White requests Supreme Court rehearing

Alan Bailey

Petroleum News

Jim White, owner of Alaskan Crude Corp., has asked the Alaska Supreme Court to reconsider its recent ruling, upholding an Alaska Department of Natural Resources decision to cancel Alaskan Crude’s lease covering the Moose Point prospect on the northwest coast of the Kenai Peninsula. As reported in the Sept. 9 issue of Petroleum News, DNR had cancelled the lease after Alaskan Crude did not continue a drilling project in the lease, to meet an April 27, 2009, deadline set by DNR for completing a well. DNR also set a 90-day deadline for bringing a Moose Point well into production, should a viable resource be discovered.

White had argued that the deadline imposed by DNR had been invalid because it had not been part of the original lease stipulations. White also said that questions over the length of the winter drilling season, and over Alaska Oil and Gas Conservation Commission requirements for a hearing into correlative rights for subsurface resources, rendered investment in the drilling in time for the April deadline too financially risky - White supplies all of the financing for Alaskan Crude operations.

The state Superior Court found in favor of White. But the Supreme Court overturned the Superior Court decision, saying that DNR’s April deadline had provided White with ample time to conduct the drilling.

In the request for a rehearing James Gottstein, attorney for White, argues that the Supreme Court had overlooked the impact of the AOGCC requirement on DNR’s deadline for production from the well. The court had also overlooked a requirement for a DNR plan of development, if the well were to go into production. Thus, a reasonable time to bring a well into production would be six months, rather than the 90-days allowed under DNR’s order. Apparently these issues had been raised before the Supreme Court.

A rehearing is justified, because, by overlooking those AOGCC and DNR requirements, the Supreme Court had not considered the entirety of the contract involved and of the material facts in the case, as is required by law, Gottstein wrote. Moreover, those two requirements, in effect, meant that “Mr. White was doomed from the beginning” in any effort to bring the well into production within the DNR deadline, even if White had continued with the drilling in early 2009, Gottstein commented.

- ALAN BAILEY