Lawmakers quiz state regulators on $5.6B Hilcorp, BP deal

An above-ground section of the Trans-Alaska Pipeline System near the Toolik Lake Research Station in the North Slope Borough. (Photo by Rashah McChesney/Alaska’s Energy Desk)

Lawmakers had the chance to probe state regulators on Monday about the pending sale of BP’s Alaska assets to Hilcorp. 

The $5.6 billion deal was announced in late August, but there are several regulatory hurdles to be cleared at the state and federal level before it can go through. 

Fairbanks Sen. John Coghill chaired the Dec. 16 Anchorage meeting.  He said this is the first of many meetings lawmakers will hold to learn more about the sale.

“We’re just now discovering what this deal looks like and the financial assurances. We’re going to be talking about taxes, we’re going to be talking about all kinds of things,” Coghill said. “This was just for us to hear how our state sees this as the state’s best interests, how we’re looking into it, where our legal challenges are, where our economic study needs to fall.”

House and Senate Resources committee members asked about everything from layoffs to whether Hilcorp has the financial resources to manage the assets it wants to take over. 

A lot more than a quarter-stake in the Prudhoe Bay oilfield could change hands. There’s also a 32 percent stake in the Point Thompson gas field on the North Slope, leases in the Arctic National Wildlife Refuge from the Arctic Slope Regional Corporation, and stakes in the Trans-Alaska Pipeline, the Aleyeska Pipeline Service Company and the Valdez terminal. In addition, half of the Milne Point field and the half of the offshore Liberty Project would change hands in the transfer. 

The state has contracted with an economic consulting firm to help model and identify risk in the deal.

Corri Feigi who heads the state’s Department of Natural Resources, said BP and Hilcorp would would like the deal to go through by mid-2020. But, it could take longer.  

“The State of Alaska doesn’t have a timeline or a clock ticking on our review. It will take the time that it takes for the state to undertake its due diligence and get to the point that we can either say ‘this transaction is in the state or the public’s best interest or it is not,’” Feigi said. “We are charged with the responsibility of ensuring that the state and the public interest are protected both in this transaction and then moving forward.”

State regulators say they’re stress-testing the Houston-based company to see if it can handle the financial and operating burden.