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Governor’s merger team finds six areas of serious concern Knowles details examination of BP Amoco acquisition of ARCO; Federal Trade Commission officials coming to Juneau Kristen Nelson PNA News Editor
Gov. Tony Knowles said April 12 that the administration team examining the proposed acquisition of ARCO by BP Amoco has “identified six areas of serious concern where the state will be examining the proposed merger.”
Knowles also said that the team will meet with officials of the Federal Trade Commission April 19 in Juneau to provide the federal agency with jurisdiction over the merger the full benefit of state information and concerns.
The six areas of concern identified are: value of North Slope oil; marine transportation; operation of the trans-Alaska oil pipeline; development of other North Slope facilities and fields; natural gas development; and leasing of acreage for oil and gas development. Value of ANS Knowles said that the value of North Slope oil was a concern since British Petroleum has had, since the startup of the pipeline, “an incentive to keep the publicly reported oil prices as high as possible”… because BP was selling crude oil to West Coast refineries. Once it acquires ARCO, Knowles said, “BP Amoco will now find itself essentially a buyer of its own crude to be refined in West Coast refineries previously owned by ARCO. This incentive to keep oil prices high may disappear.”
The state, he said, wants to examine the effect this may have on Alaska taxes, royalties and revenues.
In the marine transportation area, Knowles said, BP Amoco will control more than 70 percent of the available Jones Act tanker capacity for transporting Alaska oil. “This level of control raised potential concerns about the availability and cost of marine transportation for companies other than BP Amoco and Exxon. We want to examine the implications of essentially only two companies involved in the transportation of Alaskan oil.”
After the merger “BP will control more than 70 percent of the pipeline and that will remove much of the potential for competition. We need to closely examine the impact of the reduced competition and the effects on the tariff charged for shipping oil down the pipeline.”
Concerns about future development Knowles said that his administration, working with the Legislature, has provided incentives for the development of new North Slope fields. “We want to make sure that the newly merged company continues its interest in developing these satellites which provide jobs for Alaskans and work for Alaska businesses,” he said.
In the area of North Slope natural gas the administration will examine “ways to encourage production of North Slope gas” and review BP Amoco’s approach to gas-to-liquids technology and their pilot project on the North Slope. “We also want to make sure,” he said, “that this merger creates no obstacles to natural gas development and the construction of the gas pipeline.”
In the area of leasing there has been “intense competition among companies” and the administration wants “to make sure that this heightened interest continues as the state and the federal government make available lands for oil and gas leasing.” The team will also examine the consequences of the surrender of leased acreage in excess of the state limit of 500,000 acres per company of undeveloped leases.
Knowles said the cabinet-level team will hire international experts in two areas: the behaviors of new multi-national oil companies and in anti-trust matters.
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