ANCHORAGE, Alaska (KTUU) - Before the state of Alaska signs off on a $5.6 billion sale of BP’s North Slope assets, legislators and commissioners want to make sure Hilcorp is up to the task.
"We are undertaking a comprehensive, due-diligence end review of this transaction to ensure that it is in the best interest of Alaska, and that the state's interests are protected," Commissioner of the Alaska Department of Natural Resources Corri Feige said in a joint meeting of the House and Senate Resources Committee.
Texas-based Hilcorp Energy is on track to become a new majority owner of Alaska's North Slope oil assets. There is concern over the ability of a large, private company like Hilcorp taking over for the multi-national, multi-billion dollar BP.
If the deal goes through, according to DNR policy advisor Peter Caltagirone, Hilcorp would own 28 percent of the North Slope oil fields. ConocoPhillips would maintain 42 percent majority ownership, and ExxonMobil would hold 19 percent ownership.
Although Hilcorp will hold the minority percentage of the Greater Prudhoe Bay legacy field, it would take over BP’s role as the field’s “unit operator.” Some legislators are wary of this transition.
"Do you have any questions or concerns about their ability to ... it seems like it's a pretty big step up to become the unit operator for a long-standing unit that has multi-nationals as your partner,” Rep. Sara Hannan, D-Juneau, said.
Feige, who has the ultimate authority to allow the sale, says ConocoPhillips and ExxonMobil, co-owners of the Prudhoe Bay legacy field, have not expressed any direct concerns over Hilcorp taking over the role. But she says they are paying attention.
"You raise a very good point," Feige said. "And that is very much central to the due diligence that DNR and the other agencies are undertaking -- combing through Hilcorp's capability to undertake that operatorship, to have the financial wherewithal to manage any kind of upset or event that might happen on that unit -- that's all part of the financial analysis that we're in the process of undertaking," Feige said.
Feige added that any big decisions in Prudhoe Bay are made collectively by all invested parties. “No one acts unilaterally," she said.
The state has contracted with National Economic Research Associates, an economic consulting firm specializing in energy sector analysis. According to a commercial analyst with the Division of Oil and Gas, “… this partnership tells us a little bit about the financial health of Hilcorp, does a deep dive on the transaction, so that we can use that information to inform our financial assurances with Hilcorp.”
The Regulatory Commission of Alaska has asked for Hilcorp's audited financial statements, which the company has asked to keep private. The RCA has not ruled on whether that financial information will be made public.
The DNR acknowledged this was the first of several public hearings on the transaction.
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