipeline system, he said. 

Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.