This oil platform stopped pumping 30 years ago. Alaska still won’t make the owner tear it down.

The Spurr oil platform stopped pumping crude from beneath the silty ocean water outside Anchorage in 1992. 

The platform, built in Cook Inlet during Alaska’s first oil boom in the 1960s, was losing money, officials from owner Marathon Oil wrote in a letter to the state. Oil production was expected to decline, and a review of seismic data showed that “no further economic development potential exists,” the letter said.

A top Alaska oil and gas official, Ken Boyd, agreed. He informed Marathon that in less than two years the company would need to start the process of demolishing and hauling away the hulking structure, as required under its lease with the state. 

When oil companies build offshore platforms and other infrastructure, they must also agree to restore the public property to the state’s satisfaction once they’ve finished extracting oil and gas.

But more than 30 years later, the platform is still there. It has not produced a drop of oil since George H.W. Bush was president. And it’s set to remain in the inlet for years more.

Boyd backed down, and since then, Cook Inlet oil and gas companies have been fending off state regulators’ repeated attempts to advance the costly process of dismantling their unused platforms — beating back those efforts and minimizing their obligations.

Today, the multi-level structure, complete with a helicopter landing pad and crane, sits unused, “rusting away,” as a state inspector wrote in a 2021 report. Signs warn of an asbestos hazard, and most rooms are in an “advanced state of disrepair,” with “paint peeling from the walls, standing water on the floor, and severely corroded piping and machinery,” other state inspectors wrote after a visit in October.

In a picturesque basin surrounded by glaciated volcanoes and teeming with salmon, Spurr has deteriorated into an eyesore. It now stands as a symbol of a pliant state policy that will be tested increasingly in the coming years, as more of Cook Inlet’s platforms deplete their petroleum deposits. 

Of the 17 platforms, 15 are now owned by Hilcorp, a company that specializes in managing “mature” oil fields. Six no longer produce oil and gas, and four have been offline for a decade or more. None have ever been removed.

Their continued presence in the inlet could foreshadow looming problems on Alaska’s North Slope. There, regulators will oversee a far more sprawling removal process when the massive Prudhoe Bay field and other developments eventually reach the ends of their useful lives.

State regulators are giving Hilcorp five more years to draft plans to repurpose some of its dormant infrastructure, such as for wind or other renewable power generation — options that federal regulators have dismissed as “not reasonably foreseeable” for oil platforms off the coast of California. At another defunct platform-like oil shipping terminal in Cook Inlet, Hilcorp is studying if it could simply allow underwater portions to erode away into the ocean — or even somehow accelerate that process “to force early structural failure.”

Richard Charter, a California-based ocean protection advocate, said it’s a playbook oil companies have used repeatedly — one he described as “delay, deny and diddle around.” 

“The hope is you’ll never have to do it,” said Charter, who’s lobbied for platform removal off California and in the Gulf of Mexico. “The reality is that if you can delay it, you’re making money somewhere else.”

Derek Nottingham, director of the Alaska Division of Oil and Gas, said he’s aware of the industry’s incentives.

“It’s financially a benefit, the longer they can defer it,” Nottingham said. “And we understand that’s going to be the company’s motivation.”

Removing all 17 platforms from the inlet, along with associated pipelines, could cost on the order of $1 billion, according to industry and watchdog groups’ estimates.

For two decades, Alaska oil companies have argued that the expensive process of removal should wait until many Cook Inlet platforms are ready for decommissioning all at once. That way, heavy-lift ships and other equipment from outside the state don’t have to be rented multiple times. It’s an argument that state officials agree has some merit.

Another reason state regulators have been hesitant to press the issue of platform removal is that they would prefer to see the oil and gas industry invest in what they describe as an urgent state priority: drilling for more natural gas in Cook Inlet.

Anchorage-area heating and electrical utilities have warned of an impending shortage of locally produced gas that’s likely to force them to import higher-priced supplies from outside the region. 

Compelling companies to spend money on removing old infrastructure could “detract from some of their investment in natural gas production,” Nottingham said. Those companies, he added, have not indicated that removing platforms would come at the expense of gas production, but Nottingham said he suspects that taking a tougher line is not “in the state’s best interest at this point.”

Both state regulators and watchdogs agree that there’s not much danger of major structural failure that would threaten the environment. 

Some of the pipelines connecting the platforms to shore have sprung leaks in the past — including a high-profile incident in 2017 that forced the temporary shutdown of two platforms. But no major structural problems have arisen with the platforms themselves. 

