The big news throughout the state this week was BP Amoco's announcement it was selling Arco's entire Alaska operation to Oklahoma-based Phillips Petroleum.
In a nutshell, the deal means there will be two key oil players in the state, verses previous plans to have one major conglomerate producing more than 70 percent of Alaska's oil.
We see this as a great opportunity for the state, and believe it should ease fears of those who opposed the original BP-Arco merger. Even the Federal Trade Commission, which opposes the consolidation, has filed a motion to suspend a hearing on the case slated for Monday.
This new deal goes far beyond the agreement reached between the state and BP. That plan called for BP to sell 175,000 barrels a day, 620,000 acres in exploration and turn over two oil fields to another company.
Now, Phillips will take over Arco's holdings in a deal valued at $6.5 billion. That means BP will now control less than 50 percent of Alaska's oil production. Under the state agreement, BP would have controlled about 72 percent. Even better news for Alaska is that Phillips has already guaranteed to keep all of Arco's employees. Had the original BP plan stayed, about 375 Alaska employees would have been out of work.
Of course, there are fears about Phillips' ability to really compete in Alaska. The Oklahoma company is much smaller than other potential suitors for the Arco assets and some believe Phillips may not be strong enough.
However, we believe Phillips, like any other company, will put its interests and those of its stockholders first. At times the companies may work together, but we expect to see plenty of competition as well.
This is a good deal for the state and we hope it gets approved. Alaskans get to keep their jobs and we'll have two key oil players. That in itself should be sufficient.