Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Closes Investigation Into Proposed Acquisition of Alaska’s Natural Gas Production, Transmission, and Storage Assets, (Nov 8, 2012)

By Jody Coultas, J.D.

The Federal Trade Commission closed its investigation of Hilcorp Alaska LLC’s proposed acquisition of Marathon Alaska LLC’s Cook Inlet, Alaska, natural gas production, storage, and pipeline assets without taking any action, and the Commission has issued a related statement. The FTC deferred to Alaska’s resolution of this matter.

Natural gas produced in the Cook Inlet supplies south-central Alaska, including the Anchorage metropolitan area, with all of the natural gas. Alaska consumes all Cook Inlet production except for limited liquefied natural gas exports to Asia.

The proposed transaction raised competitive concerns because Marathon, Hilcorp, and ConocoPhillips accounted for over 90 percent of the natural gas produced in Cook Inlet and might lessen the negotiating strength of utility and industrial customers. The FTC also believed that Hilcorp would control all of the proprietary gas storage capacity in south-central Alaska and the majority of pipeline infrastructure necessary to deliver gas from the fields to the customers, which potentially could impair efforts to bolster natural gas production from sources other than Hilcorp.

The Alaska Department of Natural Resources believes that the merger might help alleviate concerns about energy security and local energy supply shortages, especially considering the Cook Inlet natural gas fields will soon be unable to meet south-central Alaska’s year-round supply needs.

Concerns about energy security and the competitive implications of the transaction led the Office of the Alaska Attorney General to negotiate and file a consent decree and to recommend that the merger not be challenged. The consent decree included price caps for customers over a period of five years.

News: Antitrust