ARCO, BP Amoco seek to assure lawmakers about merger

Murkowski notes Alaskans “sensitive to the power of absentee investors with near-monopoly power”

Cassandra Burrell

Associated Press Writer

Executives from BP Amoco PLC and Atlantic Richfield Co. spent hours on June 24 trying to assure U.S. senators the deal would benefit consumers and encourage competition in Alaska and elsewhere.

ARCO chairman Mike Bowlin told the Senate Energy and Natural Resources Committee that the $26 billion stock deal would create a company that would invest in the best technology and use it to develop new energy resources.

Richard Olver, a BP Amoco managing director, reiterated a commitment by the combined company to spend $5 billion in Alaska over the next five years — more than what the companies had planned to spend separately.

Committee chairman Frank Murkowski, R-Alaska, said he didn’t oppose the deal, but would look it over carefully.

“While Alaskans recognize and understand the changing face of the international energy economy, we also are historically sensitive to the power of absentee investors with near-monopoly power,” Murkowski said.

Alaska residents are particularly concerned, he said, because the combined company would control about 70 percent of North Slope oil production and a similar stake in the trans-Alaska oil pipeline.

“Our obligation to future Alaskans is to ensure that this consolidation does not stifle competition for Alaskan oil and gas resources,” he said.

Drue Pearce, president of the Alaska Senate, told the committee that “the rivalry between ARCO and BP Amoco has been an important part of the competition that has served Alaska and the country well. With that rivalry possibly coming to an end, competition at virtually every phase is threatened.”

John Lichtblau, chairman of the Petroleum Industry Research Foundation, played down any problems in Alaska from a combined BP Amoco and ARCO. In fact, he said, it stands to be a good thing for the state.

“It will lower operating costs while enhancing the capital and technological base supporting production in Alaska, thereby reducing the financial vulnerability of Alaskan current and future production to low oil prices,” Lichtblau said.

Jay Hakes, who heads the federal Energy Information Administration, said the competition fears felt in Alaska are not an issue in the Lower 48 refining or gasoline sector, since markets for BP Amoco and ARCO don’t overlap.