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Lawsuit filed to stop BP Amoco-ARCO deal
T.A. Badger Associated Press Writer
A former state senator and a pair of 1998 gubernatorial candidates have filed a lawsuit seeking to stop BP Amoco’s proposed buyout of Atlantic Richfield Co. on antitrust grounds.
The suit charges that BP Amoco and ARCO already behave like monopolies on the North Slope, and that the pending deal — valued at more than $25 billion — would make matters even worse for the state.
“No other state will be tied so intimately to a single company for their primary source of revenues,” the lawsuit reads. “No other company will have the potential to control a state’s revenues the way BP Amoco can control Alaska’s if this merger is approved.”
The plaintiffs seek first to have the merger declared illegal, and failing that, to force BP Amoco to sell its interest in the trans-Alaska oil pipeline system, along with a large chunk of its oil production and half of its leases in the National Petroleum Reserve-Alaska.
Payment demanded for past monopolistic conduct It also asks the court to order the companies to pay between $12 billion and $27 billion for past monopolistic conduct.
“(Alaskans) are the landlord and they are the tenants,” said Nick Begich, one of the plaintiffs in the lawsuit, which was filed Oct. 15 in Anchorage Superior Court. “We need to assert our position as landlord.”
His co-plaintiffs are Ray Metcalfe, who ran for governor last year on the Republican Moderate ticket, and Vic Fischer, a former state senator from Anchorage. Begich was a declared write-in candidate for governor in 1998 as a member of the Alaskan Independence Party.
Their lawsuit also asks that the court declare that it was improper for the Knowles administration to conduct closed-door negotiations with BP Amoco.
“Right now we have negotiations going on in secret,” Metcalfe said.
“We’re going to force the doors open.”
Those negotiations are related to conditions set by Knowles for granting state approval of the deal. Terms include selling enough producing oil leases to allow another company to become a major competitor on the North Slope, reducing the cost of shipping oil down the pipeline and providing access to natural gas reserves.
In a speech in August, Knowles said the proposed deal would represent “an unacceptable monopolistic control of Alaska’s resources.”
Plaintiffs oppose privately negotiated deals Despite Knowles’ conditions, Begich said the public interest is never well-served when deals are cut in private.
“I believe by moving this issue into the courts, Alaskans will have an opportunity to see the numbers and look at the deal,” he said.
Knowles has said he hopes to reveal a preliminary agreement with the company later this month.
BP Amoco and ARCO are currently the only companies operating oil fields on the North Slope, which provides about 20 percent of the nation’s domestic output.
Swallowing ARCO would leave BP as the sole operator. It would control 70 percent of Slope production and more than 70 percent of the trans-Alaska pipeline.
The state budget is heavily dependent on income from North Slope production. Taxes and royalties provide more than two-thirds of Alaska’s general fund revenue.
BP Amoco continuing discussions with state “We’re disappointed that the lawsuit was filed,” BP Exploration (Alaska) Inc. spokesman Ronnie Chappell said Oct. 19. “We’re still in discussions with the state and we expect that through those discussions to reach an outcome that is satisfactory to Alaska and Alaskans,” Chappell said.
“We will continue those discussions and we still expect to achieve regulatory approval of the combination with ARCO before the end of the year.”
Chappell said that the company is reviewing the complaint and evaluating options for responding.
Knowles’ administration negotiations continue Knowles’ administration spokeswoman Claire Richardson told PNA Oct. 19 that “the Knowles’ administration believes they can achieve their goals through negotiation and will continue to negotiate in good faith.”
Richardson said “as soon as there is a tentative agreement we expect to announce a series of town meetings in several locations including Anchorage, Juneau, Fairbanks, the Kenai and Barrow.” At least one of those town meetings would be teleconferenced to rural communities.
Fischer said he and the other plaintiffs filed their antitrust suit after concluding that the state would not pursue such a case, despite being urged to do so by a wide range of Alaskans who created a group called Backbone.
“It’s got to be done,” said Fischer, who was a delegate to the state constitutional convention in 1955. “It wasn’t being done by others, so we stepped forward.”
The lawsuit restates several accusations made against BP Amoco and ARCO over the years — among them, that they have used their pipeline ownership to choke off other competitors on the slope and that excessive pipeline tariffs have cheated the state out of billions of dollars.
It also claims a merger would substantially reduce the number of exploratory wells drilled on the North Slope, which would in turn lead to lower production.
BP Amoco has maintained that a combined company would be benefit Alaska because production costs would be lower, thus making Alaska a more attractive place for investment.
Petroleum News Alaska contributed to this story.
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