Hearing begins on Point Thomson oil, gas leases -
UNDEVELOPED: State could revoke them for lack of production.
adn.com
The Associated Press
Published: March 5th, 2008 12:12 AM
Last Modified: March 5th, 2008 12:43 AM
The state has begun a hearing that could result in termination of Exxon Mobil's and other oil company leases at Point Thomson, a remote section of land east of Prudhoe Bay.
Exxon and its partners in 1977 won the rights to drill for oil at Point Thomson. Despite research that showed promising finds of oil and gas, the companies have not produced one barrel of crude from the tracts.
A state Superior Court ruling gave the state the right to terminate the leases but the state must conduct a hearing first on the companies' plan to develop the field, the 23rd plan in 30 years.
The hearing began Monday in Anchorage, in a room packed with lawyers, oil industry executives and onlookers.
Department of Natural Resources Commissioner Tom Irwin will be the one-man judge and jury for the oil companies in their quest to keep the Point Thomson leases. He told oil company attorneys their job was to persuade him "that the pattern has been changed."
Craig Hayes, Exxon's Alaska production manager, presented the company's new plan to develop tracts.
"Exxon Mobil is committed to this project," Haymes said. "It is an unconditional commitment."
He said the company was proposing a firm commitment to drill at least five wells and begin production by 2014. Past proposals did not involve a commitment to a firm timeline.
Irwin remained skeptical, given the history of negotiation. The commissioner asked Haymes why his department should rely on Exxon's word for this proposal.
Haymes replied that the company will start a drilling program next winter to prove its intentions on the leases.
Exxon promises to begin production by 2014 was met by skepticism in the audience.
Lawyers for the Alaska Gasline Port Authority said they had approached the company about buying Point Thomson natural gas for a gas pipeline project. Craig Richards said the authority was never engaged.
"We made it clear that we'd be willing to purchase gas on whatever terms they offered, and no terms were forthcoming," he said.
The authority urged the state to take back the leases.
Exxon and its partners claim to have spent about $800 million conducting seismic testing and other research.
Company officials said that if the state were to revoke the leases and give them to other companies, it would take the new lease holders 15 years to get where Exxon is today.
Point Thomson lies on the Beaufort Sea coast east of the North Slope oil fields. The field holds about a quarter of the North Slope's known 35 trillion cubic feet of natural gas, and thus would play an important role in a natural gas pipeline project. The field also is believed to hold perhaps 200 million barrels of oil.
Other firms holding shares in the field include BP, Chevron and Conoco Phillips. The new development plan says they will produce 10,000 barrels a day of condensate -- a liquid form of natural gas -- starting by the end of 2014. |
