Lawyers or Drillers?

The day of reckoning is drawing near in the state's campaign to force oil giant Exxon to join with Point Thomson's other owners in drilling exploratory wells and developing production scenarios for the eastern North Slope unit

Kay Cashman & Pat Healy

PNA Editor-in-Chief/Land & Leasing Reporter

Twenty-eight years after its discovery well was deemed capable of producing in commercial quantities and 21 years after its leases were banded together in a unit, the North Slope's easternmost unit, Point Thomson, is still not in production. Unit operator Exxon Co. USA has until June 8 to decide whether it will spend its money in Alaska's court system defending its 15th unit plan of development — which was rejected by the state last fall — or if it will invest capital in exploring and delineating Point Thomson's reservoirs.

At this point, the oil giant appears to be cooperating with the state's demand for a revised plan of development that includes an integrated economic analysis of the development potential of Point Thomson. But Exxon has not always been cooperative.

Since oil prices dropped in the mid-1980s, Exxon has done as little work as possible in the 83,825 acre unit, citing poor economics as the reason it has not moved forward with development.

Technological advances since 1992 that have made similar Brookian plays on the North Slope economic did not alter the company's position. When the slope's pipeline infrastructure began to move east with the Badami project, effectively halving the distance from Point Thomson to the trans-Alaska pipeline system, Exxon remained firm in its contention that Point Thomson development was not viable. Exxon still did not budge in 1997 when BP Exploration (Alaska) Inc. and Chevron USA confirmed an oil discovery in the southeast corner of Point Thomson at the Sourdough prospect, directly across the Staines River from the coastal plain of the Arctic National Wild-life Refuge. And the company didn't soften its position late last year when the U.S. Department of the Interior indicated it might be open to a “paper” oil and gas lease sale in ANWR, which would allow subsurface entry into the refuge via horizontal drilling through Sourdough/Point Thomson wells. ...

The rest of this story is available from Petroleum News • Alaska by calling the circulation manager Dan Wilcox at 522-9469 for back issue copies. (April 1998)