Story of the Year.

• Author: ESS, CHARLIE
• Position: BP Amoco-Arco merger

The BP Amoco-Arco merger is the obvious choice for our Story of the Year, but is a work in progress and developments may have unfolded after we went to press. For those not following it daily, we gathered the essential facts and present a few new ones. For example: When the agreement is consummated and following post-flowback of certain assets, United Kingdom share holders will only own 50 percent of B.P. The U.S. and other non-UK shareholders will own the other 50 percent. Editor.

Atlantic Richfield Co. proposed; British Petroleum-Amoco accepted--and the townspeople scrutinized. Marriages, when they come along, aren't without pain. Somebody's always got something to lose, and there will be changes, not the least of which, in the case of BPARCO, would be job losses and BP's gained control of drilling reserves on the North Slope.

So we have gathered this year to witness the melding of BP Amoco with ARC0, a shotgun wedding in the sense that Alaska Gov. Tony Knowles is standing by, one hand wielding his gubernatorial powers like a well-oiled 12-gauge, and the other clutching a list of stipulations that he believes will protect Alaskans against the monopolistic control of their oil patch.

Jeering From the Pews

Obviously, not everybody believes the $28 billion merger with ARCO is a good move. Oil analysts, concerned that BP's holdings are growing like a king's dowery, are quick to note that BP Amoco's expansion with the $57.6 billion merger last December with British Petroleum Co. and Chicago-based Amoco Corp. makes it one of the world's largest oil producers. In Alaska, the merger potentially meant that one company would control more than 70 percent of North Slope oil and gas, 72 percent of the trans-Alaska oil pipeline and 80 percent of the tanker capacity that hauls crude from Valdez to West Coast refineries.

Gov. Knowles and his advisors worried that the merger could undermine the best interests of Alaska. "This represents an unacceptable monopolistic control of Alaska's resources," said Knowles in a press release prior to a tentative agreement between BP and the state. "It is an insurmountable barrier to the competitive participation of other major companies developing our oil and gas."

But if a wedding it will be, Knowles has drawn up a list of prenuptial conditions. For starters, he wants BP to invite at least one major player on the North Slope and to sell off vast tracts of exploration lands and more than 200,000 state-owned acres in the National Petroleum Preserve. He also wants commercialization of the North Slope's 37 trillion cubic feet of gas reserves. But the bigger consideration is how BP Amoco's control of production facilities and tariffs on the pipeline will...