Most oil industry observers are looking favorably, if some of them cautiously, at Phillips Petroleum Co.'s purchase of Arco Alaska.
The deal is intended to resolve federal antitrust concerns about BP Amoco's proposed merger with Los Angeles-based Atlantic Richfield Corp., known as Arco.
But it hasn't settled disputes about how the merger issue was handled by the Knowles administration and by the Federal Trade Commission.
London-based BP said Wednesday it will sell Arco Alaska to Phillips for $7 billion to clear the way for FTC approval of BP's acquisition of the rest of Arco, which would create the world's second largest non-government oil company.
The FTC had been poised to block the $30 billion BP-Arco merger in court, saying the combined company would control West Coast oil and gas prices. But hours before the new deal was publicly consummated in Anchorage Wednesday, the commission said it was putting legal action on hold.
``The FTC has saved us from ourselves,'' said Jim Sykes, executive director of the Alaska Public Interest Research Group.
The revised merger averts the planned layoff of 400 employees and gives Phillips, based in Bartlesville, Okla., an investment of more than 20 percent in both the Prudhoe Bay oil rim and the trans-Alaska pipeline.
That lowers BP and Arco holdings on the North Slope below 50 percent, in contrast to the majority control many Alaskans feared when the original merger was announced last year.
Meanwhile, BP and Phillips executives promised aggressive oil exploration and progress on tapping the state's ample natural gas reserves.
Sykes, while expressing optimism, said the public should be able to see details of the agreement among the companies and to learn more about how BP and Phillips have competed - or cooperated - worldwide.
But the new proposal is a big improvement over the charter negotiated by Gov. Tony Knowles with BP and Arco, Sykes said, contending that the divestitures it called for did not protect Alaskans against a monopoly on the North Slope.
``The charter was relatively unenforceable,'' he said from Anchorage. ``The wording was weak; the provisions were weak.''
Alaska Chamber of Commerce President Pamela La Bolle, though, supported the charter and said the FTC's opposition to the merger had been arbitrary.
``It was almost a popularity poll with the West Coast states, instead of using the usual measurements they would have used,'' La Bolle said.
She said she doesn't have an opinion on whether the new deal is better than the originally proposed merger. ``I think getting things off the dime is an improvement. . . . It appears that this is a very good solution. All's well that ends well.''
Phillips has committed to take over Arco's responsibilities under the charter. The charter calls for environmental-protection measures, local hire and donations to Alaska charities, non-profit organizations and the University of Alaska.
Knowles, defending the administration's role in backing the merger, noted at a news conference that the charter makes demands upon the companies that the FTC can't. ``We could not have accomplished these goals had we not been at the table.''
A lingering question is whether BP and Phillips will be true competitors in the state.
``I think it's immeasurably better than the original agreement, certainly,'' said Walt Parker of Anchorage, an observer of the oil industry who chaired the state commission on the Exxon Valdez oil spill. ``(But) I think Phillips may be BP's choice as the one they want to see on the Slope.''
While Phillips has done an admirable job in managing liquefied natural gas at a Nikiski plant, it would have been interesting to see the bids for Arco made by Chevron Corp. and Conoco, Parker said.
But he applauded strong statements by Phillips Chairman and CEO Jim Mulva Wednesday in favor of bringing natural gas reserves to market through a variety of technologies.
Juneau economist William S. Brown said he's not convinced BP and Phillips really will be competitors, as they will see the world oil market from a similar vantage point.
And mergers shouldn't be only about the bottom line, Brown said. The original Sherman Antitrust Act of the 1890s also placed importance on ``undue influence'' that a company could place on the political system following a merger, he said.
``Competition isn't just economic competition. Competition is also social and political competition,'' he said.
Even without Arco's assets in Alaska, BP will be in a strengthened position following the merger to bend lawmakers to its will, Brown said. ``It'd certainly be hard to raise taxes on this one company.''
It's not clear what the merger's trickle-down effect on the Juneau economy might be, said Kirk Flanders, acting director of the Juneau Economic Development Council.
``It would seem to me that anything that would affect state government financing would have an effect here, with 31 percent of our wages coming from the state,'' he said.