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Alaska Agrees to Reconsider Producers' Point Thomson Plan

May 26, 2008
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Alaska's Department of Natural Resources (DNR) has granted ExxonMobil Corp.'s request for reconsideration of its decision to terminate the North Slope Point Thomson Unit (PTU) leases held by the company and BP Exploration (Alaska), Chevron U.S.A. Inc. and ConocoPhillips Alaska.

Last month DNR Commissioner Tom Irwin rejected the 23rd Plan of Development and Operations (POD 23) for the oil and gas field and terminated the Point Thomson Unit (see NGI, April 28). This followed the March announcement by ExxonMobil, the operator of PTU, of a proposal that committed the PTU producers to developing the field, which was discovered 30 years ago (see NGI, March 31). If accepted, the producers' proposal would have resolved the litigation over Point Thomson and held the companies to the unit's POD 23 dated Feb. 19 (see NGI, Feb. 25).

ExxonMobil said in a filing earlier this month that if the PTU leases are taken back by the state it will seek damages of $800 million (see NGI, May 19). Last Friday the company said it would prefer to settle the issue outside of the courts.

"ExxonMobil and the 17 other PTU owners are committed to the plan of development submitted to the DNR on Feb. 19, 2008," the company said. The plan of development will bring Point Thomson into production by yearend 2014 through a $1.3 billion development project. Equally important, it will allow Point Thomson gas to be ready for a gas pipeline project [from the North Slope]. Point Thomson gas is essential for a successful gas pipeline project."

The PTU leases date back to the 1960s and the producers and the state have been sparring over their development for decades. In 2005 the companies were declared to be in default of the leases.

The Point Thomson field is estimated to hold 8-9 Tcf of gas and hundreds of millions of barrels of gas condensates and oil. The state wants the producers to begin producing the liquids, but the producers have argued that development of the field depends upon a natural gas pipeline to commercialize the gas reserves. The state is engaged in considering its pipeline options and last Thursday announced that a proposal from TransCanada Corp. would be presented to lawmakers for their consideration during an upcoming special session (see related story).

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