NEWS BULLETIN

June 11, 2008 --- Vol. 14, No. 62June 2008

Thomson decision stands, unit terminated; owners will appeal

Alaska Commissioner of Natural Resources Tom Irwin said today that his April 22 decision to terminate the Point Thomson unit stands.

The unit was terminated in late 2006, a decision upheld in Alaska Superior Court in early 2008.

However, Judge Sharon Gleason remanded the decision to the department so that the former unit owners could suggest an appropriate remedy for their failure to submit an acceptable plan of development.

In February the owners proposed a 23rd plan of development and the department held a hearing.

Irwin rejected the proposed 23rd plan of development as a remedy in an April 22 decision. On May 12 the companies requested reconsideration; partial reconsideration was granted May 22.

Irwin listed a number of deficiencies in the request for reconsideration, but said the request “on several issues merits a response so that a reviewing court has the benefit of DNR’s perspective.”

Irwin said units are formed to facilitate development of the state’s resources, but in more than 30 years “no oil or gas has been brought to market and none of the infrastructure for development has been built” at Point Thomson, he said. “This unit is terminated because the Point Thomson unit working interest owners failed to fulfill the commitments made in the unit agreement.”

ExxonMobil spokeswoman Margaret Ross told Petroleum News in an e-mail that “ExxonMobil is extremely disappointed by the DNR decision.” She said ExxonMobil believes DNR “has no legal basis to terminate the unit and doing so will lead to further court appeals,” taking years to resolve and delaying Point Thomson development.

She also said: “We are continuing plans to begin drilling this coming winter,” despite DNR’s decision. “We have the right to conduct such drilling under the terms of the leases, which have not yet expired,” she said.

DOI team starts next phase of CBM drilling at Wainwright

A Department of the Interior-led team has started drilling wells for a coalbed methane production test at in the Chukchi Sea coast village of Wainwright, Art Clark, U.S. Geological Survey drilling project supervisor and co-project leader, told Petroleum News June 10.

The team drilled a successful coalbed methane test well in the summer of 2007. That well encountered a total of 70 feet of coal dispersed across multiple seams. Testing of samples from those seams indicated a significant gas resource.

“There’s enough gas contained within these coal seams (at Wainwright) to warrant the next phase of work. … These coals are fully saturated with gas,” Clark said.

This year’s production test will involve a production well and probably four monitoring wells at the site of the 2007 well. The testing will enable an assessment of how easily gas and water can flow through the coal and will measure the amount of water produced for a given amount of gas. The testing will also involve monitoring pressure changes in the coal during gas production.

See complete stories in the June 15 edition of Petroleum News, available to subscribers online at noon, Friday, June 13, at www.PetroleumNews.com.


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