Alaska seizes Point Thomson leases from Exxon!!!
Governor goes after North Slope oil field
POINT THOMSON: Critics charge development stalled for 30 years.
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By WESLEY LOY, Anchorage Daily News
Published: November 28, 2006
Last Modified: November 28, 2006 at 12:51 PM
Gov. Frank Murkowski on Monday moved to seize control of a major North Slope oil field -- a seismic decision that could provoke a heavyweight court battle between the state and one of the world's most powerful corporations.
The action came with only a week left in Murkowski's term in office, and over the objections of his successor, Sarah Palin, who had urged the governor to leave the decision on the Point Thomson field to her administration, which begins Monday.
Murkowski's natural resources commissioner, Mike Menge, on Monday said Exxon Mobil's latest proposed plan of development for the huge and long-dormant field was unacceptable, in large part because it doesn't commit to actually pump out any of its oil and natural gas riches.
Menge ruled that Point Thomson is in default, effectively immediately, and that Exxon now has 30 days to appeal the decision to the Alaska Superior Court.
"This has probably been one of the most difficult decisions that I've had to make," Menge said at a news conference Monday in Anchorage.
"I wholly support and stand behind the decision of Commissioner Menge," Murkowski said.
The decision was sure to cheer industry critics who argue Exxon and other oil companies holding leases in the 106,000-acre field have "warehoused" Point Thomson's oil and gas since its discovery in 1977. That might be good for Exxon, which can concentrate on developing other projects around the world, but it denies Alaska tax money and jobs, the critics say.
Exxon spokeswoman Susan Reeves said the company was disappointed the state didn't accept the latest Point Thomson development plan -- the 22nd such plan submitted -- but that it was too early to say whether Exxon would appeal.
Reeves added: "This is a major setback for an Alaska gas pipeline, since the gas supply from Point Thomson is critical for the project."
Murkowski and his aides, however, said they believe putting Point Thomson in default might prod the oil companies toward construction of a pipeline to carry the North Slope's enormous natural gas reserves to market.
Point Thomson holds about a quarter of the Slope's total known reserves of 35 trillion cubic feet of natural gas. It also holds an estimated 300 million barrels of oil and other petroleum liquids.
Although Palin had said she preferred the Point Thomson matter be rolled over to her administration, she praised Murkowski and Menge.
"It was the right decision," she said, one that was "long overdue."
Menge, in a 20-page ruling, said Exxon and the other owners had failed to present an acceptable plan for developing Point Thomson and had broken commitments to drill wells and otherwise get on with pumping oil and gas.
His decision affirmed, and even seemed to strengthen, an initial ruling by former state oil and gas director Mark Myers, who in October 2005 held Point Thomson in default and said the leaseholders were making "a mockery" of state law by "continuing this 30-year record of nondevelopment and delay."
Myers later resigned with several other state resources officials who said Murkowski was making too many concessions to Exxon, BP and Conoco Phillips to try to persuade them to build a $20 billion gas pipeline.
Point Thomson lies on state land some 60 miles east of the giant Prudhoe Bay oil field, nearly to the edge of the Arctic National Wildlife Refuge. Exxon holds about 53 percent of the field, with more than 20 other companies holding the rest.
Menge's decision does not revoke the Point Thomson leases directly. Rather, his decision terminates what is known as the Point Thomson Unit, an umbrella designation covering the entire field and all the leaseholders. Once the unit is disbanded, the Point Thomson leases effectively are voided because they had already been extended well beyond their original terms, Menge said.
The intent now is to offer the Point Thomson acreage for lease again, which would give newcomers, or the original leaseholders including Exxon, a chance to grab the acreage and develop the field, Menge said.
The new leases could include terms requiring companies to start producing by a certain date, he said.
Assuming a lawsuit filed by Exxon or other leaseholders doesn't get in the way, the state could lease Point Thomson as early as next October, Menge said.
But a lawsuit is widely expected. Richard Todd, an assistant attorney general, estimated an Exxon lawsuit could take three years to wind through the courts.
Monday's action marked the second time in his four-year term that Murkowski, a Republican who had been considered industry friendly, dealt oil companies a painful decision. In early 2005, he ended a major tax break on small oil fields on the fringes of Prudhoe Bay.
Ken Boyd, an industry consultant and former state oil and gas director, said the state's impatience is understandable, but it's unfair to say Exxon and the other companies simply sat on Point Thomson for 30 years. They spent millions exploring the field, and it's only been in the last six years that natural gas prices have risen high enough to justify the cost of a pipeline, he said.
"I can't imagine Exxon not appealing," he said. |
