The Observer, January 2007

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Council and Alyeska settle disagreement over review of oil profits on North Slope

The citizens’ council and Alyeska Pipeline Service Co. have resolved a long-running dispute over the council’s right to investigate the profitability of oil companies operating on Alaska’s North Slope.

As a result of the settlement, Alyeska has dropped its claim that the council can’t use Alyeska contract funds for such investigations, and has paid half the council’s legal expenses for the case.

At issue was a report by Dr. Richard Fineberg that the council commissioned in September 2004 at a cost of $25,000.

Fineberg, a Fairbanks-based economist, concluded in the report that the oil industry’s North Slope operations are hugely profitable, even at times of lower oil prices. The council wanted the information to evaluate industry claims that financial pressures require cutbacks, or prevent improvements, that could affect the safety of the oil-transportation system the council is charged with overseeing in Prince William Sound.

Several months after the council commissioned the study, Alyeska objected to the council’s use of contract funds to pay for Fineberg’s analysis, and requested the council to either arbitrate the matter or take it to the state courts. The council opted for the latter.

The matter never came to trial and was dropped late last year by mutual consent of Alyeska and the council.
“We’re glad to have this issue cleared up,” said John Devens, executive director of the council. “It was a relatively small amount of money that created a major headache in the relationship between us and Alyeska. Both parties have more important things to focus on.”