Judge rules against state in Point Thomson dispute

Posted: Wednesday, January 13, 2010

ANCHORAGE - A judge has ruled that the state improperly terminated ExxonMobil's leases to develop the Point Thomson gas fields on the North Slope.

Alaska Superior Court Judge Sharon Gleason said in a 30-page decision Monday that Department of Natural Resources Commissioner Tom Irwin did not follow proper procedures regarding hearings to which Exxon was entitled.

The state attorney general's office said it is analyzing the decision.

In 2005, the state notified Exxon that its development plan for Point Thomson was inadequate and began stripping the companies of their leases. The state terminated the leases and declared them expired after becoming frustrated with a lack of production at the gas fields, where no drilling had occurred for decades.

ExxonMobil challenged the state's termination of those leases.

A year ago, Irwin reinstated two of the 31 leases at Point Thomson. In exchange, Exxon pledged to start drilling there right away. The company completed the surface section of the first gas well last September. The well is part of the first phase of Exxon's planned $1.3 billion natural gas cycling project at Point Thomson.

ExxonMobil said it is studying the implications of Gleason's ruling.

Exxon estimates that the field on the Beaufort Sea coastline, about 60 miles east of Prudhoe Bay, holds an estimated 8 trillion cubic feet of gas. That's about a quarter of all the known gas reserves on the North Slope. The company estimates that it also contains about 200 million barrels of condensate or liquid hydrocarbons.

The Irving, Texas-based company has said it plans to complete the well by the end of next year and begin production by the end of 2014.

The gas is a crucial part of a proposed multibillion-dollar natural gas pipeline plan from the North Slope into Canada for delivery to the United States.

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