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Public or private? State wants Prudhoe agreement made public; producers say it’s too sensitive
Kristen Nelson, PNA editor-in-chief
The Division of Oil and Gas, as well as members of the Legislature and some private parties, would like to see what’s in the 2000 Prudhoe Bay unit alignment agreement, but the oil companies that signed the agreement say the document is confidential — and that it is not part of the Prudhoe Bay unit operating agreement.
Last September Division of Oil and Gas Director Mark Myers wrote Neil McCleary, BP Exploration (Alaska) Inc.’s Prudhoe Bay performance unit leader, asking for a copy of the April 12, 2000, Prudhoe Bay unit alignment agreement.
Myers said the division reviewed the agreement while assisting the Department of Law with the Charter for Development of the Alaskan North Slope, and, he said, “it appears to us that significant portions of that agreement address matters typically found in a unit operating agreement.”
The division also believes, Myers said, that “the parties to the agreement are operating under provisions of it that differ from the applicable provisions of the Prudhoe Bay unit operating agreement” on file with the division.
“As a consequence, we believe the agreement should be filed with the division as a de facto amendment to the PBUOA,” Myers said. Companies disagree Margaret Yaege of Phillips Alaska Inc., the company’s vice president for the greater Prudhoe area, told Myers in an Oct. 5 response that she disagrees with the assertion that the alignment agreement “constitutes an amendment” to the unit operating agreement. The alignment agreement, she said, “provides for cross-assignments of Prudhoe leases and assets among the signatories and prescribes how the parties shall exercise their rights under the PBUOA as it exists today.” The alignment “addresses amendments to the PBUOA, but such amendments remain at this time mere future possibilities that are contingent upon achievement of alignment with the non-signatories to the alignment agreement and execution of a formal amendment by all working interest owners.”
Myers said in his Sept. 4 letter that if the division did not hear from BP within 30 days, “we will assume you have no objection to us obtaining a copy of the agreement from the Department of Law and placing it in our public file.”
Yaege said she was “troubled by the suggestion that the Division of Oil and Gas could or world unilaterally convert the alignment agreement into a public document without explicit written approval from the parties to the agreement. The alignment agreement was provided to and accepted by the Department of Law pursuant to the understanding that it would be kept confidential. As a result, the suggestion that the Division of Oil and Gas might unilaterally obtain a copy from the Department of Law and make the document public raises concerns about the firmness of the state agencies’ confidentiality commitments.”
Yaege said that while the division “has failed to demonstrate the right, the obligation, or any specific public need for making the alignment agreement a public document,” Phillips would consider making parts of the document public if BP, ExxonMobil and Forest Oil agreed, and “with such redaction as requested by any one of the parties to the agreement.”
Phillips would insist, Yaege said, “upon a minimum redaction of Sections 2 and 3 of the Phillips Joinder Agreement.” BP sites commercial sensitivity BP’s objection to placing a copy of the agreement in the division’s public file came from McCleary, who told the division that BP, as Prudhoe Bay unit operator, is bound by the terms of the Prudhoe Bay unit operating agreement, “which provides that it can be amended only by 100 percent of the working interest owners.”
Chevron and Texaco have not approved the alignment agreement, McCleary said, so BP does not believe the agreement “can be construed as an amendment to the PBUOA.
“Your interpretation of the agreement as a ‘de facto amendment’ can be confirmed only by a court of law,” McCleary said.
He said that BP as an individual Prudhoe Bay unit working interest owner would not object to the division being provided “with a non-confidential copy” of the April 12, 2000, alignment agreement between BP, ExxonMobil and ARCO Alaska Inc. “as a matter of courtesy.”
BP would also not object, McCleary said, to providing the division with “non-confidential copies” of the Phillips and Forest Oil joinder agreements, “but only on the condition that the last sentence of section 2 and all of section 3 of the Phillips Joinder Agreement be deleted due to the commercially sensitive nature of the provisions.” Amendments envisioned Jack Williams, Alaska production manager for ExxonMobil Production Co., told Myers in an Oct. 29 letter that ExxonMobil does not consider the alignment agreement to be an amendment to the unit operating agreement.
“Achieving full alignment with all Prudhoe owners would provide the basis for undertaking significant modifications to the PBUOA and we continue to work on reaching such a resolution,” Williams said. “At this time, however, no amendment to the PBUOA has occurred.”
He said ExxonMobil requests the division to “maintain any copies of the alignment agreement it has as confidential and not make them public.”
Williams also said he realizes that the division has had requests from members of the Legislature and the public for information on the agreement, “and we appreciate that not being able to provide a copy may, at times, be difficult for the division. However, we don’t believe this is a sufficient basis to release confidential, commercially sensitive agreements negotiated among the owner companies.”
Williams also said that providing copies of the “numerous agreements negotiated among the companies” would be impractical, “and it would be an extremely onerous precedent from a business climate perspective.” Other requests for document Rep. Jim Whitaker, R-Fairbanks, told Myers in a June 17 letter that it has been brought to his attention that the Prudhoe Bay unit alignment agreement “has not been made available to the public through your office, a situation that is probably contrary to Alaska law concerning public records.”
Wayne Lewis and Jeff Lowenfels of Lewis & Lowenfels requested in a June 5 letter that the alignment agreement be made public, and told Myers that, “given the import of this document to the management of Prudhoe Bay by the state, we expected to find a copy of the agreement on public file in the lease administration section of the Division of Oil and Gas.”
Lewis and Lowenfels told Myers that while they have seen the letters from BP, Phillips and ExxonMobil “asserting that the document is not a public document, is not signed by all parties and cannot possibly be released until it is, and even then, perhaps not.
“Nevertheless, it is apparent that members of the PBU are acting as if the agreement has been signed by all parties, so it seems more than disingenuous of the BPU members to withhold access assignments, cross assignments and other matters which are obviously contained in the secret document,” they said.
Lewis and Lowenfels said they agreed with the division’s conclusion that the alignment agreement “is, in reality, an amendment to the Prudhoe Bay unit operating agreement and as such, must be filed and must be made available to the public under Alaska’s public records law.”
Lowenfels told PNA July 18 that the state’s public meetings act says the government is not to do the peoples’ business behind the peoples’ back. Lowenfels said he believes the Attorney General’s office is looking into the request.
“I’m certain that the state will see it as we do,” Lowenfels said.
“These are public documents” — or the companies “should be required to file them in public document form,” he said.
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