State officials also say that the infrastructure poses little financial risk to taxpayers, because oil companies have signed agreements with the state designed to ensure they have money available to remove the platforms when the time comes. 

But watchdogs have questioned whether those agreements are sufficient.

Hilcorp officials declined an interview request. 

In response to written questions, a spokesman, Luke Miller, sent a statement saying the company has shared confidential decommissioning studies with state regulators and “strives to be a best-in-class operator of mature oil and gas assets.”

That includes making “significant investments” to decommission old infrastructure, Miller said, and to seal old wells, which prevents them from leaking into the environment.

Existing infrastructure in Cook Inlet, including the platforms, Miller said, will play a “critical role” in ensuring Hilcorp can meet its natural gas commitments to urban Alaska utilities.

“We are also exploring opportunities to repurpose existing infrastructure, such as offshore platforms, for renewable energy and carbon sequestration,” Miller said. “The future utility of these platforms is constantly evolving as repurposing opportunities expand alongside technological advancements.”

In other states, the oil industry has been wrangling for decades with marine advocates and government agencies over infrastructure cleanup.

In California, the Biden administration announced last year that it would require full removal of 23 remaining offshore platforms.

In the Gulf of Mexico, operators are allowed to leave some platform equipment in the ocean as artificial reefs that, according to some scientists, boost marine life. 

But even with those industry-friendly policies in place in the Gulf, the U.S. Government Accountability Office recently documented lax enforcement by federal regulators that has resulted in a “substantial” backlog of idle infrastructure — with more than 500 platforms overdue for decommissioning under federal deadlines.

Delay tactics date back decades

The Cook Inlet area is Alaska’s oldest producing oil and gas basin, with its first petroleum discovery in 1957. 

The platforms, scattered along a 25-mile stretch of the inlet, are engineering marvels: man-made islands with space for drilling rigs and living quarters. 

Designed to withstand enormous tides and winter ice floes, the infrastructure was manufactured outside Alaska, then towed to drilling sites. 

In some cases, the four legs were built together in a single module, floated on their sides to Alaska, then tipped over and sunk as the legs filled with water.

At their peak, in the 1970s, Cook Inlet’s offshore and nearshore fields pumped some 230,000 barrels of oil a day — about 2.5% of U.S. production at the time. 

But after the discovery of the massive Prudhoe Bay field, industry interest shifted to Alaska’s North Slope. And by the early 1980s, oil companies had initiated discussions with state regulators about shutting platforms down and removing them.

Regulators say that the state’s leases with the companies give them broad authority to compel infrastructure removal.

But officials have never exercised that authority over the platforms.

Instead, a succession of administrations have left a trail of false starts and reversals, while the oil industry has successfully parried efforts to nudge the removal process forward.

The decades-long dance between the state and the industry is laid out in hundreds of pages of archived correspondence at the Alaska Department of Natural Resources — some of it still stored on paper, in manila folders with handwritten meeting registers. 

After dropping demands for Marathon to swiftly dismantle its Spurr platform in the early 1990s, records show that it took more than a decade for state officials to formally raise the issue again. 

In 2007, 15 years after Spurr switched off, Marathon finally shared the findings of what it called a “decommissioning study” for Spurr and its companion platform, Spark, which had also reached the end of its productive life.

But it was clear that the company still viewed removal as a distant prospect. Even deciding how, exactly, to remove the platforms would require “significant planning and state agency interaction,” Marathon said.

Unocal took a similarly unhurried approach with its Dillon platform, which shut off in 2002.

In 2003, Unocal suggested that the platform could potentially be repurposed for radar tracking, a rescue helicopter base or perhaps research — though none of those ideas ever came to fruition.  A few years later, it told regulators that it was “impossible to predict with any accuracy” when removal might happen.

By 2011, state officials appeared to be taking a tougher line with the company, telling Unocal to draft plans to either reestablish oil or gas production from the platform within two years — or to remove it by 2015. 

But just as the natural resources department was issuing that demand, Unocal’s parent company announced that it was selling its Cook Inlet assets, including its stake in 10 platforms. The buyer was a privately owned Texas oil company that specialized in wringing more oil out of aging infrastructure: Hilcorp. A year later, Marathon announced that it, too, was selling its Alaska assets to Hilcorp. 

That change in ownership put the state’s efforts to get rid of the platforms on hold.

