State ignores public policy questions arising from BP sale to Hilcorp

The hands-off approach taken by the state of Alaska to the sale of BP’s Alaska’s assets to Hilcorp is evident in the lack of any coherent public process to examine the wide range of issues related to the sale.

This is in stark contrast to the experience in 1999-2000 when BP acquired Arco, which led to a political struggle and the agreement under which BP was required to sell Arco’s Alaska operations to Phillips Petroleum, which became ConocoPhillips. That decision helped preserve some competition on the North Slope.

The Charter for Development of the Alaskan North Slope is essential reading in connection with the Hilcorp acquisition, and it reflects the enormous range of policy choices facing Alaska. Also essential is the Federal Trade Commission decision that forced BP to sell, with Phillips as the successful buyer. The combination of the charter developed under former Gov. Tony Knowles and the FTC ruling led to many benefits for Alaska.

Who is looking out for Alaska’s interests today? I suspect the Dunleavy administration attitude is that we should trust Hilcorp to do what’s right.

The BP transaction with Hilcorp is of a much different nature than the BP-Arco merger, but it is important and it has received almost no scrutiny since it was announced two months ago, which should set off alarm bells.

One of the most important items getting no public attention is the request by Hilcorp that its financial records be treated by the Regulatory Commission of Alaska as confidential. Hilcorp is a private company owned by Texas billionaire Jeff Hildebrand, a tycoon with a penchant for secrecy.

Nearly three months after Gov. Mike Dunleavy was elected, HIldebrand donated $25,000 to the campaign group largely funded by Dunleavy’s brother and Bob Penney.

Forbes estimated in 2015 that Hildebrand was worth $5.9 billion and that he was believed to own all of Hilcorp. He stepped down as CEO of the company last year, remaining as executive chairman of one of the largest privately held oil companies in the nation.

Records filed with the RCA are presumed to be public under state law. But companies are free to ask that records be kept confidential. State regulations say the information can be kept private if the “disclosure of the record to the public might competitively or financially disadvantage or harm the person with confidentiality interest or might reveal a trade secret” and if “the need for confidentiality outweighs the public interest in disclosure.”

Hilcorp says the need for Hildebrand’s privacy outweighs the public interest in disclosure. That should be debated, not accepted as a given.

Considering Hilcorp is in line to own about half of the trans-Alaska pipeline, there ought to be a healthy public discussion in Alaska and whether Hilcorp’s finances are to be kept secret. There should be public hearings and an analysis of the pros and cons of how secrecy would impact the future of oil development in Alaska.

But nothing like that is happening. Hilcorp asked for confidential treatment of its records on Sept. 27 in a series of filings from the RCA.

The Dunleavy administration has done little to publicize the Hilcorp deal other than an obligatory press release by the governor Aug. 27 welcoming Hilcorp and promising “a regulatory environment that ensures safe and responsible development to Alaska’s fullest potential.”

The RCA regulations say that those who want to keep public records public have to act before the end of the public comment period to make their views heard.

“An interested person wishing to file an opposition to the confidentiality petition must file the opposition with the commission by the end of the public comment period. The applicant seeking confidential treatment wishing to file a reply to the opposition must file that reply with the commission within the five business days after the end of the public comment period. The commission will by order grant or deny the confidentiality petition within 30 days after the end of the public comment period,” the regulations say.

Public comments had been due by the end of business Friday, but the RCA public comment system didn’t work, one reason why there were no public comments posted until this week.

The RCA decided to extend the public comment period until Nov. 15. That’s a good first step, but not enough. More time needs to be allowed for public hearings to raise the level of awareness in Alaska.

The Dunleavy administration and the Legislature have failed so far in the matter of due diligence and the Alaska media has yet to explore and explain the implications of one of the biggest transactions in Alaska history.

The state needs to schedule public hearings and gather comments from Alaskans and experts in oil and gas who can offer informed testimony on the wide-ranging ramifications of the Hilcorp acquisition.

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