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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2009

Vol. 14, No. 4 Week of January 25, 2009

Exxon can fight state on permits

A judge has turned back a state effort to kill an Exxon Mobil Corp. lawsuit seeking a drilling permit for the disputed Point Thomson oil and gas field.

The ruling from Anchorage Superior Court Judge Patrick McKay doesn’t mean Exxon gets the drilling permit. Rather, it means Exxon may continue to fight in court to overturn the state’s denial of the permit.

The state and Exxon are battling for control of the rich North Slope field, which state officials are trying to reclaim on grounds that Exxon has failed to produce any oil and gas from state acreage the company and its partners leased decades ago.

In an effort to hang onto its leases, Exxon has proposed drilling at Point Thomson this winter. But state officials have rejected that plan as untrustworthy and have withheld drilling and related permits.

Ruling from Dec. 31 hearing

McKay’s ruling stems from a Dec. 31 hearing on the state’s request to have Exxon’s lawsuit dismissed. An attorney for the state argued that Alaska Natural Resources Commissioner Tom Irwin hadn’t yet made a final administrative decision to deny Exxon a drilling permit, thereby making a lawsuit premature.

The judge ruled that Irwin did make a final decision, and so Exxon is within its rights to appeal his decision in court.

However, McKay said he would stay the case — meaning further action will be delayed — until at least Feb. 20.

In the interim, the judge said, the state and Exxon can carry on with other proceedings on the pertinent question of whether Point Thomson leases are still valid. Without valid leases, Exxon can’t drill.

A Department of Natural Resources hearing on the lease issue is expected to begin Jan. 12 in Anchorage and could last a week or more. The state says it has canceled the leases, but Exxon argues they’re still good.

—Wesley Loy, Anchorage Daily News






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