Regulatory Commission of Alaska

Public Comment for P-19-015 by Andy Josephson

Regarding dockets P-19-015, P-19-106, and P-19-017:

BP’s sale of its Alaska operations and assets to Hilcorp has prompted many questions but relatively little discussion – I remember more public engagement on Carrs’ sale to Safeway than I’ve heard about this sale. Oil and Alaska’s economy have been inextricably linked since the late 1960s. Therefore, it is critical that this sale be thoroughly vetted and that Hilcorp commit to answering the many open questions posed to them in a forthright and public manner. 

In Alaska, BP has a long history of being a fairly good corporate citizen; Hilcorp’s history is far less substantial and far more fraught. Since 2012, Hilcorp has been cited on multiple occasions for failing to comply with Alaska’s state laws and regulations. Hilcorp’s safety record has been less than stellar: in 2014, a fire destroyed the living quarters on Hilcorp’s drilling platform in Cook Inlet; in 2015, three workers were knocked unconscious through the unsanctioned use of nitrogen gas in an enclosed space; and just last year, a worker was killed by a falling pipe, due to insufficient safety protocols and training. Can Hilcorp improve their safety record? How?

BP has a long history of voluntary financial support for Alaska’s communities, arts, children, and more, while prioritizing local hire. Will Hilcorp commit to donating to public entities to the same extent as BP? Will Hilcorp commit to hiring Alaskans, or should Alaska expect an influx of workers who commute from other states?

Fossil fuels have been the bedrock of Alaska’s economy for the last half century; with the Exxon Valdez spill, we’ve seen the damage that can be caused by a single mistake. Luckily, BP has never had such a sizable event occur in Alaska waters, but the Deepwater Horizon disaster is illustrative; a series of oversights, technical mistakes, and safety violations led to the biggest, most costly oil disaster in history, one for which BP was ultimately liable for at least $65 billion. BP maintained financial solvency because it had staggering financial resources on which to draw; does Hilcorp have the assets/insurance necessary to cover a fraction of such a disaster? As a privately held business which is not traded, Hilcorp affords the public less transparency relative to its financial position than has BP. Will Hilcorp release financial audits proving its solvency, should such a situation occur?

Legally, Hilcorp is an S-Corporation, which means that they are not subject to the same tax structure as BP; it has been estimated that this will result in a $30 million annual reduction to the state treasury, all other things being equal. The Legislature will likely attempt to address this during the upcoming session. Is Hilcorp willing to pay the same taxes as other oil companies?

Under the terms of the agreement between BP and Hilcorp, BP will retain responsibility for dismantling, removing, and restoring the pipeline, despite ceasing operations in Alaska. Why is this? If BP ceases to exist as a corporate entity, will responsibility for this task devolve to Hilcorp? If so, does Hilcorp possess the financial wherewithal to complete this task?

Type

Comments

Date Filed

12/11/2019

Tracking Number

TR1906599

Filed By

Andy Josephson

Entities

Certificate(s)

Means Received

Internet

Related Matters

P-19-015	Application-Transfer BP Pipelines (Alaska) Interest in PTE Pipeline to Harvest Alaska (Point Thomson Export Pipeline)
P-19-016	Application-Transfer BP Pipelines (Alaska) Interest in Milne Point Pipeline to Harvest Alaska (Oil & Product Pipelines)
P-19-017	Application-Transfer Certificate No. 311 from BP Pipelines (Alaska) to Harvest Alaska (TAPS)

Show Supporting Documents

No files found

701 West Eighth Avenue, Suite 300 Anchorage, Alaska 99501-3469
Phone: (907) 276-6222 Fax: (907) 276-0160 TTY/Alaska Relay: 7-1-1 or 1-800-770-8973
Toll Free: (1-800) 390-2782 (outside Anchorage, within Alaska)
Webmaster: webmaster.rca@alaska.gov