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Public Radio's Environmental News Magazine (follow us on Google News)

Alaska Oil Merger

Air Date: Week of

In Alaska the two biggest oil producers, British Petroleum and ARCO, are trying to merge. Environmentalists are worried that the deal could harm the state’s fragile ecosystems. But state officials have insisted on environmental concessions in return for approving the deal. Katie Bausler (BAUW-sler) reports from Juneau.


CURWOOD: It's Living on Earth. I'm Steve Curwood. Mega-mergers are sweeping the petroleum industry. Last month federal officials approved the amalgamation of Exxon and Mobil, and now they're reviewing the proposed merger of British Petroleum and ARCO. The two companies are the largest oil producers in Alaska, and some residents worry the merger will affect the state's fragile ecosystems, including the Arctic National Wildlife Refuge. From Juneau, Katie Bausler reports.

BAUSLER: Ever since the merger was proposed this spring, many Alaskans have been in a state of shock. British Petroleum's buy-out of ARCO could consolidate most of Alaska's oil in the hands of a single foreign company. Environmentalists have sounded the alarm with provocative ads on the radio.


MAN: The British are coming! The British are coming!

(Fife and drums)

VOICE-OVER: In 1776, British soldiers fought us to take control of the American colonies. We stopped them cold.

(Cannon shot)

VOICE-OVER: But now they're back.

(Suspenseful music)

VOICE-OVER: British Petroleum is trying to take control of Alaska's economy. And if they take over ARCO without a fight, the stranglehold on our economy could cost jobs and hurt small businesses and our environment....

BAUSLER: The oil industry has a troubled history in Alaska, including the illegal dumping of toxic waste, inadequate maintenance of the aging Trans-Alaska pipeline, poor spill response preparedness, and harassment of workers who point out safety problems. For years, environmentalists have been pushing for improvements, and see the marriage of the state's biggest oil companies as an historic opportunity. Deborah Williams heads the Alaska Conservation Foundation.

WILLIAMS: There are many environmental issues at stake associated with this merger. The primary concern is when you put so much power into one company. That company then has unacceptable leverage in the environmental arena.

BAUSLER: Environmental issues have been a key component of secret negotiations between Alaska officials and BP, British Petroleum. In a charter agreement recently released to the public, BP has agreed to several concessions in return for state approval of the merger with ARCO. BP attorney Bill Noble, who wrote the draft, says the pact is unprecedented in even mentioning the environment.

NOBLE: If you take a look at the number of words, if you take a look at the number of commitments in this charter, there are more provisions devoted to the environmental terms than any other type of term in there. There was a great deal of attention given to the environmental provisions in drafting and putting the charter together, and I believe the fact that they're there and the nature of them is very, very significant.

BAUSLER: Some aspects of the pact have pleased both environmental officials and activists. For example, British Petroleum will spend millions to remove toxic waste from the oil fields, even waste left behind by other companies. BP will also inspect thousands of miles of corroded feeder lines that connect the Trans-Alaska pipeline. Larry Dietrick is the chief spill prevention and response officer for the Alaska Department of Environmental Conservation.

DIETRICK: The merger has created the circumstances whereby we can ask for things that we otherwise couldn't ask for. And indeed, there is a suite of things that are in that agreement now, that actually bolster what we can do from a regulatory standpoint.

BAUSLER: British Petroleum will still control the lion's share of Alaska oil. But in response to fears that it will become an oil monopoly, BP has agreed to sell off a number of exploration leases to another company, along with some of its North Slope oil reserves. Ms. Williams of the Alaska Conservation Foundation has been lobbying for economic competition like this, saying it can minimize the oil industry's impact on the environment.

WILLIAMS: What we've seen in the past several years is oftentimes, when BP said they couldn't do something, ARCO or Conoco or someone else said we can. We can meet that environmental requirement. We can come up with the best available technology to improve the environmental conditions associated with this particular activity. If you don't have good competition, then you lose that ability to look at other companies and what they are able to do for the environment in similar circumstances.

BAUSLER: Despite British Petroleum's environmental concessions, some Alaskans oppose the merger. During a recent series of public hearings, some speakers blasted any deal with big oil.

MAN: I urge you to block this deal. I believe that the creation of a monopoly in this industry is not in the best interest of the state.

MAN 2: These multinationals have a sole motive. One that comes ahead of people's lives, of the environment, of communities. That motive is profit.

BAUSLER: Other critics have pointed out that many of BP's commitments to the state, such as a promise to replace older supertankers with newer, double-hulled ships, are things the company is already required to do by law. Still others are upset the state never even asked British Petroleum to give up hopes of drilling in the coastal plain on ANWR, the Arctic National Wildlife Refuge. One caller grilled Alaska Governor Tony Knowles about this during a recent radio talk show.

CALLER: Are you going to allow them to drill on that plain?

KNOWLES: As far as I am concerned, as your governor, I think that there should be development, oil development and exploration on the study area of the Arctic National Wildlife Refuge. That was the reason it was put aside as a study area there, on the coastal plain, when the refuge was created. So I don't think there's any disagreement between that oil company's interest, indeed industry's interest, in taking a look at the coastal plain to see if there isn't the potential to develop.

CALLER: Well, what about the citizens of Alaska's interest? What about the caribou's interest?

KNOWLES: I think, like any issue, there are differing opinions on that, but I believe the majority of Alaskans do believe it can be done responsibly.

BAUSLER: The majority of public testimony is in favor of the merger. Still, the company has saturated Alaska media with an advertising campaign to ensure continued support.

(Upbeat music)

VOICE-OVER: We're bringing together the strengths of BP and ARCO, building a stronger company that will capture the promise of more production, more investment, more jobs, and more opportunities for Alaskans today and tomorrow.
MAN: You know, I -- I feel real good about where things are headed.

(Music with chorus: "It's a new day.")

VOICE-OVER: BP and ARCO. Shared energy for a brighter future.

(Music and chorus continue up and under)

BAUSLER: The debate is now moving from the state level to Washington. Six senators and 50 House members have already signed a letter asking British Petroleum to put the Arctic Wildlife refuge off-limits. But Congress may have little say over the deal, and in fact the environment might not be a big consideration at the federal level. The merger is being reviewed by the Federal Trade Commission, which is focusing instead on antitrust issues and how the merger might affect the retail price of gasoline. For Living on Earth, I'm Katie Bausler in Juneau, Alaska.



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