|
Evergreen engineers shallow gas lease settlement in south-central Alaska
Kristen Nelson Petroleum News editor-in-chief
In the process of consolidating its acreage position in the Matanuska and Susitna valleys north of Anchorage, Evergreen Resources intervened in and brought to settlement a lease dispute which began some five years ago, allowing the state of Alaska to award the remaining shallow gas leases from February 2000 applications.
Pirtle Bates, natural resources manager with the Alaska Department of Natural Resources’ Division of Oil and Gas, told Petroleum News Sept. 22 that the remaining 30 leases from the state’s initial February 2000 shallow gas lease offering were awarded after a judge signed off Sept. 15 on a voluntary withdrawal of the appeal. The leases are in the Matanuska-Susitna area, Bates said, with the bulk of the acreage in the Willow area and the remainder around Palmer and Sutton.
The settlement was reached after Evergreen Resources intervened and worked out an agreement with Ted Williams of Spearfish, S.D., and Kenneth Schlenker and William Fulton of Billings, Mont. The men had appealed decisions made in 1998 and 1999 by the Division of Oil and Gas when the state was establishing its shallow gas leasing program. After the appeals were denied by the department the men appealed in Superior Court.
Williams, Schlenker and Fulton were awarded 12 leases, which by terms of the settlement they will assign to Evergreen Resources. Bates said the state held 30 leases because of overlap between the additional 18 leases and leases applied for by the men. Statute passed in 1996 The Alaska Legislature created the state’s shallow gas leasing program in 1996, providing for leasing on a first-come, first-served basis, rather than the competitive leasing the state uses for conventional oil and gas leases, and authorizing the commissioner of Natural Resources to adopt regulations to implement the program.
Williams, Schlenker and Fulton submitted letters and deposits for shallow natural gas leases in October 1998, before the state opened lands for noncompetitive shallow gas leasing or provided public notice. The division initially accepted the letters as applications for shallow gas leases and said it would hold them until shallow natural gas lease forms were developed. But in 1999 the division told the men it had determined that, under state regulations, it could not accept applications or deposits until the Natural Resources commissioner had opened land for leasing and provided public notice. The letters and deposits were returned.
In January 2000, the division published a notice that shallow gas lease applications would be accepted Feb. 29 on a first-come, first served basis, with priorities among overlapping applications determined by a public drawing. Williams, Schlenker and Fulton submitted applications for the Feb. 29 opening covering the same acreage they had applied for in their 1998 letters, and obtained rights to some of the acreage, but not all. They appealed the acreage they did not obtain. Agreement provides for overriding royalty interests The agreement approved by the court is a voluntary withdrawal of the appeal by Williams, Schlenker and Fulton against the state and Evergreen Resources, which had intervened in the case.
Williams, Schlenker and Fulton agreed to convey their interests in the leases to Evergreen in exchange for a 2 percent overriding royalty interest.
In exchange for non-objection by the state of Alaska to the motion to dismiss the appeal, the state will receive partial payment of the attorney fees it would have received had it prevailed, up to $8,000, to be paid 50 percent by Evergreen and 50 percent by Williams, Schlenker and Fulton.
Williams, Schlenker and Fulton also agreed not to pursue any interests competing with Evergreen within six miles of the exterior boundaries of the leases for a year after the expiration of any of the leases in exchange for a one-time lump sum payment of $75,000.
| 