One giant question Alaska needs to have answered regarding the BP-Hilcorp sale is whether the eventual dismantling of the trans-Alaska pipeline will now be governed by what we’ll call the Unocal plan, which is to avoid all responsibility for the task by selling out, unloading the obligation on the remaining owners.

The Unocal plan, which has been approved by the Texas courts, could theoretically allow BP to claim some day in the future that it has no obligation for dismantling the project because it sold its interest to Hilcorp, the company owned by Texas billionaire Jeff Hildebrand. The state should insist that BP provide details on the implications of the court ruling on Unocal and the risks to Alaska.

Both BP and Hilcorp have told the Regulatory Commission of Alaska that BP will be responsible for all of its obligations related to dismantling that were accrued up to the time when the sale closes, while Hilcorp will be obligated to pay for removal costs associated with pipeline modifications made after the sale date.

Despite the assurances by BP and Hilcorp, however, the Unocal court decision could be a precedent that would let former pipeline owners off the hook, even though they have long since collected all the money from oil purchasers to finance “dismantling, removal, and restoration,” an obligation known as DR&R.

The dismantling would occur sometime this century, after the oil industry decides that it is not economic to operate the pipeline. The agreement to do this was part of the original agreement to get the pipeline built.

In essence, Unocal claimed in court that its obligation to pay a part of the removal costs would end as soon as it sold its 1.3 percent share of the pipeline to the three big owners. This dispute has held up the Unocal sale for seven years.

As BP, ConocoPhillips and Exxon put it in court papers, the Unocal plan allowed the company “to foist its DR&R obligation on the remaining owners, while keeping its DR&R allowance,” a situation that they called unworkable.

An appeals court agreed with Unocal, however, and the Texas Supreme Court refused to get involved.

Left unanswered in all of this is what happens to the profits Unocal made by collecting money long in advance for the future chore of removing the pipeline.

Unocal and the other pipeline owners have already been paid for removing the pipeline and enjoyed significant tax benefits over the decades. Fairbanks scholar and journalist Richard Fineberg has estimated that the benefits to all of the pipeline owners could total tens of billions of dollars in time.

The oil companies have now told Alaska regulators they have settled their differences and the Unocal sale is ready to close.

The “obligation” for former pipeline owners to pay for removing the pipeline is now far less certain than it was before court approval of the Unocal plan, which appears to force all the costs of dismantling on whoever owns the pipeline just before it is to be shut down.

Unocal certainly had an obligation to participate in the removal of the pipeline, since it is a 1.3 percent owner of the pipeline. BP owns 48 percent, ConocoPhillips has 29 percent and Exxon has 21 percent.

The sale of BP’s Alaska assets to Hilcorp should not be approved by the Dunleavy administration before there is a clear understanding of this issue and others.

In a column that has appeared in the state’s major newspapers, John Shively, former natural resources commissioner, claims there is no need for any formal agreement similar to the 1999 Charter for the Development of the Alaskan North Slope. That agreement, reached when Shively was natural resources commissioner under Gov. Tony Knowles, spelled out major commitments that BP and ARCO made before their merger nearly two decades ago.

Shively complains that the proposed sale of BP to Hilcorp is not a merger, but a stock transfer and any additional government involvement would be bad for Alaska.

In his current position, as chairman of the Pebble Partnership, I can understand why Shively would be opposed to an additional layer of government scrutiny on one of the largest business transactions in Alaska history. If the BP-Hilcorp deal received such treatment, it would be logical to do the same with Pebble and he would not want that.

Shively’s repeated claims that the existing processes of state agencies are all that Alaska needs seem hollow in this instance, given the refusal of the Dunleavy administration to involve the public in any serious fashion with review of the BP-Hilcorp sale.

And when the state finally wrote to legislators about the BP-Hilcorp review, Department of Natural Resources Commissioner Corri Feige mistakenly claimed that the Securities and Exchange Commission was responsible for oversight of the BP-ARCO deal. It was in fact the Federal Trade Commission.

And Feige’s letter to legislative leaders gave the impression that the state had already hired a consultant to “rigorously examine Hilcorp’s ability to fulfill its obligations to the state under a set of stressful scenarios,” instead of making it clear that a contract had yet to be signed. The letter did not specifically mention the DR&R legal uncertainty.

So I’m not convinced that the state review will be as thorough as it should be.

Among the many issues that warrant an open process is the loss of $30 million or so in state revenue that would occur because Hilcorp, as a limited liability company, would not have to pay the oil income tax paid by oil corporations.

One of the others is the complicated matter of the Unocal plan to keep the money paid for dismantling the pipeline, while forcing other companies to take on the obligation.

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