Growing weary of waiting, BP Amoco and Atlantic Richfield Co. hope to step up the pace of their ongoing merger procedures by restarting the required 20-day notice period, suspended Nov. 2, at the US Federal Trade Commission (FTC). The companies concede the FTC has concerns about their pairing, but the merger partners said they don’t agree with the issues raised by the commission.

BP Amoco and Arco said they believe the combination would enlarge rather than adversely affect competition. They have failed to get FTC acceptance of a number of concessions. BP Amoco and Arco said they accept that re-triggering the notice could prompt the FTC to seek resolution of the issues through litigation. A meeting with the FTC is set for today to discuss next steps.

The $26.8 billion merger was announced April 1 (see NGI April 5). In December BP Amoco secured Alaskan agreement for the deal after agreeing to a package of measures with Governor Tony Knowles (see NGI Dec. 6). The package included divestments of 175,000 barrels a day of Alaskan production and 620,000 acres of state and federal exploration lands, along with the sale of a matching stake in the Trans-Alaska pipeline and the sale or transfer of Jones Act ships to buyers of production – actions facilitating the entry of one or more major new operators in the state.

In Alaska, BP Amoco CEO John Browne said the deal could help unlock the potential for large volumes of gas “which are currently uneconomic to develop but could make an enormous contribution to the energy needs of the U.S. in the next century.” BP Amoco and Arco are two of the three owners of North Slope gas. Exxon is the third.

Alaska previously had balked at BP Amoco and Arco’s attempt to push the merger through the FTC by starting the clock on the notice period (see NGI Nov. 8). Knowles broke off state negotiations with the company and asked the FTC to temporarily block the $26 billion merger after learning BP Amoco had filed certificates of substantial completion with the commission. The BP Amoco filing started the clock on the 20-day deadline within which the FTC would either have to approve the deal or sue to block it. BP Amoco then stopped the clock on the 20-day time limit.

In December Knowles called on a hesitant FTC to swiftly approve the merger (see NGI Dec. 13). Exploration and production on Alaska’s North Slope, which should be “bustling” now due to high oil prices, “has slowed dramatically because of uncertainties” over whether the FTC will give its go-ahead to the $26 billion transaction, Knowles wrote FTC Chairman Robert Pitofsky in a Dec. 8 letter. “This means less oil is being produced and the longer the acquisition remains in limbo, the greater the chill [will be] on further” E&P activity.

Knowles said the proposed merger initially had violated the state’s antitrust laws, but the “scope, magnitude and consequences” of the divestitures in three areas – production, acreage and transportation – that were mandated under Alaska’s agreement resolved those concerns. “To our knowledge, this is the largest divestiture of oil production in U.S. history, and the value of the total divestiture has been estimated by industry analysts at up to $4 billion.”

Joe Fisher, Houston

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