Providing coverage of Alaska and northern Canada's oil and gas industry
December 2008

Vol. 13, No. 50 Week of December 14, 2008

DNR, governor in line on Point Thomson

Palin backs up Department of Natural Resources officials; says Exxon hasn’t abided by terms leases at eastern North Slope field

Kristen Nelson

Petroleum News

The suggestion made Dec. 1 that the Alaska Department of Natural Resources was not on the same page as Gov. Sarah Palin on the Point Thomson issue seems to have been given the lie in Fairbanks Dec. 5.

Point Thomson gas was front and center at a recent legislative hearing (see story in Dec. 7 issue of Petroleum News) and it also surfaced when the Alaska Gasline Inducement Act license was signed in Fairbanks (see stories this issue).

Rep. Jay Ramras, R-Fairbanks, who chaired the joint hearing by the House Judiciary and Resources committees in Anchorage Dec. 1, asked Alaska Department of Natural Resources Deputy Commissioner Marty Rutherford and acting Director of the Division of Oil and Gas Kevin Banks for benchmarks on where DNR would be on Point Thomson in 12 months.

Banks said there were high-level negotiations on Point Thomson “and to predict that outcome would be I think very challenging.”

DNR ‘off the reservation’?

Ramras suggested that DNR was acting in opposition to Gov. Sarah Palin’s “drill baby drill” philosophy and said it was like locomotives pulling in two directions, but with the administrative locomotive being more powerful than the executive locomotive. He said it was difficult for him to reconcile the governor’s “drill baby drill” with DNR’s refusal to permit work at Point Thomson and suggested that DNR was “off the reservation, so to speak.”

Rutherford said the state had “absolute commitments from the previous leaseholders at Point Thomson on drilling and development and those, many of those commitments were reneged on.” She said the state is “trying to ensure development will occur in all of our state lands. ... And if you haven’t had people honoring their commitments then you have to begin to consider other operators as possible developers to ensure that we do have the drilling that we all want.”

Rutherford: Exxon nervous

Addressing a similar question at the Fairbanks AGIA license signing, Rutherford told the Fairbanks Daily News-Miner: “Exxon is very nervous about losing that unit and those leases. They are putting a lot of pressure on the state. But at the end of the day, we’ve gotten commitments from them previously that they haven’t honored.”

Rep. Ralph Samuels, R-Anchorage, queried at the Dec. 1 hearing whether the state was using Point Thomson as leverage to get commitments of gas to the TransCanada Alaska gas pipeline project.

Gov. Sarah Palin was asked about suggestions by legislators that Point Thomson was leverage for the state and told the News-Miner “some would say that Exxon has held Point Thomson and the state hostage for a couple of decades now. No, we’re not playing that game.”

And the governor sounded very much in agreement with DNR officials when she said:

“What we’re doing, what is right for Alaska, is to say that we need that development up there. It’s time for that development, and by not abiding by the provisions in your leases, you knew what was coming, Exxon.”

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