AOGCC delays action on Exxon permits

The Alaska Oil and Gas Conservation Commission has decided to hold off making a decision on applications from ExxonMobil for drilling permits for the former North Slope Point Thomson unit.

Petroleum News learned of the decision from a Dec. 19 letter AOGCC sent to Tom Irwin, commissioner of the Alaska Department of Natural Resources.

Irwin had written to Dan Seamount, the commission chair, on Oct. 29, asking, as a landowner, to be heard on the Point Thomson permit applications AOGCC had received from Exxon.

Irwin also said that state law prohibits drilling on state land without an approved plan of operations from DNR’s Division of Oil and Gas, which had rejected Exxon’s plan.

In a Nov. 6 response, Seamount said the commission had been officially notified that DNR had terminated 44 of the 45 leases “in the area formerly known as the Point Thomson unit.”

Exxon’s permit applications were filed “well before that notification but have not been withdrawn,” he said. “We understand that ExxonMobil is disputing DNR’s determination regarding lease status.” He invited both DNR and Exxon “to submit written argument on the question of what action” the commission should take on the drilling applications.

Seamount noted that AOGCC’s regulations say permits to drill are “not valid at a location where the applicant does not have a right to drill for oil and gas,” while courts have found that a drilling permit “grants no affirmative rights to the permittee to occupy the property,” merely removing conservation laws and regulations as a bar to drilling.

The same ruling said — in that case the Texas Railroad Commission — “should not do the useless thing of granting a permit to one who does not claim the property in good faith.”

In their Dec. 19 letter to Irwin, the three AOGCC commissioners said they knew that the Point Thomson leases on which Exxon planned to drill were involved in DNR and court “dispute resolution processes,” and that if the case was resolved against Exxon, the drilling applications “will be moot.”

If the dispute is resolved in favor of Exxon, the commissioners think there will be sufficient time to “promptly” make a decision on the drilling permit applications, and not cause a delay in drilling.

The commissioners also noted that issues raised about the drilling applications might be “intertwined to some extent” with the compulsory unitization petition Exxon submitted to AOGCC, and which is scheduled for oral argument before the commission on Feb. 9.

—Kay Cashman