The Alaska Department of Natural Resources terminated the Point Thomson unit on the North Slope last year, and although lessees have appealed the decision to the courts, the Division of Oil and Gas has terminated the leases.
Following the decision by DNR Commissioner Mike Menge in November terminating the unit — and the affirmation of that decision by Acting Commissioner Marty Rutherford in December — the division began the work necessary to notify leaseholders.
Leases can be held beyond the original term of the lease by inclusion in a unit; once the unit is terminated, however, so are the leases.
Letters went out Feb. 13 to the notification lessees. While the majority of termination notices for the 45 leases were addressed to Exxon Mobil Corp., letters also went to BP Exploration (Alaska), Chevron USA, ConocoPhillips Alaska and Devon Energy. While others own portions of leases in the former unit, ExxonMobil, BP, Chevron and ConocoPhillips were the major owners.
Some leases terminated at end of yearFourteen leases, all or parts of which were added to the unit in a 2001 expansion, were terminated effective Dec. 31 “per the terms of the 2001 Expansion Agreement.” As of the end of February, those leases were shown in state records as closed, since part of the expansion agreement was that if the expansion area contracted out of the unit, the leases would terminate immediately.
The rest of the leases fall into one of two categories, but in both cases the division said those leases terminate March 27, 90 days from the Dec. 27 decision on reconsideration.
Some leases had been certified in the past as containing wells “capable of producing in paying quantities.” The Nov. 27, 2006, commissioner’s decision denied that leases in the Point Thomson unit could be held based on certified wells.
The majority of leases were terminated because they were beyond the original term of the lease, and with the termination of the unit the leases terminated.
The former leaseholders had 20 days from the date of the decision letters to appeal the decision to DNR Commissioner Tom Irwin.