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May 02, 2007 --- Vol. 13, No. 39May 2007

Superior Court rules against Point Thomson lessees

On May 1, Alaska’s Superior Court denied motions by Chevron, BP, ConocoPhillips and ExxonMobil to halt administrative decisions by the Department of Natural Resources in regard to the termination of the eastern North Slope’s undeveloped Point Thomson unit.

Since the department issued its final determinations in late 2006, DNR’s Division of Oil and Gas has moved forward with the unit termination process, including the termination of Point Thomson core and expansion leases. The agency has also tabled a March 23 plan of operations and well permits filing by unit operator Exxon — to drill up to seven wells between 2008-09 and 2015 for the purpose of holding the Point Thomson leases — because of the defunct status of the unit and its leases.

The lessees had wanted all DNR actions related to unit termination, including cancellation of the unit’s leases, halted until their court system appeals had been decided.

In its May 1 decision to deny the lessees stay motion, the Superior Court was acting in its capacity as an appellate court for administrative decisions by DNR.

In her ruling Superior Court Judge Sharon Gleason said the state had “persuasively demonstrated that it is in the public interest” to give DNR a reasonable opportunity to address related lease termination proceedings at the administrative level.

However, Gleason said if DNR seeks to reoffer the Point Thomson leases, the state had agreed to give at least 60 days notice of its intent, which would allow the lessees sufficient time to renew their stay motion with the court.

With respect to the commissioner’s finding that the lessees owe the state $20 million for breach of the 2001 unit expansion agreement, the court said the appellants (lessees BP, Chevron, Conoco and Exxon) are entitled to a stay of the monetary portion of the commissioner’s decision upon posting a $25 million supersedeas bond with the court.

Editor’s note: See full story in the May 6 issue of Petroleum News, which will be available online at noon Alaska-time at www.PetroleumNews.com.

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