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Senate Resources gets Pt. Thomson update Menge says he could brief committee once gas contract released; would likely give Exxon extension until after gas decision Kristen Nelson Petroleum News
Commissioner of Natural Resources Mike Menge told Senate Resources April 28 that he likely will give ExxonMobil an extension on the company’s appeal of a decision from last fall’s Division of Oil and Gas decision finding the company in default of its Point Thomson unit obligations.
Menge said Point Thomson gas is a “critical” part of the gas pipeline — with Prudhoe Bay still producing oil, he said, much of the initial gas for a pipeline project would come from Point Thomson.
Resources Chair Tom Wagoner, R-Kenai, said Menge had assured him that the last extension Exxon received for Point Thomson – a six month extension — would be “the last extension they’d get and if they didn’t comply there would be other action taken.”
Wagoner asked if there was an end in sight.
Menge said he wasn’t going to try to “sugarcoat” the situation.
Next year, he said, would be the 30th anniversary of the unitization of the still-undeveloped Point Thomson field adjacent to the Arctic National Wildlife Refuge on the eastern North Slope.
Point Thomson is a “critical part” of the gas pipeline because the three North Slope producers who want to build a gas pipeline to Lower 48 markets want to take gas from Point Thomson before they pull it from Prudhoe Bay, the other proved source of natural gas on the North Slope, Menge said.
He noted that Prudhoe Bay is still producing oil and taking too much gas could reduce the amount of oil that can be recovered.
“I have to try as commissioner to strike a balance. … I’m very sympathetic to the committee’s desire” to see Point Thomson developed, he said.
Menge expects to make a decision on Point Thomson by May 31 when the current extension runs out.
In the meantime, Exxon could ask for another extension or provide a new plan of development. Menge believes it’s “reasonable to assume” Exxon will request an extension.
“If they do nothing then we proceed forward and we have four options.” One would be to “simply order the unit into production,” which “brings complications.” Another is to find the unit in default and initiate dissolution. Or, he could order the leases with certified wells into production. The fourth possibility would be to provide another extension.
Sen. Ralph Seekins asked if an extension would benefit the people of Alaska.
Menge said an extension would give the legislature “time to evaluate” the proposed gas contract between the administration and the three producers, BP, ConocoPhillips and Exxon.
“If I took (back the) leases it would generate a cloud ... it could place the entire system in jeopardy. I would think long and hard about taking the decision away from executive and legislative branch,” Menge said.
Seekins asked if the legislature approved the gas contract, “at that point how long would it take for Point Thomson to go into development?”
Gas could be pumped into a pipeline in “eight years or so,” Menge said, noting that “hypothetically” he would consider an extension “until the legislature is done with considerations.” After that, he said, there is “no reason to continue along lines we have for 30 years.”
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