Former Natural Resources Commissioner John Shively disagrees with my call for a public charter with Hilcorp, and I welcome his criticism. His column (News-Miner, Nov. 19) is precisely the kind of public discourse and debate Alaskans should be having. We should be asking: How do we protect Alaska’s public interest in the proposed BP-Hilcorp deal?
The proposed deal is unprecedented in Alaska history. Never before has the dominant owner, BP, transferred its shares of the trans-Alaska pipeline. This is not “simply” a private business deal; the pipeline is central to Alaska public policy, environmental protection and the public interest. This is the largest business deal in a generation in Alaska, and it demands a level of transparency and oversight commensurate with its unique nature.
Mr. Shively contends that citizens need not be worried because the deal is “merely” a stock transaction where Hilcorp is “stepping into BP’s shoes.” The reality is much more complicated and concerning.
It’s inaccurate to conflate BP and Hilcorp. As the Prince William Sound Regional Citizens’ Advisory Committee testified, the sale would transfer “operational control over (the trans-Alaska pipeline) from one of the world’s largest and most well-resourced oil companies to a mid-sized, privately held company with no record of successfully and safely operating comparable facilities.” BP has a reputation as one of the most accountable oil companies, while Hilcorp has earned a reputation for secrecy. Hilcorp does not even have a Wikipedia page, and it seeks to control the most important hydrocarbon system in U.S. history.
Not only has Hilcorp never operated a system as complex as the trans-Alaska pipeline, its history of managing pipelines is alarming. Hilcorp (or more specifically, its wholly owned midstream subsidiary, Harvest LLC) has the dubious distinction of having more accidents than nearly any other company operating more than 300 miles of pipeline. Since it began operating in Alaska in 2012, Hilcorp has been responsible for over 90 crude oil discharges.
Mr. Shively further asserts there is already sufficient regulatory oversight, but a quick look at the health of our regulatory agencies reveals a troubling picture. The proposed BP-Hilcorp deal occurs at a moment when Prince William Sound Regional Citizens’ Advisory Committee has warned of a “steady erosion in regulatory oversight, staffing, funding, and coordination among many of the federal and state agencies.” The truth is that after years of budget cuts, Alaska’s regulatory agencies are underfunded and overworked.
The actions of the Dunleavy administration only accentuate concerns about responsible oversight. Gov. Dunleavy fired Hollis French from the Alaska Oil and Gas Conservation Commission after French insisted the commission should extend its jurisdiction over a 2017 leaking Hilcorp pipeline in Cook Inlet. French’s firing came in the wake of a political donation from Hilcorp’s CEO, Jeff Hildebrand, to Dunleavy’s campaign. The Dunleavy administration has since joined a lawsuit defending Hilcorp’s seismic blasting and harassment of marine mammals. Is this the independent oversight Alaskans should count on?
Mr. Shively’s most troubling argument is that state regulators will handle the deal and citizens need not be involved. BP, Hilcorp and most state agencies (the Regulatory Commission of Alaska being the exception) have acted as if this were a done deal. This deal will affect all Alaskans for decades to come, and Alaskans deserve an opportunity to have their voices heard. Our regulatory agencies are supposed to serve the public interest — a function they can only perform by listening to, and being accountable to, the people. As the Alaska Oil Spill Commission argued in the wake of the Exxon Valdez spill, “Alert regulatory agencies, subject to continuous public oversight, are needed to enforce laws governing the safe shipment of oil.” Where are the public hearings and testimony at the Department of Natural Resources and Department of Environmental Conservation?
Mr. Shively additionally argues that Alaskans should not “shackle” this deal with demands of accountability and transparency, which might make the transaction “uneconomic.” That’s not the first time we’ve heard that argument. As a result, Alaskans have a long history of cleaning up after companies that have extracted Alaska resources and left behind a mess. Alaskans have also benefited from companies that developed our resources in good faith, operated transparently, hired Alaskans, and given back to the community. Picking public protections versus business development is a false choice. We can and have done both.
This is not just another business deal. Alaskans deserve to know: Will Hilcorp be an effective steward of our most valuable energy asset? Will it be able to respond if accidents happen? Will it hire Alaskans? If answering these questions is too burdensome for Hilcorp to answer, then we’ve got bigger issues to worry about than a charter process.
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.”