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Vol. 12, No. 13 Week of April 01, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Exxon gets more time to file appeal

Alaska DNR Commissioner Irwin gives Point Thomson operator extra 30 days to turn in appeal brief on terminated leases

Kay Cashman

Petroleum News

Tom Irwin, commissioner of the Alaska Department of Natural Resources, has given Point Thomson unit operator Exxon Mobil Corp. an extra 30 days to get its appeal into him on the termination of the North Slope unit’s 32 leases. Exxon was supposed to have filed its arguments on why the leases should not be terminated by March 27.

Press reports that followed Irwin’s decision were unclear, suggesting the term of the leases had been extended, which was incorrect. The extension was for filing appeal paperwork, Irwin said in a press conference March 28.

“The companies asked for an extension — not of the leases, I want to be clear on that — it’s of the appeal time to get information in, and it’s most appropriate to grant that. We want them to get all the information to us, so that I can make an informed decision.”

The State of Alaska, Irwin said, “hasn’t changed its position at all” on Point Thomson. But “it’s my obligation to make sure I review all the data and that it’s fair.”

DNR terminated the eastern North Slope Point Thomson unit last year. Exxon and other lessees have appealed that decision to the courts.

Following DNR’s decision to terminate the eastern North Slope unit, Division of Oil and Gas Director Kevin Banks went ahead and terminated the 32 core leases that were part of the unit. (Leases can be held beyond their original term by inclusion in a unit, but once the unit is terminated, lease termination automatically follows.)

The division sent out notices to lessees in February, saying the 32 leases were terminated as of March 27, 90 days from the Dec. 27 decision on reconsideration by acting DNR Commissioner Marty Rutherford, Irwin’s predecessor under the current administration. Rutherford currently serves as a deputy commissioner under Irwin.

State confident in its legal position

In the March 28 press conference, Irwin declined to talk about the Point Thomson unit litigation, but he did say “the state’s really confident in its position.”

In regard to Banks’ termination of the 32 leases within the unit, Irwin said he has received more than 100 appeals of that decision “because there are multiple owners and when you are looking at leases starting in 1965, it’s a very complex issue.”

It’s “appropriate” that the “companies have appealed the director’s decision to the commissioner,” Irwin said. It’s “what one would expect. In such a major, complex issue such as this, it’s my responsibility to make sure there’s fair evaluation in the appeal.”

While the majority of termination notices for the 32 leases were addressed to Exxon, letters also went to other Point Thomson leaseholders, including BP Exploration (Alaska), Chevron USA, ConocoPhillips Alaska and Devon Energy. While numerous companies own smaller portions of leases in the former unit, Exxon, BP, Chevron and ConocoPhillips were the major owners.

Thirteen other leases were added to Point Thomson in a 2001 unit expansion, bringing the total number of leases in the unit to 45. Those 13 leases were terminated effective Dec. 27 per the terms of the 2001 expansion agreement and, as of the end of February, were shown in state records as closed. The expansion agreement called for immediate termination of those leases if the expansion area contracted out of the unit.



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