Alabama asks for record verdict against Exxon

The Associated Press

An attorney asked a jury Nov. 12 to find that ExxonMobil cheated the state out of natural gas royalties and return a record $9.5 billion verdict against the oil company.

“There is one language ExxonMobil understands and understands real well — money,” state attorney Robert Cunningham told the jury at the end of a four-week trial.

ExxonMobil attorneys said the company had abided by its lease agreement with the state for gas wells in state-owned waters along the Alabama coast and owes the state nothing.

“In the end what the state is asking you to do is change the deal,” company attorney Chris King said.

The state sued ExxonMobil in 1999, contending the company had deducted too much in expenses for operating its natural gas wells along the Alabama coast and had defrauded the state out of millions in royalties. A Montgomery jury in 2000 returned a record verdict of $3.5 billion but it was overturned by the Alabama Supreme Court, which said the jury was wrongly allowed to see an internal memo, prompting a new trial that began Oct. 20.

Cunningham said Alabama drafted a unique lease for oil companies drilling along the coast. He said the lease required oil companies to pay royalties on gross proceeds, but ExxonMobil deducted expenses like it would have on traditional, industry-friendly leases for processing the natural gas.

Cunningham said the state had been shorted $63.6 million in royalties and that the loss could have climbed to as much as $950 million over the 30-year life of the natural gas field in Mobile Bay. He asked the jury return a verdict 10 times the potential loss, or $9.5 billion.

Lack of evidence

“There’s not one piece of paper where they say no deduction,” King said.

The trial has been conducted while the state has been going through a financial crisis that has resulted in about 800 state workers being laid off, but the judge prohibited both sides from mentioning the state’s financial troubles during the trial.