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Judge orders mediation for North Slope explorers Stowers says case wouldn’t be tried until late 2009 or early 2010, successful mediation effort could save 2010 drilling season Eric Lidji Petroleum News
A state judge has ordered two North Slope explorers to go into meditation in the hope of resolving a legal dispute between them in time to save a 2009-10 drilling program.
At a hearing on Feb. 6, Anchorage Superior Court Judge Craig Stowers ordered Alaska Venture Capital Group, the Kansas-based parent company of Brooks Range Petroleum Corp., and Calgary-based TG World Energy Corp. to “be ready to go in 30 days.”
BRPC had asked the court for a trial within six months, saying they needed a decision by August in order to prepare for the winter 2009-10 drilling season on the North Slope.
But lawyers for TG World said there was nothing unusual about the case that warranted pushing up the trial date. They said they needed the normal lead-time to prepare a case.
Stowers said it would be “impossible” to try the case before August, because the first full week on his calendar without any cases scheduled yet wouldn’t be until Jan. 4, 2010.
The companies both expect a trial to last one week.
Waiting until next year for a resolution to the case would mean sacrificing another winter drilling season to the lawsuit. BRPC and TG World, part of a four-company joint venture exploring the North Slope, have already postponed drilling planned for this winter.
In addition to lost opportunity, losing a second season could increase the stakes of the lawsuit. BRPC is already claiming damages against TG World for delays this year.
In court filings, Edgar Dunne, a managing partner of AVCG, said the joint venture budgeted $58 million for the now postponed operations originally planned for this winter.
Additional delays could impact daily operations for AVCG, Dunne wrote. He said BRPC has seven full-time employees in Anchorage, and between 20 and 50 contractors, and estimated that AVCG’s overhead in the coming year would be around $2.4 million.
“How long AVCG can continue that level of support without production cannot be predicted,” attorneys for AVCG and BRPC wrote in court filings.
Dunne also wrote that losing a second season could lead to missing work commitments required for retaining North Slope leases, jeopardizing the joint venture’s land position.
If the companies can’t agree on a mediator within 30 days, Stowers said retired Anchorage Superior Court Judge Brian Shortell would be the mediator for the case.
Money isn’t behind delays The lawsuit began late last year after TG World said it would not participate in a two-well drilling program planned this winter in the Gwydyr Bay area north of Prudhoe Bay.
BRPC filed suit, saying TG World violated its contract, a claim TG World disputes.
Although the four-company joint venture is not currently producing oil or gas in Alaska, the companies have been among the most active explorers in the state in recent winters.
TG World has said it postponed its involvement in drilling work this winter because of global financial uncertainty and low oil prices, but insisted it is not in financial straits.
In third-quarter financial filings last November, the company said it had nearly C$16 million (about US$13 million) in its treasury, and expected to get some C$10.2 million (about US$8.5 million) in exploration tax credits requested from the state.
BRPC is the operator of the joint venture. TG World holds a 35 percent interest in most operations. Calgary-based Bow Valley Energy Ltd. has frozen its interest in the program.
The fourth partner is Nabors subsidiary Ramshorn Investments Inc.
Early last fall, the joint venture laid out plans for two wells and possibly a sidetrack this winter in the North Shore and Sak River prospects in Gwydyr Bay, where it drilled wells in previous winters. Recently, it also began permitting a prospect called West Shore.
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