THE BLOG

Can Alaska survive without BP?

06/19/2010 05:32 pm ET | Updated May 25, 2011

From casual coffeehouse conversations to contentious congressional hearings and vengeful presidential addresses, the reputation of London-based oil giant BP is taking a royal beating. Since the oil started hitting the water in the Gulf of Mexico, BP has morphed into public enemy number one.

It's no surprise that distrust of the company responsible for what President Barack Obama has called "the worst environmental disaster America has ever faced" is on an exponential growth spurt. Nor is it shocking that policymakers at all levels are calling for financial blood to atone for the oil smear that's fouled coastlines, livelihoods and tempers alike. Yet taken too far, that national outcry is likely to hurt Alaska and further strain its unusual love-hate relationship with its well-to-do foreign bedfellow.

Like it or not, Alaskans need the nation's archenemy.

BP's success is our success. Its failures cause us pain. The state lost revenue when the trans-Alaska oil pipeline shut down in 2006 following a large spill for which BP was responsible. Still, BP is a valuable resource in its own right, one that Alaskans have come to rely on for a steady flow of money to fund roads, schools, cops and more. Oil and gas account for nearly 90 percent of the state's revenue. In 2008, state and federal governments extracted nearly $4 billion from BP's Alaska operations in taxes and royalty payments, $2.3 billion of which went to Alaska by way of the state's production tax known as ACES (Alaska's Clear and Equitable Share), according to BP spokesperson Steve Rinehart.

Perhaps that's why Alaska's policymakers and industry regulators are loath to answer directly whether BP is trustworthy. The seated politicans we spoke with answered without a simple "yes" or "no." Instead, they tended to point to regulatory frameworks and other checks and balances that are designed to catch problems and keep all operators -- not just BP -- on track.

"We expect every operator to act responsibly and in accordance with the law," Gov. Sean Parnell said Thursday afer a bill signing event in Palmer. "If they are not following the law then they should be punished in accordance with the law."

Because of lessons learned during the Exxon Valdez oil spill, Alaska's spill response and prevention effort is "unsurpassed in this country," according to Parnell. Still, he said the state is re-evaluating whether the current regulatory framework, in light of the Gulf spill, is sufficient to safeguard Alaska's people, environment and jobs.

BP sauntered into the state decades ago as a stately foreigner -- a curiously distinct presence with a calculating eye on our rich petroleum resources and a knack for wooing the citizenry. To BP, Alaska's North Slope was the Iran of the Americas, full of promise and wealth. Having left Iran after that country moved to nationalize its oil fields, for BP, entering Alaska was about survival, and the company's appearance here was a breath of fresh air to a newly minted state that felt the federal government wasn't doing enough to invest in the Last Frontier.

Decades later, BP contributes to the injection of cash Alaskans rely on to run the state, and although it leaves industry regulators and some citizens nervous about a corporate culture that has generated a laundry list of environmental lapses, it is a company with which Alaska intends to keep doing business. BP and the state appear locked in a relationship born of necessity, and one in which troublesome traits can and will be overlooked.

"BP is generally trusted still in Alaska, though that trust is very, very grudging," observed Stephen Haycox, a history professor at the University of Alaska Anchorage who has studied the industry for years.

BP's reputation in Alaska started to tarnish long before the spill in the Gulf of Mexico, Haycox said. The 2006 spill on the North Slope "really damaged" the company's credibility. Yet Alaskans, he pointed out, are between a rock and a hard place -- "dependent on oil drilling and pumping and all the mess that inevitably entails, and wanting the Alaska environment and Alaska workers respected and protected."

For Alaska's policymakers, it's a sticky situation. They must appear forceful in defending Alaska's interests, but must also be careful to avoid alienating a source of state wealth.

"My target is not to worry about their image, but to ensure the work they are doing is the safest possible," said U.S. Sen. Mark Begich, D-Alaska, in a broad sentiment he expressed Wednesday about all oil and gas operators in Alaska.

"Disappointed" over BP's 2006 North Slope oil spill, U.S. Sen. Lisa Murkowski has since increased her scrutiny of the company's operations, said Robert Dillon, communications director for the Senate Energy and Natural Resources Committee, on which Murkowski sits. "BP has taken steps to clean up its act in Alaska and Sen. Murkowski will remain vigilant in ensuring they keep that promise to protect Alaska," he said.