Two Alaska state lawmakers are calling on the Federal Trade Commission to investigate whether Hilcorp Alaska engaged in “illegal anti-competitive practices” that may have contributed to the looming gas shortage in south-central Alaska.

Republican Senator Cathy Giessel, Co-Chair of the Senate Natural Resources Committee and Democratic Senator Bill Wielechowski wrote in an August 14 letter that Hilcorp has a “virtual monopoly” in the Cook Inlet basin and that Hilcorp has shown that it can abuse that dominant position.

This came as Hilcorp successfully fought off an attempt in the Alaska Legislature earlier this year to force the company to pay state corporate taxes, telling utilities that a tax increase could jeopardize current and future gas supply contracts, they wrote.

The senators also wrote that Hilcorp’s large stake in gas storage facilities was another potential problem, as there were concerns that Hilcorp “may charge exorbitant fees for this gas storage.”

Hilcorp is required by law to produce gas when it is economically viable to do so, they wrote. State consultants and experts have told Alaska lawmakers that new gas production projects are “very likely” to be profitable, they wrote. Yet the region is facing an “acute gas supply crisis” that Hilcorp may have caused, they claim in the five-page letter.

“This letter requests the U.S. Federal Trade Commission to initiate an investigation into this matter and the surrounding circumstances to determine whether Hilcorp engaged in illegal anti-competitive practices in Alaska that resulted in the supply shortage, possibly by manipulating regional and statewide markets to obtain private benefits or to gain influence over state policies affecting the company,” the lawmakers’ letter said.

The request comes after Wielechowski and other mostly Democratic Alaska lawmakers unsuccessfully pressed Alaska Attorney General Treg Taylor to investigate the matter based on a 2013 settlement between the state and Hilcorp. Giessel had not signed those earlier letters.

Hilcorp, based in Houston, Texas, supplies more than 80% of the natural gas produced in Cook Inlet. The company began producing natural gas in the aging basin more than a decade ago. In 2022, it warned Alaska’s Railbelt utilities that it does not currently have enough natural gas to renew gas supply contracts in the future when existing contracts expire. This has prompted utilities to look for alternative fuel sources for power and heat generation, including importing gas, a proposition that would result in higher bills.

Enstar, the natural gas supplier in Southcentral, has warned that there could be a gas shortage as early as next year.

Hilcorp said in a prepared statement on Sunday that the company has made significant investments in the Cook Inlet basin.

“When we entered Cook Inlet, the basin was in rapid decline and few companies were willing or able to raise the capital needed to produce oil and gas from the aging fields,” Hilcorp spokesman Luke Miller said in an email. “Hilcorp Alaska stepped in and stabilized the Railbelt’s natural gas supply by investing over a billion dollars in Cook Inlet, drilling more than 160 wells and producing more than 700 billion cubic feet of natural gas.”

“In 2024 alone, we are investing several hundred million dollars in the Cook Inlet Basin, operating four rigs and drilling more than 20 wells,” said Miller. “Hilcorp Alaska is also working closely with utilities and regulators to make our natural gas storage facilities available for commercial use.”

Hilcorp Alaska will continue to “fully develop” its leases in the basin and recognizes that new discoveries are needed, Miller said.

“However, the south central market needs new sources of natural gas supply, especially since Hilcorp Alaska’s assets are among the most intensively evaluated and developed in the Cook Inlet Basin,” Miller said.

Hilcorp said in January that Railbelt utilities and other gas producers in Cook Inlet will need to develop additional gas sources.

Wielechowski, a member of the Senate Natural Resources Committee, said Monday that he wanted to launch a federal investigation into Hilcorp on the matter because the state has not yet done so.

“It is a complete failure of the Attorney General’s Office to protect Alaska consumers,” he said.

There has been no comment on the letter from the state spokesperson so far.

Taylor and Natural Resources Commissioner John Boyle said in a letter to Wielechowski in October that the department would take appropriate action if it “has reason to believe that Hilcorp has not made or is not making commercially reasonable efforts to increase the production and development of natural gas from its Cook Inlet properties or has otherwise violated the terms of the settlement.”

Giessel said in a text message on Monday that she had no further comment.

She had voted for the tax increase on Hilcorp because the state needs money to fund mental health and education. When the tax increase was repealed in May, she said Hilcorp owner Jeff Hildebrand “had an exemption for the corporate taxes that other companies pay.” She said Hilcorp could control “the narrative” by threatening to cut off Cook Inlet’s gas supply if it was forced to pay corporate taxes.

Before Hilcorp acquired Marathon Oil’s Cook Inlet assets in 2012, the Federal Trade Commission (FTC) expressed concerns that Hilcorp’s controlling ownership of natural gas storage and pipeline infrastructure in Cook Inlet could hinder efforts to increase gas production, the lawmakers’ letter said.

The agency’s concerns have today proven to be justified, it said.

There was no comment from the Federal Trade Commission, Victoria Graham, a spokeswoman for the agency, said in an email on Monday.

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