December 21, 2006 --- Vol. 12, No. 90December 2006

Exxon, Conoco appeal certified well decision

ConocoPhillips and ExxonMobil have appealed a portion of the Nov. 27 decision of former Commissioner of Natural Resources Mike Menge terminating the Point Thomson unit to acting DNR commissioner Marty Rutherford.

Menge ruled that there are no wells in the unit certified capable of production in the unit — effectively overruling decades of decisions by directors of the Division of Oil and Gas.

Both companies reserved rights to all other matters in the decision, but said the well certification decision had not been properly noticed, so unit owners did not have notice that it would be part of the commissioner’s decision. The decision was the final department decision; affected companies had 30 days to appeal to Alaska Superior Court.

ConocoPhillips argued that certified well issues were not properly before the commissioner, “and had not been properly noticed and subject to public comment” and said it was in the state’s best interest that DNR “act promptly to remedy the former commissioner’s ill-advised attempt to repudiate the long-standing rules regarding certified wells.”

ExxonMobil requested reconsideration of the findings and decision revoking certification of wells and terminating the unit “because those issues were not previously raised by the decision of the director of the Division of Oil and Gas, and thus ExxonMobil and the other Point Thomson working interest owners … were not on notice that they would be raised as issues by the commissioner.”

ExxonMobil said that while the decision was designated as final, it “believes that the decision respecting certified wells and, following that, administrative termination of the PTU, were new decisions at the commissioner level and therefore are appropriate for reconsideration.”

Petroleum News sources say Exxon will file a suit in Superior Court tomorrow.

Fairbanks Natural Gas to build North Slope LNG plant

Fairbanks Natural Gas is moving ahead with plans to build an LNG plant on the North Slope, Dan Britton, the company’s president, told Petroleum News Dec. 20.

“We have obtained a land use permit from the North Slope Borough and are working on the lease of a pad with the (Alaska) Department of Natural Resources,” Britton said. He also said that the company is working on gas supply agreements with the North Slope producers.

“Our plan is to try to have the facility operational for the fall of 2007,” Britton said. “That’s a fairly aggressive time schedule. … Most of the equipment will be skid-mounted, packaged units that we just interconnect.”

The company currently produces LNG in Cook Inlet and trucks it to Fairbanks, but dwindling deliverability of natural gas from Cook Inlet has created gas contract issues for the company.

Britton said the Point Mackenzie LNG plant will remain in operation until the North Slope facility is running smoothly and after that the company will source all of its gas from the slope.

Editor’s note: see complete stories in Dec. 24 issue of Petroleum News, available online at noon, Friday.

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