The proposed BP-Hilcorp deal is unprecedented, but few Alaskans seem to appreciate the gravity of the situation. This is the biggest Alaskan business deal in a generation. It’s not simply a “private” transaction between two companies — the deal will likely affect Alaskans more than any other for decades to come. Who is protecting Alaska’s public interest?
The deal affects Alaska oil and gas operations from the North Slope to Valdez and Prince William Sound. Never before in history has the dominant owner of the Trans-Alaska Pipeline System been willing to sell its share of Alaska’s infrastructural crown jewel. As Alaskans know well, TAPS is more than a pipeline — it’s the state’s most important energy infrastructure and its fiscal engine. TAPS is “a huge asset very much tied to the value of state revenue,” former Senate President Rick Halford explained. The pipeline is not simply a private oil system; TAPS is central to Alaska public policy, environmental protection and the public interest. And lest we forget, the system moves the state’s royalty oil across public lands and waters.
The last time Alaska faced a deal this large was in 1999, when BP sought to acquire ARCO. The result was a bipartisan debate about how to protect the best interests of Alaska. Gov. Tony Knowles, BP and ARCO agreed to a “Charter for Development” that ensured that the companies would invest in the state, hire Alaskans, be transparent, clean up legacy oil wells and fund independent oil spill response, among many other commitments. Veteran journalist Dermot Cole argues this charter is “essential reading” in the context of the Hilcorp deal. The 2000 Charter declared that Alaska’s support for the deal relied on BP and ARCO “making substantial marketplace and community commitments.”
Why haven’t our elected leaders been holding hearings and negotiating a similar charter to protect our workers, our environment and our society?
Alaskans need a new charter — a Charter for the Public Trust — with Hilcorp LCC. Like the agreement with BP in 2000, this charter is a mechanism by which the state ensures that Hilcorp operates in the best interests of the Alaska public. Such a charter should have at least four key elements.
The first, transparency, would ensure that Hilcorp is open and honest. Hilcorp argues it should not have to disclose its audited financial returns, claiming that “potential competitive harm” to its interests “outweighs public interest in disclosure.” But as the Fairbanks Daily News-Miner argues, the public has an overriding interest in Hilcorp disclosing its finances. This is especially pertinent since Moody’s has put Hilcorp under review to downgrade its credit. One of the many reasons BP is selling its Alaska assets is to restore its finances after paying over $63 billion in liabilities (nearly the value of the Alaska Permanent Fund) from the Deepwater Horizon disaster. Alaskans deserve to know that any company — especially a limited liability corporation like Hilcorp — that moves so much crude through our lands and our waters has the capital to clean up spills and make Alaskans whole.
The second pillar is accountability. Hilcorp has a troubling record of safety and environmental violations, including the death of a worker in 2018, the near-death of three workers in 2015, and a major pipeline leak in 2017. “The disregard for regulatory compliance is endemic to Hilcorp’s approach to its Alaska operations,” the Alaska Oil and Gas Conservation Commission concluded; “Hilcorp’s conduct is inexcusable.” Alaskans have a duty to ensure private companies will protect our workers and our environment. Such a charter should also address cleaning up legacy oil wells and infrastructure. Ensuring Hilcorp and BP are escrowing dedicated funds for the dismantling and removal of TAPS at the end of its economic life is particularly important.
Labor is the third pillar. Hilcorp has promised to retain existing labor contracts in the near term but has not committed to ensure Alaska hires, employ organized labor or hire Alaska Natives in the future. BP promised these protections in the 2000 Charter, why won’t Hilcorp? Our workers deserve good jobs, in a safe environment, with fair compensation.
The fourth pillar to ensure is benefit to Alaskans. Under Gov. Knowles’ charter, BP pledged to be a generous corporate citizen and subsequently contributed millions of dollars to education and social issues throughout Alaska. We should expect nothing less of Hilcorp. At a moment when Alaska is struggling to pay for public safety, fund our university, and care for our elders, shouldn’t we be demanding our legislators negotiate the best possible deal for all Alaskans?
Philip Wight lives in Fairbanks and is a policy analyst for the Alaska Public Interest Research Group. He recently completed his Ph.D. dissertation in history, “Arctic Artery: The Trans-Alaska Pipeline System and the World it Made.”