New owner, same strategy

Alaska politicians greeted Hilcorp’s arrival with optimism. 

Co-founded by billionaire Jeffery Hildebrand, Hilcorp is famed for its lean, efficient operations. 

The company has succeeded in reviving declining fields that previous owners — typically bigger, more bureaucratic oil companies — had starved of investment. Its maintenance of older assets, however, has sometimes drawn attention from regulators, nonprofit watchdogs and conservation groups, as Hilcorp and its affiliate companies have contended with leaks, spills and other problems.

The aging infrastructure in and around Cook Inlet fit Hilcorp’s business model perfectly. And in an early public appearance, the company’s president, Greg Lalicker, said it planned to invest $500 million in the area during the next three years. 

An inspector from the state agency that regulates oil wells later wrote that two of the offline platforms Hilcorp had purchased, Spurr and Spark, were in “terrible condition” even before their sale. But in its formal correspondence with the natural resources department, Hilcorp said it wanted to take a “fresh look” at its new properties and suggested that all four of its shuttered platforms — Spurr, Spark, Baker and Dillon — could be reactivated.

At the time, Lalicker told business leaders that urgency was one of the company’s values. “We don’t have the luxury of studying things for two to four years,” Lalicker said.

But in 2014, Hilcorp told the natural resources department that it needed three years to finish its studies of Spurr and Spark. Once those three years had passed, the company said it still was “not economically viable or technical[ly] feasible to return either platform to production” — echoing the conclusion that Marathon and previous regulators had reached about Spurr two decades before.

Nonetheless, Hilcorp said it wasn’t ready to tear the platforms down. It said that there was still value in leaving Spurr and Spark in place to “support ongoing evaluation and analysis of potential development and production.” 

Two years after that, the state oil and gas division director, James Beckham, tried to prod Hilcorp to take action. 

He took the aggressive step of trying to terminate the lease unit that encompassed those two Hilcorp platforms. In his letter to the company, he said state regulations require ongoing “diligent operations” to restore oil and gas production, and that they don’t allow an operator “to merely promise” work in the future.

That could have been a first move toward compelling the company to begin removing Spurr and Spark. 

But Hilcorp appealed, and Beckham’s boss, Natural Resources Commissioner Corri Feige, sided with Hilcorp and reversed the termination.

It wasn’t until three years later, in 2023, that Hilcorp finally acknowledged the platforms were “no longer suitable for drilling or production operations.”

Nonetheless, Hilcorp, in its latest yearly plan shared with the state, said that the platform infrastructure — things like helicopter pads, workspaces, legs — still has “future utility,” and it included no plans to remove them.

Hilcorp has also had little success in finding uses for the Baker and Dillon platforms, which were both offline when the company acquired them.

It managed to briefly restore gas production at Baker, but then a 2014 fire destroyed the platform’s living quarters and knocked it back offline. It has not produced any petroleum since, according to state records, and Dillon was never revived after Hilcorp’s purchase.

State downplays risk

Some oil industry watchdogs warn that the state’s accommodating approach could stick taxpayers with the bill.

In 2009, Pacific Energy Resources, a small oil and gas company that owned a relatively new Cook Inlet platform, Osprey, filed for bankruptcy. Another company eventually agreed to take over the platform, but if one hadn’t, “the state faced the very real specter of expending tens of millions of dollars in state funds” on decommissioning, the Department of Natural Resources wrote in a report four years later.

Hilcorp is far larger than Pacific Energy Resources. But some experts say that a single catastrophic event, like a major oil spill, could quickly deplete the company’s balance sheet.

“When oil hits the water, damages can become really enormous. The Deepwater Horizon well blowout almost bankrupted BP,” said Antony Scott, a former natural resources department analyst and former state utility regulator. “Industrial accidents can happen in the oil and gas industry, and we’ve seen it over and over again.”

Alaska oil and gas officials say that multiple layers of safeguards protect the state’s financial interests — including deals negotiated with each operating company known as financial assurances agreements.

Hilcorp’s agreement requires it to guarantee that money is set aside to cover a specific fraction of its estimated costs of removing oil and gas infrastructure from state land. 

The fraction goes up if Hilcorp’s finances worsen, but the precise amount is secret. 

