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Producers Win One in Point Thomson Dispute

A Superior Court judge in Alaska has ruled that the state erred when it terminated the North Slope Point Thomson unit of ExxonMobil Corp., BP plc, Chevron Corp. and ConocoPhillips. The move was said to violate the companies' constitutional right to due process.

Alaska Department of Natural Resources (DNR) Commissioner Tom Irwin canceled almost all of the disputed leases for the Point Thomson unit in a decision issued in summer 2008 (see NGI, Aug. 11, 2008). The unit was created in 1977 as a means to more efficient production of oil and gas from leases held by more than one company. However, as years passed the state grew impatient as producers failed to advance development activity. Multiple development plans for Point Thomson were considered by DNR.

DNR has allowed ExxonMobil to drill on two of the unit's 31 leases. ExxonMobil Production Co. resumed drilling of two wells last month (see NGI, Dec. 14, 2009). "We are working to resolve the unit and lease dispute with the Department of Natural Resources to ensure Point Thomson's development continues," ExxonMobil Alaska Production Manager Dale Pittman said at the time.

In her ruling last week, state Superior Court Judge Sharon Gleason said DNR failed to ensure impartiality during its handling of the case. She said a special hearing should have been held before DNR terminated the unit. The parties now have 30 days to respond on whether a special hearing should be held or if an administrative law judge should handle the matter.

"ExxonMobil is encouraged that Judge Gleason has agreed with our position regarding the process DNR followed in considering the Plan of Development for the Point Thomson Unit," the company said in a statement. "We are continuing to progress Point Thomson Project work, consistent with the February 2008 Plan of Development and the interim decision issued by DNR Commissioner Irwin in January 2009. We are ready to work with the DNR on all aspects of Point Thomson development in a mutually satisfactory manner for the benefit of all Alaskans.

"ExxonMobil believes the Plan of Development that the Point Thomson Unit owners submitted to DNR in February 2008 is the right path forward to develop the Point Thomson Unit oil and gas resources. We are studying the decision issued by Judge Gleason to consider the full implications for Point Thomson development."

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