Jerry McCutcheon: Alaska should buy BP's remaining North Slope assets

The State of Alaska should consider buying out BP's interest in Prudhoe Bay and the Trans-Alaska Pipeline System, in view of BP's sale of its smaller holdings on the North Slope to Hilcorp, which signaled BP's desire to scale back in Alaska.

BP is an elephant reservoir hunter, and it needs go elsewhere in the world to look for new high-risk and high-reward plays. The company also needs cash to pay for its massive Gulf of Mexico blowout debts.

The state can buy out BP and pay cash without having to put up any state funds by pledging the former BP assets to investment bankers and taking advantage of the difference in "time-value of money" between Alaska and BP.

Prudhoe Bay would provide not only a stream of revenue to pay off the debt to the investment bankers, but also provide revenue to the state. When the investment bankers are paid off, the entire stream of revenue from Prudhoe Bay could help support the state of Alaska, which is now deficit-financing its operations and rapidly using up its savings.

While a BP buyout is not panacea for the Alaska's financial problems, it is very good start.

The state would be acquiring an asset for no money down, and BP would obtain the funds it needs to hunt major oil reservoirs elsewhere in the world. A BP buyout by the state of Alaska is a win-win opportunity.

Jerry McCutcheon has followed oil and gas since seeing his first oil well derrick at Oil Well Lake above Chickaloon in 1942.