It’s possible that the threat of an oil tax initiative scared BP away from Alaska.

It’s possible that the threat of an asteroid strike scared BP away from Alaska.

Rep. Lance Pruitt and Sen. Cathy Giessel have raised the prospect of the former. The Anchorage Daily News chose to include their reflexive fear-mongering in one account about the BP sale to Hilcorp.

“Even with this great news, the departure of one of the world’s largest oil and gas companies should cause us all to be concerned that renewed conversations on oil tax changes are causing great anxiety among producers," said Pruitt, whose wife gets $15,400 a month as messaging mastermind for Gov. Mike Dunleavy.

“BP’s exit raises significant concerns and questions, in my mind, about the impact of Alaska’s political instability on BP’s business decision," Giessel said.

Hand it to Pruitt and Giessel for quickly rounding up the usual suspect—our old friend, instability. If the tactic seems familiar, that’s because the playbook hasn’t changed in 40 years.

"When the petroleum industry came to Alaska, the ground rules and tax policy were clear. Since then the rules have changed—and changed—and changed,” the Alaska Oil and Gas Association complained. "Oil and gas taxes have increased 12 times since the Prudhoe Bay Field was discovered.”

(Those sentences appeared in a newspaper ad campaign in December 1977, six months after the trans-Alaska pipeline went into operation. The same script is used today.)

It’s fine to include baseless and predictable claims in the news coverage, but the Daily News should have added a general disclaimer that an asteroid strike is a far more likely explanation for BP’s exit than a proposed initiative that didn’t exist until last week.

And it could have pointed out that if Pruitt and Giessel are right that BP was scared off because the initiative posed a threat to the oil business, then Jeff Hildebrand, the owner of Hilcorp, must be the dumbest billionaire on the planet. He’s not.

Former Gov. Steve Cowper wrote me to say that while he doesn’t know Hildebrand, he has talked to many who have worked with him in Texas and he has watched Hilcorp’s remarkable growth. “I think he is the smartest guy in the industry,” Cowper said.

Cowper thinks it is likely that Hilcorp will do more to produce Alaska oil than BP, perhaps a lot more. And Alaska will be a much larger part of Hilcorp’s future than it has been a part of BP’s recent past.

BP has 73,000 employees worldwide in 73 countries with sales of $300 billion a year, a giant company. Hilcorp has nearly 2,000 employees and operates in nine U.S. states, one of the top private oil and gas producers in the U.S..

As to what really prompted the decision by BP and the investment by Hilcorp, there are probably many factors, most of which are based on confidential assessments about risks and rewards.

One explanation is that BP sold old assets in Alaska—in which Hilcorp sees potential—to help finance a big Lower 48 investment by BP in shale oil.

In 2017, the Wall Street Journal wrote about how BP was shopping its holdings in the North Sea, though the company denied it.

“The talks come as BP and other big energy companies reassess their portfolio of oil-and-gas fields as the crude-price downturn enters its fourth year. With prices stuck around $50 a barrel, BP, Shell and others have been looking to ditch oil fields that are nearly tapped out for cheap, quicker-hit options like U.S. shale,” the Journal said.

"They can't get the returns in the North Sea compared to more attractive, lower-cost opportunities globally," Fiona Legate, an analyst at Wood Mackenzie, the Scottish energy consultant, told the newspaper.

The newspaper said BP needed to keep raising cash to help pay for the Deepwater Horizon disaster in 2010. “The company wants to raise $5.5 billion with various divestments this year. It is considering spinning off some of its U.S. pipelines into a separate public company.”

A year ago, the Australian mining company BHP, which had made a disastrous investment in oil shale in Texas and other states, cut its losses and sold its holdings to BP for $10.5 billion. Analysts said BP had acquired oil assets that could break even at prices well below $50 per barrel.

BP signaled it had plans for a significant sale of other assets, without mentioning specifics.

”In conjunction with this, we have announced the intention to divest an additional $5 billion to $6 billion of assets, predominantly from the upstream, all of which results in a net investment of around $5 billion. Proceeds from divestments are expected to fund up to $5 billion to $6 billion of further share buybacks,” BP CFO Brian Gilvary told analysts on July 27, 2018.

“This transforms our Lower 48 business and reinforces our position as a top onshore producer in the United States. It adds assets which today produce around 190,000 barrels of oil equivalent per day across 470,000 acres along with around 4.6 billion barrels of discovered resource,” Gilvary said.

This BP acquisition, the biggest the company made in two decades, was completed last fall. The rise in oil prices, which proved to be temporary, allowed the company to predict in October that it would use cash to pay for the deal. But it still planned to divest itself of $5 billion to $6 billion in assets, the Times of London said.

The divestment proceeds would go to reduce debt, the company said.

On Oct. 31, the Times quoted Gilvary as saying that oil prices of $75 appeared “pretty firm.”

“While the price of oil might fluctuate by $5 or $10 either way, ‘it's unlikely we are going to see a major correction" in the near term,’” the London paper quoted him as saying.

As a reminder of just how unstable the world can be, this was just before the start of a major correction in oil prices.

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