A year after Hilcorp Energy Co. took the reins the role of manager of Prudhoe Bay oil field and was the nearly half owner of the trans-Alaska pipeline Hilcorp Energy Co. is now the Alaska Supreme Court is considering whether the public should be given access to the privately-held firm’s financial information.
The Supreme Court on Tuesday heard arguments in the case that was filed on behalf of the City of Valdez in which the city contends that the state authorities violated people’s basic rights when they permitted Hilcorp to keep its financial records secret following the acquisition of all the BP Plc.’s Alaska assets.
The $5.6 billion sale of BP in the deal with Hilcorp has been completed by the year 2020 and was approved from the Regulatory Commission of Alaska. In addition to to approve the transfer of BP’s part of the pipline that runs across Alaska came the commission’s acceptance of Hilcorp’s request for keeping its financial data confidential. This is in contrast to the situation that exist with BP and the other large oil firms operating within Alaska which are traded on the stock exchanges.
Robin Brena, the attorney representing Valdez said that the public is entitled to be informed about the reasons of the RCA’s decision to determine that Hilcorp is able, willing and competent to oversee and manage the Trans-Alaska Pipeline System, including the Valdez marine terminal, which is located in the Prince William Sound city.
“There isn’t anywhere on record any bit of evidence to suggest that’s actually the case,” Brena told the justices during the hearing.
Valdez isn’t seeking to stop the transaction, Brena emphasized. However, it would like access to financial data to ensure that residents of the city as well as other Alaskans can determine if Hilcorp in its current capacity to manage the pipeline and other facilities, is able to run its operations safely, respond to any disasters like oil spills and clean up facilities once they cease to be used as well as the costs of this latter undertaking estimated at more than $5 billion.
“As the situation is now, neither we Alaskans, not cities like Valdez nor this court have any means to determine if the biggest owner of the most important facilities that are publicly controlled in Alaska has a $1,000 balance in the bank, and less the capacity to manage these facilities for the public good,” Brena said.
Valdez presented an identical argument, but was unsuccessful the case when an judge from the state Superior Court judge dismissed the case in 2021. Valdez is now requesting for the Supreme Court to reverse that decision and to send this case for a hearing in Superior Court so that its entire merits are considered.
The attorneys representing RCA, Hilcorp and BP participated in a succession during the hearing. They repeated their client’s arguments that Valdez had no legal standing to challenge the commission’s decision. They also argued the issue of releasing Hilcorp’s financial information is now in doubt.
Valdez could have made an official complaint to stop the RCA action, but he did not make it happen, the officials said.
“This appeal isn’t about merits,” or about the commission’s actions stated David Wilkinson, the assistant Alaska attorney general representing the RCA. “It’s concerning what Valdez was unable to accomplish in bringing the issue to a point where they are likely to be resolved and keep those issues open for an appeal to judicial review.”
Michael McLaughlin asserted a similar argument. He was the lawyer representing BP who voluntarily left Alaska after a half century of operation in the state after it sold its final property to Hilcorp.
“Valdez did not exercise its rights in this case and allowed the appeal to be dismissed,” McLaughlin said.
Justices were uneasy about some of the technical arguments, particularly the assertion that Valdez did not have standing in the matter.
Justice Joel Bolger said such technicalities were difficult to accept “when I consider port Valdez marine terminal as well as the place and the location of Port Valdez – all these things that the commission as well as many others are aware of.” Bolger also refers to the official statement of the city in which they concluded that any disruption to any disruption of the Trans-Alaska Pipeline System would be extremely detrimental the Port Valdez residents.
“How can you claim that these interests aren’t enough to allow Valdez to bring an appeal in behalf of the citizens of this country?” Bolger, who has retired, but was on the panel that heard the case, questioned Anne Marie Tavella, the attorney representing Hilcorp Harvest Midstream, its subsidiary for pipelines. “I am aware of your procedural objections but when you get into the meat of the matter I’m not able to think of anyone who’s more concerned about this particular transaction.”
Tavella said Valdez even though it holds a significant interest in the subject and is not affected due to the RCA’s approval of the BP-Hilcorp deal. To be considered to have standing the person must be hurt or possibly injured by an act.
A large crowd was in the court’s chambers during the proceedings that lasted over two hours. One of the spectators was Vic Fischer, 99, the last remaining writer of the Alaska constitution, as well as a few former state legislators.
The court was aware of this by justices. “We as a justices appreciate the public’s attention to this case,” Chief Justice Peter Maassen declared at the conclusion of the trial.
Maassen told reporters that the court would issue a written ruling in the near future, however the judge did not offer an estimate of the time it will take.
There are mixed emotions in Alaska over Hilcorp’s rise to become one of the largest oil industry players.
Many supporters of the company highlight its success in slowing down production at the aging Prudhoe Bay and its improvements at the other North Slope fields acquired from BP. Hilcorp has a long history of revitalising old field of oil and natural gas which were operated by large corporations. The company started the development of its Alaska activities in 2012 at Cook Inlet, where it purchased properties from Chevron in addition to Marathon Oil.
Hilcorp’s critics say that the company cut corners and has a track record of environmental and safety violations. They cite a myriad of enforcement actions, including the most recent of which was that was taken by the Alaska Oil and Gas Conservation Commission for drilling violations in the Milne Point field and the most significant of them all was the 2015 incident at the oil field which nearly caused the deaths of three employees.
The company’s critics as well as those from the Alaska Public Interest Research Group and the Fairbanks Climate Action Coalition, protested at the front of the courthouse right prior to Tuesday’s Supreme Court hearing. They shouted slogans such as “No more secrets No more spills” along with “We have our eyes on you,” and directed the former at the justices of the court.
One of the Hilcorp skeptical participants at the rally was state senator. Bill Wielechowski, D-Anchorage. He said he is concerned that BP has sold the assets it had to Hilcorp to save the enormous cost of cleanup that comes with the deconstruction of facilities and also that Hilcorp does not have the capacity to finance these expenses.
“Why was it that BP sell at so little?” he asked after his speech at the courthouse gathering.
Wielechowski is the bill’s sponsor which would compel the privately-owned business to pay its corporate tax to the state just like BP did in the years it was operating in Alaska. The bill, Senate Bill 114 will apply to privately-held companies that operate in the oil and gas sector that generate more than 4 million dollars in profit. The amendment, Wielechowski said, would result in an additional $120 million annually to the state.
Oil industry as well as its backers have been adamantly opposed to Wielechowski’s bill. In an memo that called on members to attend an upcoming legislative hearing on May 4 in the Resource Development Council for Alaska declared that it “threatens the prospects of future oil and gas exploration in Alaska and could be disastrous for the economy, job opportunities as well as the living standards.”
The story was originally published in Alaska Beacon and is republished here with permission.
