BP holds firm, won’t give Walker & Co. info

BP's Northstar unit.
BP’s Northstar unit.


In a letter hand-delivered to the Division of Oil and Gas at the Department of Natural Resources on Thursday, Sept. 1, BP Alaska basically told the governor “no can do.” It’s not able to give the State of Alaska a marketing plan for gas because of signed and sealed confidentiality agreements:
“As you know, BPXA, the State, and other PBU [Prudhoe Bay Unit] working interest owners, have signed the Alaska LNG [Liquified Natural Gas] Project Confidentiality Agreement. The latter agreement expressly prohibits sharing or discussing the marketing information that the division is requesting. Furthermore, BPXA possesses neither the right, nor the ability, to direct the PBU working interest owners to market gas nor to provide gas marketing information to the division. These confidentiality agreements and antitrust law prohibit BPXA from requesting, possessing, or discussing the PBU working interest owners’ proprietary marketing information. In any event, that information is not related to the operation and development of the PBU as set forth in the Prudhoe Bay Unit Agreement.”
Nothing much changed from the earlier [May 2] letter that BP sent the State, other than the date of Sept. 1. The May letter stated that “The division’s [April 11] letter seeks extraordinary additional information concerning ‘the timing and type of activities that will be conducted to prepare for major gas sales.’ These new requirements asserted by the division are contrary to the terms of the [PBU Agreement] as well as the division’s regulations and the division’s own interpretation of its regulations over many decades.”

The Sept. 1 letter just said no.

Even ConocoPhillips wrote to the Division of Oil and Gas in support of BP’s position in the spring. No means no.

After the May 2 “thanks, no thanks” from BP, the administration of Gov. Bill Walker threatened the company with one last chance to provide him their plan for marketing gas.
The deadline for BP to fork over its gas marketing plan was set at Sept. 1. Once again, the letter arrived before close of business at the State, but the answer was probably not satisfactory.
What happens next? The Walker Administration is not saying. The transparency he promised may not apply to this high-stakes game of chicken with Prudhoe Bay producers.
Many insiders speculate that Gov. Walker will propose a gas reserves tax on gas left in the ground at Prudhoe Bay. He may attempt this through legislation that he’ll propose after the general election, if he gets the Legislature he wants: Majority Democrats.
Until recently, most gas has been used to scour out reservoirs for the more valuable oil. But those days are coming to a close. In the next few years, the gas will simply be reinjected until a time when it’s economical to ship it to market.
A gas reserves tax would certainly precipitate a lawsuit, because you cannot sell gas if you have no way to ship it. Litigation would likely extend many years and throw the AK-LNG project into a state of uncertainty, since companies could not negotiate to sell their gas, as they would not know if they actually own it. Some lawyers will get very, very wealthy in the process.


Earlier this summer, the governor rather angrily threw down the gauntlet on BP, when he said: “As we see the very same producers announcing competing projects elsewhere around the world, it is important for us to know where Alaska stands in getting Alaska’s gas to market. Based on meetings this week on this very issue with the top Alaska executives of BP, ConocoPhillips and ExxonMobil, I have no reason to think that information will not be provided to our satisfaction during the additional 90-day period we provided.”
“I don’t see putting them in default as being realistic at this point because there’s just too much discussion going on back and forth,” Walker told reporters. “If they were completely stonewalling — but they’re not, they are being very forthcoming with information and discussions about it so I’m encouraged by that.”
Now that BP has repeated its refusal, it’s Gov. Walker’s move. He has promised he will not default the leases at Prudhoe, but he also left the door open by saying it was not “realistic at this point.” A gas reserves tax, however, is something he has also wanted and may still pursue.
Grand Prince Hotel
Grand Prince Hotel, New Takanawa, Tokyo.


This fall, Governor Walker will head to Tokyo for the LNG Producers Conference. He’ll likely stay at the Grand Prince Hotel New Takanawa. He attended the Tokyo conference last year and was a speaker, but is not on the agenda yet for this year.

After Tokyo, Walker is scheduled to head to Qatar for unknown business, presumably relating to the gasline. No one outside the administration knows why, as the trip is a closely held secret.

Governor Walker's Facebook post.
Governor Walker’s Facebook post.

Earlier this year, Walker met with the Qatari ambassador, who came to Alaska and delivered a $25,000 donation to help start a domestic violence shelter for women.

“Thank you for your generosity,” Walker wrote on his Facebook page, to Mohamed Jaham al-Kuwari.

According to Amnesty International, Qatar is a country well known for its widespread human trafficking and abuse of women.”The Qatari authorities are failing to protect migrant domestic workers who face severe exploitation, including forced labour and physical and sexual violence,” Amnesty International said in a 2014 report.

“My sleep is my break”: Exploitation of domestic workers in Qatar details the working conditions of women who were recruited as slaves for the wealthy in Qatar, with promises of great salaries and luxurious conditions. The women work extremely long hours — up to 100 hours a week is common — and many are subjected to sexual assault and systematic beatings.

“Migrant domestic workers are victims of a discriminatory system that denies them basic protections and leaves them open to exploitation and abuse including forced labour and human trafficking,” according to Audrey Gaughran, Amnesty International’s Global Issues Director. “We have spoken to women who have been terribly deceived, then found themselves trapped and at the mercy of abusive employers, banned from leaving the house. Some women said they were threatened with physical violence when they told their employers they wanted to leave.”

Some 84,000 women migrant domestic workers are thought to work in Qatar, most coming from Asia.


Presumably Governor Walker will be not there investigating human trafficking, but will instead tour one of the world’s largest LNG plants, which is in Qatar.

But even more likely, he’ll be talking to the overseers of the Qatar Investment Authority, which is said to have $35 billion to invest in the U.S. during the next five years.

The Qatar Investment Authority is that country’s sovereign wealth fund, structured differently than the Alaska Permanent Fund. It invests primarily in international markets, such as the United States, Europe and Asia-Pacific and is the ninth-largest sovereign wealth fund in the world.

Kenneth Rogoff, the cousin of Alaska Dispatch News publisher Alice Rogoff and one of the leading world experts on the subject, wrote an opinion in the ADN last year regarding sovereign wealth funds and Alaska’s Permanent Fund.

He wrote, “There is certainly scope to manage the sovereign wealth fund somewhat more aggressively, at the very least the amount in excess of the state’s debt. Other resource-dependent countries like Norway try to strike a balance between risk and return. It would probably behoove Alaska to look at other sovereign wealth funds and how they are managed.”

Indeed, perhaps Gov. Walker has been persuaded by the Rogoffs to look more closely at how other sovereign wealth funds are managed. If so, he’ll want to find out if Qatar’s sovereign wealth fund really lost $12 billion last year and whether it’s dipping into its principle to support the Qatari government.