ARCO left Alaska in the early 2000s. BP is leaving in 2020. Today, Hilcorp is looking to expand its Alaska operations, but one day, it too will be leaving our state.
While Alaska politicians idly dream about creating another boom, major investors and corporations are recoiling from our oil. When the oil industry can no long extract profit from our state, who will pay to restore the abandoned oil fields? When hapless Hilcorp suffers a major spill or blowout, who will pay to clean up the mess? Hilcorp needs to show us the money up front before we entrust it to operate the Trans-Alaska Pipeline System, or TAPS, and a large chunk of Alaskans’ oil fields. Hilcorp may say such costs are too burdensome, but a failure to honor these obligations would certainly be too burdensome for our cash-strapped state government.
All of this begs an even more essential question: Where is Alaska going to find the funds to deal with the climate crisis that oil companies have created?
Our state government and many of our leaders act as if what’s good for oil companies is good for Alaskans. This line of thinking is corrupt: If we follow it, we will follow the oil industry into decline. Even now, there are troubling signs that Hilcorp might be overplaying its hand. After the deal was announced, Moody’s Investors Service began reviewing the company for a possible credit-rating downgrade. The Wall Street Journal has reported that Hilcorp is seeking $4 billion in credit to pay for BP’s assets. Investors may charge Hilcorp a whopping 8.5% interest rate for these funds — a clear sign they see this investment as a huge gamble. Perhaps this explains why Hilcorp has not been forthright with Alaskans. It has petitioned to keep its financial records secret. It has refused to talk to media outlets. Hilcorp wants Alaskans to trust it, but the firm shows no signs of trusting Alaskans.
Hilcorp has an abysmal safety record, and a major spill on its watch is very likely, especially given the aging infrastructure of TAPS that it would be taking over. Without sufficient capital, the company could default on its obligations and leave the public with an enormous bill and a toxic mess. One of the deal’s most troubling terms is the fact that BP would retain responsibility for decommissioning the pipeline system at the end of its lifetime. By this time, BP would no longer be a player in Alaska or making a profit from our state: Do we really expect it will honor this massive liability? How many communities in the U.S. have been screwed over by industrial mining companies who moved around their assets and declared bankruptcy as soon as it was time for them to clean up their messes?
Alaska should take heed: The oil era is beginning to sunset. Worldwide renewable energy generation capacity is expanding dramatically, and institutions throughout the globe are looking for ways to quickly transition to cleaner alternatives. During the past few decades, our state has avoided serious public discussion about what Alaska’s post-oil future will look like. If we continue to stall for more time, we will be caught flat-footed when sagging worldwide demand pulls down prices and dries up our oil production. By this time, climate change’s toll — forest fires, melting permafrost, disease, mental health problems, village relocations — will be staggering. As long as the oil industry continues to profit from Alaska, it is incumbent on us to recover some of these costs from it.
It is time for Alaska to invest aggressively in economic diversification. We must actively create a just transition away from dependence on oil, rather than waiting to be dragged, kicking and screaming, from the oil economy. Right now, we are literally paying the oil industry to ransack our lands and getting little else but climate disruption in return. Allowing a faithless actor like Hilcorp to acquire such a massive stake in our state’s oil production — in a deal that’s shrouded in secrecy — will have grave consequences for our future.
Alaskans and our leaders must ensure the Trans-Alaska Pipeline System dismantlement funds are placed in a transparent trust account. Hilcorp must be open and honorable about its finances and demonstrate that it has the funds to clean up any major accidents. We reject any move by Hilcorp to control our resources and our most important energy infrastructure until these basic criteria are met. Hilcorp would do well to remember that they have no entitlement to our public lands and resources.
Odin Miller is a lifelong Alaskan and volunteer co-facilitator of the Fairbanks Climate Action Coalition’s Keep it in the Ground! working group.