A previous iteration of the state-Hilcorp agreement, referenced in 2015 by a University of Alaska student in an academic paper, required the company to have 17.5% of its estimated costs for removing the platforms budgeted in advance. At the time, those overall obligations were estimated at $700 million for Hilcorp’s Cook Inlet platforms and related infrastructure, the paper said.

The Department of Natural Resources said that the student — now the deputy director of the oil and gas division — only had access to the full document because of an “oversight,” and wouldn’t confirm the accuracy of the numbers, citing confidentiality. When the agency released the current version of Hilcorp’s assurances agreement in response to a public records request from Alaska Public Media and APM Reports, the agency redacted the exact amount of the company’s financial commitment.

The department denied an appeal of the redactions under the state’s public records law. It also withheld third-party estimates of Hilcorp’s cleanup costs that the company is required to submit every three years. 

The release of the information, the agency said, was barred by a separate state law that provides for the confidentiality of certain “cost data and financial information” submitted by companies. 

Hilcorp also opposed the release, saying that public exposure of its commitments would harm its competitive position. 

State officials say there’s a backstop in the event Hilcorp or another company can’t cover their full cleanup costs: Those obligations are passed on to prior owners, said Nottingham, the state oil and gas director.

“We feel like we’re well covered,” he said. “And that the risk to the state is very low.”

But Scott said that contention is “legally untested.”

Predecessor companies “may not have the balance sheet you want,” he said. “And the further up the chain that you have to go, the more tenuous all of this protection might hope to be.”

He added: “The longer you wait, the riskier it is.”

Could platforms pump out green energy?

As Hilcorp offers alternatives to tearing the platforms down, it has touted their potential to harness renewable energy.

In the next 18 months, a Maine-based business, Ocean Renewable Power Company, plans to use Cook Inlet as a testing ground for equipment that generates electricity from tidal forces.

Federal studies suggest that Cook Inlet has some of the highest tidal generation potential in the world, and Hilcorp has been working with the state university system to gather data in the vicinity of its platforms.

Using the platforms to support tidal power infrastructure could reduce expenses for permitting and new maritime construction, according to Nathan Johnson, Ocean Renewable Power Company’s vice president of development.

“There’s still some studying that needs to be done to look at the applicability at each location, how they’re strategically located to the tidal energy resource in the broader Cook Inlet,” he said. “But there’s high potential.”

Hilcorp is also working with the electric cooperative in Homer to examine the potential for using offline platforms for wind power generation.

But Charter, the ocean protection advocate, is skeptical.

“You would have to completely redesign and re-engineer most oil rigs to put a wind generator on them,” he said. “You don’t do it with spent oil rigs. You do purpose-built wind farms.”

In September, Hilcorp asked state regulators for permission to leave four dormant platforms in the water through as late as 2048. 

It cited the potential for wind and tidal power, along with other repurposing ideas such as carbon storage or even marine mammal research. Two of the platforms could still be useful for future petroleum development, the company said. 

The department gave Hilcorp approval — but for 10 years, significantly less time than the company requested. 

The state also required Hilcorp to make a decision on the viability of the alternative uses at the five-year mark. If it can’t find one by then, Hilcorp is required to share its decommissioning plans within the following year and to start the process before the approval expires in 2033.

The state circulated Hilcorp’s proposal for public comment and received none, according to a natural resources department spokesman. But Mark Foster, a former utility regulator and finance executive who’s scrutinized oil companies’ cleanup obligations, said he thinks that a public discussion about the future of Cook Inlet infrastructure — with transparency around corporate commitments and obligations — is overdue.

Leaving some infrastructure in place, as regulators have allowed elsewhere to preserve fishing habitat around platforms, could be worth considering in Alaska, Foster said.

But he wants Republican Gov. Mike Dunleavy’s administration to make sure that the state gets its fair share of any savings if companies don’t have to do full cleanup. In the Gulf of Mexico, for example, the “rigs to reefs” program allows businesses to keep half of the avoided cost of platform removal, with the rest going to the government.

“The state has not been willing to bite down and go, ‘We have allowed this to go on for far too long. Let’s begin an adult conversation about what we’re going to do with these platforms,’” Foster said. “It really comes down to: What’s the obligation? And how are we going to hold the developers to that obligation?”

This story was originally published as a collaboration between Alaska Public Media and APM Reports as part of the Public Media Accountability Initiative, which supports investigative reporting at local media outlets around the country.

Nathaniel Herz welcomes tips at [email protected] or (907) 793-0312. He published the newsletter Northern Journal. Subscribe at this link.