Alaska Gov. Tony Knowles last week called on a hesitant FederalTrade Commission (FTC) to swiftly approve BP Amoco’s proposedacquisition of Atlantic Richfield Co. (Arco), which has beenstalled at the agency due to antitrust concerns.

Exploration and production on Alaska’s North Slope, which shouldbe “bustling” now due to high oil prices, “has slowed dramaticallybecause of uncertainties” over whether the FTC will give itsgo-ahead to the $26 billion transaction, Knowles wrote FTC ChairmanRobert Pitofsky in a Dec. 8 letter. “This means less oil is beingproduced and the longer the acquisition remains in limbo, thegreater the chill [will be] on further” E&P activity.

Although “I appreciate the national antitrust concerns you mustconsider about this proposed acquisition,” Knowles said he was”hopeful…..that the FTC [would] bring its merger deliberationsto a prompt and satisfactory conclusion…”

Prior to the letter, Knowles had telephoned Pitofsky to informhim of the agreement that Alaska reached earlier this month with BPAmoco, which clears the way for the marriage of the two largest oilproducers in the state. Also, Alaska Attorney General Bruce Botelhomet with the FTC staff in Washington last week to discuss theAlaska-BP Amoco agreement and some of the merger concerns. And BPAmoco officials last week “went and made their case” again beforethe FTC.

But still there’s no word from the agency on what’s in store forthe proposed BP Amoco-Arco merger. “The FTC is playing it prettyclose to their chest at this point, and they have not decidedexactly what they intend to do and when they intend to do it,” saidan informed source.

Knowles urged the FTC to support Alaska’s “historic agreement”with the two oil producers, which calls for a combined BPAmoco-Arco to: divest 175,000 barrels per day of North Slope oilproduction, and 620,000 undeveloped acres on state and federallands; divest controlling interest in the nation’s second largestoil field, Kuparuk; and sell a share of the Trans-Alaska oilpipeline system to other North Slope producers.

But even with these concessions, a combined BP Amoco and Arcostill would control close to 60% of Alaska’s production and raisecertain antitrust concerns. FTC staff members reportedly have urgedthe commission to reject the Alaska accord because they believe thecombined company still would exert too much control over Alaskacrude oil production and, as a result, could drive up gasolineprices on the U.S. West Coast.

Knowles said the proposed merger initially had violated thestate’s antitrust laws, but the “scope, magnitude and consequencesof”‘ the divestitures in three areas — production, acreage andtransportation — that were mandated under Alaska’s agreementresolved those concerns. “To our knowledge, this is the largestdivestiture of oil production in U.S. history, and the value of thetotal divestiture has been estimated by industry analysts at up to$4 billion,” he said.

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