A window into Hilcorp’s operations provides a peek into the likely impact of the Trump administration’s “streamlining” and eliminating regulations for energy producers. (Photo: nate’sgirl / Flickr; Edited: JR / TO)

This story was originally published by The Revelator.

Houston multibillionaire Jeffery Hildebrand has a big problem brewing in Alaska, where one of his Hilcorp Energy companies has presided over two pipeline breaks in the ecologically rich Cook Inlet since December.

After decades of flying under media and public scrutiny, Hildebrand finds his Hilcorp Alaska operation in the limelight. It’s struggling to keep 50-year-old underwater pipelines in the treacherous inlet intact — and at the same time eke out a profit from a depleted oilfield.

It wasn’t supposed to turn out this way.

When he began investing more than $4 billion in Alaska in 2011, oil prices were above $100 a barrel, and Alaska was handing out billions of dollars in subsidies. It was a fat time for oilmen. Now oil prices are hovering near $50, and Alaska’s beginning to slash lucrative tax credits to oil and gas producers, putting a financial squeeze on independent energy producers such as Hildebrand.

Saddled with a history of negative cash flow and a decrepit infrastructure, Hildebrand’s Hilcorp Alaska is now attracting widespread public criticism and negative press focusing on its Cook Inlet pipeline failures.

One of the ruptured underwater pipelines released between 200,000 and 300,000 cubic feet methane a day from late December until April 13, posing a threat to the endangered Cook Inlet beluga whale (Delphinapterus leucas) and other marine mammals and fish. The number of beluga whales in the region has declined from 1,300 individuals in 1979 to just 349 in 2014.

“Hilcorp knew when it purchased the (Cook Inlet) property it was buying old infrastructure and did nothing to maintain and inspect it in way that would suggest they were a good neighbor,” says Bob Shavelson, advocacy director for Cook Inletkeeper, a Homer, Alaska environmental group. “They do the bare minimum to wring profits out of here.”

A two-month Revelator investigation of Hildebrand and Hilcorp Energy reveals the 58-year-old petroleum engineer found his way to vast wealth as an energy vulture. Hildebrand became America’s 134th richest person, worth $4 billion according to Forbes (or $9.5 billion/138th richest according to Bloomberg), by rehabilitating played-out oil and gas fields after major energy companies moved on to more lucrative opportunities.

(The Revelator is published by the Center for Biological Diversity, which on Feb. 27 filed a 60-day notice of intent to sue Hilcorp Alaska under the federal Clean Water Act for violations in Alaska.)

Hildebrand deploys a well-paid, highly motivated work force using advanced technology to squeeze out more oil from fields well past their prime. He also emphasizes aggressive cost-cutting that frequently sidesteps environmental and safety regulations, state and federal regulatory records show.

Our investigation shows that Hildebrand is adept at exploiting weak regulatory oversight that is characterized by warnings, forgiveness and slap-on-the-wrist fines. There is little incentive for Hilcorp and other energy producers not to cut corners to save money.

Hildebrand’s rapid-fire investments in the volatile oil and gas industry combined with a damn-the-regulations attitude show just how quickly an energy boom can fizzle and how downward economic pressure can increase threats to the environment and workers’ safety.

A window into Hilcorp’s operations provides a peek into the likely impact of the Trump administration’s “streamlining” and eliminating regulations for energy producers. Regulatory rollbacks have been welcomed on Wall Street, where stocks rose sharply after Trump’s surprise election.

Even before that election, efforts to tighten pipeline regulatory oversite have been stymied for decades by the powerful oil and gas industry, which writes the industry standards for operating and manufacturing pipelines that are then incorporated into federal regulations, says Carl Weimer, executive director of Pipeline Safety Trust, a nonprofit citizen’s group based in Bellingham, Wash., that monitors oil and gas pipeline operations, including Hilcorp’s.

The industry’s fundamental approach, he says is to “put a pipe in the ground, wait for it to fail and then go out and fix it.”

Hilcorp’s flouting of state and federal regulations certainly has not hindered Hildebrand’s ability to raise capital needed to expand his oil, gas and pipeline empire that includes operations in Alaska, Texas, Louisiana, Wyoming, New Mexico, Colorado, Ohio and Pennsylvania.

In fact his attitude is a plus on Wall Street, where it translates into lower costs, higher productivity and a bigger bottom line. This business philosophy has encouraged private equity firms like the Carlyle Group to invest up to $1.24 billion in Hilcorp to acquire, develop and operate onshore oil and natural gas properties in North America.

“We’re thrilled to be partnered with Hilcorp,” said Carlyle’s managing director David Albert of his firm’s December 2015 investment. Carlyle has raised an additional $2.8 billion to invest in privately run energy firms like Hildebrand’s, which have turned to private equity as commercial bank lending tightened after oil prices collapsed in late 2014.