Alaska to reinstate 2 Point Thomson leases

Posted: Wednesday, January 28, 2009

JUNEAU - The state of Alaska will allow oil giant Exxon Mobil Corp. to move forward with preparations for drilling two wells in a disputed North Slope oil and gas field.

Department of Natural Resources Commissioner Tom Irwin issued an interim decision Tuesday that conditionally reinstates two of the 31 Point Thomson leases held by Exxon and its partners BP, Chevron and ConocoPhillips.

Irwin said he based his decision on new evidence that Exxon was committed to begin drilling this winter with production scheduled to begin in four years. His action authorizes state permits to be issued for the project, including construction of an ice road.

The state has been in a protracted dispute with Exxon Mobil and other leaseholders over the field that many consider critical to supplying a proposed multibillion dollar natural gas pipeline.

The state notified Exxon in 2005 that its development plan was inadequate and began action to strip the companies of their leases. That led to a court challenge that continues.

More recently, the director of the Division of Oil and Gas in April found that the leases, some of them as much as 43 years old, were not being used and had expired.

Exxon appealed the decision to the commissioner, where it demonstrated that it had mobilized equipment and was lining up contractors to begin work in the upcoming drilling season.

Oil and Gas Division deputy director Kurt Gibson said the new evidence was persuasive.

"Hopefully this is a step in the right direction. We want to see resource development happen in a timely and responsible manner," Gibson said.

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