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Vol. 12, No. 49 Week of December 09, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

No stay for Point Thomson

AOGCC asks for submissions; Superior Court wants briefing on DNR issues

Kristen Nelson

Petroleum News

Point Thomson is currently playing in multiple venues: the Alaska Superior Court is hearing an appeal of the Department of Natural Resources’ decision terminating the unit; DNR is holding a decision on an appeal of the status of leases at Point Thomson pending the court’s decision; and the Alaska Oil and Gas Conservation Commission is hearing a petition by ExxonMobil for compulsory unitization at Point Thomson.

Judge Sharon Gleason of the Alaska Superior Court heard oral arguments Oct. 5 and said it was her goal to have a decision out by the end of November, but definitely by the end of the year, on the appeal of the DNR decision terminating the unit. The Nov. 30 target went by the wayside Nov. 21, when Gleason requested supplemental briefing on three issues: Is the current administrative code inconsistent with the regulations in effect when the Point Thomson unit agreement was entered into; did these formal procedural regulations, in conjunction with other regulations, “accord to the DNR the administrative authority to either adjudicate default or to terminate a unit agreement?” And if state regulations can be read to “permanently certify a well as capable of producing hydrocarbons in paying quantities for regulatory purposes, would that regulation be inconsistent” with the Point Thomson unit agreement? These supplemental briefs are due Dec. 7.

AOGCC won’t stay decision

The Alaska Oil and Gas Conservation Commission, meanwhile, said recently that it will not stay a decision on ExxonMobil’s petition for compulsory unitization of the Point Thomson sand unit.

The commission held a hearing July 10 to consider whether its proceedings should be stayed pending resolution of the administrative appeal of the status of the Point Thomson unit in state court. The commission said both DNR and ExxonMobil opposed a stay and no party argued in favor of a stay, so the commission is exercising its discretion and will not order a stay.

In its Nov. 28 order the commission said ExxonMobil’s petition “involves highly unusual circumstances that raise novel and probably unique legal issues,” with the petitioner seeking “compulsory unitization of an area that has already been in a voluntary unit” approved — but recently terminated — by the Department of Natural Resources.

“The petitioner and others are challenging DNR’s decision in Superior Court,” the commission said, so the petition to the commission “implicates the relationship between the respective unitization authorities” of AOGCC and DNR.

Multiple issues

The Commission said parties identified a number of issues related to unitization authority:

• Does the commission have “jurisdiction or authority to unitize state oil and gas leases that DNR has ‘de-unitized;’”

• Can the commission “adopt a view that is at odds with DNR’s view of how unitization of the area in question affects the public interest;”

• Whether compulsory unitization by the commission “would interfere with DNR’s management of state lands and if so whether administrative comity (legal reciprocity) bars the commission from so acting;”

• “Whether the commission’s compulsory unitization authority is triggered by the failure of a lessor … to agree to voluntary unitization when the lessees have agreed to voluntary unitization;” and

• “Whether the petitioner’s interests would be prejudiced by a stay.”

The commission said that if the petitioner prevails in court, its petition to AOGCC “and all of these issues will become moot, because the pre-existing DNR-approved unit will have been reinstated or determined not to have been terminated.”

If the petitioner does not prevail in court, the leases will have expired and “the petitioner may lack standing to proceed” and the issues cited before the commission would also become moot. “Even if they do not become moot, they are likely to be narrowed and better illuminated as a result of resolution of the administrative appeal,” the commission said.

Issues to be addressed

The commission said DNR raised several issues that DNR believes would result in a dismissal of the petition without a hearing on the merits if the commission ruled in DNR’s favor. But the commission said those issues were raised in the context of the commission’s proposal to stay proceedings, “and it is not clear, therefore, that other parties have had an adequate opportunity to respond, or for that matter whether DNR has fully addressed the issues on their own terms.”

The commission said it is providing an opportunity for all parties “to submit and respond to potentially dispositive motions, including motions in the nature of motions for summary judgment.”

The commission has asked parties to confer and agree on a schedule for submission and has also asked the parties “to consider whether or not any factual issues may exist that would require an evidentiary hearing to resolve.”

The parties have 30 days from the Nov. 28 order to submit a schedule; if they cannot agree, then parties wishing to be heard may each file schedules.



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