In an effort to ensure competition in Alaska's North Slope area, BP Amoco plc will have to part with certain assets before merging with ARCO, according to Alaska Gov. Tony Knowles. In fact, the state would prefer to have a say in which North Slope acreage would be sold and to whom, says the governor.
State law restricts oil companies' leased exploration holdings to 500,000 acres. If BP Amoco's $26 billion acquisition of ARCO is approved, the merged energy giant would own 860,000 acres accounting for 70% of North Slope production (see related story, p. 33).
The purchase would also give the combine a 72% stake in the Trans-Alaska Pipeline and ownership of 80% of the capacity of the tankers that carry Alaska North Slope crude oil. This would create a near-monopoly situation that the state finds unacceptable.
Speaking before the Anchorage Chamber of Commerce late last month, Knowles also called for other concessions by BP Amoco-ARCO. These include giving competitors access to its oil production and transportation facilities and exhibiting a "new level of corporate commitment to hiring Alaskans, using Alaska businesses, protecting the environment, and supporting important community and civic causes."
Knowles continued, "My bottom line is this: Alaska's control of our resources requires a competitive, free-market environment. Monopolistic control of those resources by any outside source, public or private, will inevitably work against Alaska's long-term interests.
"Elsewhere, Alaska does not dispute BP's purchase of gas stations and convenience stores on the West Coast, refining capacity in Washington and California, and oil and gas resources in other countries. What Alaska does care deeply about is maintaining the competitive environment that has brought so many mutual benefits to both Alaskans and industry."
It is Alaska's intention, says its governor, to resolve these issues at the bargaining table. If for some reason negotiations between the oil giant and the state do not reach an accord, says Knowles, Alaska will notify the U.S. Federal Trade Commission of its opposition to the merger and possibly ask the U.S. Congress or Alaska's legislature to resolve the conflict.
"Those are the forums that I think would be least productive but may be necessary," he said.