On April 1, 1999, oil giant BP announced its proposed acquisition of Atlantic Richfield for $27 billion, a deal that originated with a request from Arco.

The agreement would have made BP the dominant player on Alaska’s North Slope, while providing a much stronger presence in the Lower 48.

The New York Times said that the companies had both had major discoveries in Alaska, “rode the good times of huge production and struggled in recent years to stem the decline.”

BP chairman John Browne said the company hoped that a combined company could cut the cost of production by 80 cents a barrel, slashing overhead.

“He said this would make it more attractive to invest in the fields of Prudhoe Bay and Kuparuk, which now produce about 800,000 barrels a day for both companies. That argument has been used to persuade officials in Alaska to support the takeover,” the Times reported 20 years ago.

But the deal did not go the way that BP had envisioned, for which Alaskans should be forever grateful to the Federal Trade Commission, a new Alaska political group called “Backbone: Standing Up For Alaska’s Future” and the Knowles administration. The combination of the three, sometimes working in opposition, led to some long-lasting benefits for Alaska.

Gov. Tony Knowles believed that the merger was unstoppable and began confidential negotiations that lasted for months and led to an important series of concessions from BP. These were spelled out in the so-called Charter for the Development of the Alaskan North Slope.

The New York Times said one lawyer referred to the concessions as “grease” that had nothing to do with anti-trust issues. These included promises to make donations to the University of Alaska, among many other things.

Technically, the charter still exists, but a provision inserted into it said that no court action to enforce it could be taken after 2009, which was pretty much the same thing as an expiration date.

The charter stated the oil companies would make donations to the University of Alaska and to charities in Alaska "equal to .2 percent" of their oil production times the price of oil. Starting in 2009, BP and ConocoPhilliops said their donations to Alaska groups would no longer governed by the charter.

The state and BP signed the charter in 1999, but that was far from the end of the negotiations.

Former Govs. Wally Hickel and Jay Hammond, formed “Backbone” and opposed the merger on the grounds that it would give BP far too much power in Alaska. The group also included the likes of Jack Roderick, Chancy Croft, Vic Fisher, Oral Freeman and Jay Kerttula.

Hickel and Co. argued that Alaska would be but “one pawn in their global corporate game,” and pushed for more concessions than those that Knowles had secured.

Backbone pushed for additional stipulations that should be part of the deal, such as “guaranteeing access to North Slope processing facilities for companies other than BP, securing access for the state to develop the Slope's huge, but undeveloped, gas reserves, and requiring BP to put up collateral for the costs of dismantling oil and gas facilities,” the Anchorage Daily News reported.

Among other things, the deal signed by Knowles called for the sale of a share of the North Slope production to some other company, at least 175,000 barrels a day of production, and the sale of part of the Kuparuk and Alpine oil fields.

But the pressure from Backbone and the noise from Alaska and the West Coast helped focus federal attention on the anti-trust issue.

When the Federal Trade Commission entered the picture, the dynamics of the situation changed in dramatic fashion. As the Financial Times of London reported, BP and its lawyers “evidently misread the mood of the FTC.”

On Feb. 2, 2000, the FTC voted 3-2 to oppose the takeover of Arco on anti-trust grounds. A combined BP-Arco operation in Alaska would have controlled 75 percent of Alaska oil. “The effect would be to lessen competition in the production and sale of ANS crude to West Coast refiners and increase the market power that BP already exercises,” an FTC announcement said.

The FTC decision prompted BP to change its plans for Alaska, an action that created the major North Slope lineup that exists today.

To get the merger approved by the FTC, BP had to sell Arco’s Alaska assets, which it did to Phillips Petroleum for $7 billion. Phillips merged with Conoco in 2002.

The FTC dropped the lawsuit once Phillips entered the picture. "The anxiousness of BP benefited Phillips," Fadel Gheit, an analyst with Fahnestock & Co., said at the time.

Adding to the anxiety, BP found itself being pressured by Alaska to keep West Coast prices high and pressured by California and Washington to keep prices lower.

"The prize of a large, unified Alaska holding is gone,” Ron Gold, an oil industry analyst, told the publication Octane Week when the sale was announced. “Thanks to high oil prices, BP Amoco can sell the Arco assets for a reasonable price, although still under forced circumstances. All-in-all, if BP could have anticipated how things would end, it's not clear they would have attempted the merger in the first place."

The FTC approved the sale 5-0 in April 2000, which prevented BP from gaining a dominant Alaska position.

In August, BP announced plans to sell its Alaska assets for $5.6 billion to Hilcorp, a company controlled by the family of Texas billionaire Jeff Hildebrand.

The legal and political issues are not the same as those that arose with the BP-Arco merger 20 years ago, but there are some similarities. There are certainly a wide range of things that need to be examined.

In terms of a public response, the biggest difference compared to 20 years ago, is that the Dunleavy administration and the Legislature have failed to promote or engage the public in any discussion about what’s at stake and the policy questions that should be addressed.

One issue, among many, is that Hilcorp would not be subject to the oil and gas corporate income tax that BP has paid for decades.

Hilcorp is a limited liability company and current Alaska law excludes LLCs from this tax. This issue alone is likely worth $30 million a year to the state.

Other questions: Why did Hilcorp give $25,000—three months after Dunleavy was elected—to the Dunleavy campaign group funded largely by the governor’s brother and Bob Penney? Why is BP holding onto the responsibility for dismantling the pipeline at some future date? Are Hilcorp’s financial resources sufficient to respond to a catastrophe? What are the plans for the pipeline? There are many others.

The silence from the Dunleavy administration, the lack of public hearings and the scarcity of reporting about key issues related to the Hilcorp sale, is alarming.

On Oct. 25, the attorney general’s office submitted a short statement to the Regulatory Commission of Alaska advising the RCA that enough time should be set aside to review Hilcorp’s ability to provide safe, economical and reliable service. Where is the analysis from the attorney general on the key public policy questions? Where are the public hearings? Does the governor care about this?

Two days before the state filed that comment, the RCA had announced it was extending the comment period until Nov. 15. That’s not enough.