• Other Authors: The Pennsylvania State University CiteSeerX Archives
• Format: Text
• Language: English
• Published: 2002
• Subjects: Alaska North Slope; north slope; Prudhoe Bay; Alaska
• Online Access: http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.608.6867; http://faculty-gsb.stanford.edu/bulow/articles/031BPfinal.pdf

Richfield Company (ARCO) for $25.6 billion in stock. As one of the largest oil mergers ever, the BP/ARCO deal was sure to attract intense public attention as well as antitrust scrutiny. Attention was further heightened because the deal was part of a more general consolidation in the unloved oil industry. In particular, the BP/ARCO deal came close on the heels of the massive 1997 Shell/Texaco joint venture, BP’s December 1998 acquisition of Amoco, and the then-pending Exxon/Mobil merger. At the heart of the BP/ARCO deal was the combination of the firms ’ Alaska North Slope crude oil (ANS) reserves and related operations. The huge Prudhoe Bay oil field was the only one in the United States to have two operators. By 1999, with production having fallen by over half since its 1988 peak, it had become far more efficient to have just one operator. Furthermore, the three primary owners of ANS, BP, ARCO, and Exxon, had disparate shares of oil and gas production. Exxon, for example, owned a larger share of the gas than the oil. This conflict made it more difficult for the partners to agree on an efficient development strategy. Overall, BP estimated it could save $100-200 million per year from reorganizing Prudhoe.1 But the consolidation raised antitrust concerns. Exxon and some smaller investors were minority shareholders in the fields, but did not operate in Alaska. Thus the combined BP/ARCO would own 74 percent of ANS production and would operate every oil