Lawmakers quiz state officials about oil leases

Posted: Thursday, December 04, 2008

FAIRBANKS - State lawmakers want to understand why two energy companies ready to drill for natural gas have not received lease-related considerations from the state.

The state's Department of Natural Resources addressed the issue with two House committees on Monday.

Exxon Mobil Corp. and Escopeta Oil want to begin drilling on the North Slope and Cook Inlet respectively, but have been blocked over lease disputes with the state.

Escopeta's leases in Cook Inlet expire in a month; meanwhile DNR terminated the Point Thomson unit operated on behalf of several partners by Exxon Mobil.

The issue: Is the state fostering development of Alaska resources, or is the agency trying to warehouse leases so it can to collect more bonus payments by re-selling them to new buyers.

One lawmaker says this is in contradiction with Gov. Sarah Palin's catch phrase, "Drill, Baby, Drill."

But state officials insist Alaska's leasing program is set up to ensure the best return for the Alaskans.

Members of the House Judiciary and House Resource committees quizzed officials from the state's resources department.

Majority Leader Ralph Samuels, R-Anchorage, looked to the bigger picture: the what will natural gas field development mean to the state's hope for a large-diameter transcontinental gas line.

"If this state does not get a gas line, we are all so screwed and you can't get it without Point Thomson," Samuels said.

"You want Exxon and Chevron and BP and all the rest of the them to put that gas into the AGIA pipeline," Samuels said. "Is that the endgame that's going on here?"

Samuels wondered whether the state seeks to leverage support TransCanada's pipeline proposal, which was licensed under the Alaska Gasline Inducement Act.

Some say the TransCanada proposal won't succeed without the assurance of gas to come from North Slope producers Exxon Mobil, ConocoPhillips and BP.

Critics also say that a producer-backed line, such as proposed by the joint venture between ConocoPhillips and BP is more likely to materialize.

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