Petroleum News: BP, Conoco, Chevron join Exxon in Point Thomson lawsuit against State of Alaska

Week of January 07, 2007

Three other Point Thomson working interest owners have joined unit operator ExxonMobil in filing lawsuits appealing the State of Alaska’s decision to terminate the eastern North Slope oil and gas unit.

BP, Chevron and ConocoPhillips on Dec. 22, 26 and 28, respectively, filed separate but similar lawsuits to Exxon’s in Alaska Superior Court.

Exxon filed its suit on Dec. 22 (see the Dec. 31 issue of Petroleum News), asking the court for a complete reversal of a Nov. 27 decision by the commissioner of the Alaska Department of Natural Resources to terminate the Point Thomson unit and its leases. As an alternative to a reversal Exxon asked the court to “remand the matter to the commissioner with instructions to make a new and different decision.”

Exxon also filed a complaint for damages for breach of contract and declaratory and injunctive relief against DNR.

The basis for each company’s appeal was almost identical with one notable difference. In addition to its 47 points on appeal, Chevron said it wanted to adopt any other arguments made by its three partners, except those related to the negotiation of a fiscal contract.

Chevron was referring to arguments presented by BP, Conoco and Exxon in their lawsuits related to a North Slope gas pipeline fiscal contract negotiated between the three companies and the administration of former Alaska Gov. Frank Murkowski, under which a modified plan of development for the Point Thomson unit was considered.

The proposed fiscal contract deferred existing requirements for Point Thomson development as long as natural gas from the unit was committed to a gas pipeline from the North Slope.

The contract, however, failed to win popular support and the necessary approval by the Alaska State Legislature.

On Oct. 20 the Point Thomson unit extension granted by the state expired. It was the third such extension granted by the state since the unit was put into default in the fall of 2005.

Last summer Chevron submitted comments to the state about the proposed fiscal contract, saying the proposed fiscal contract gave special treatment to the three pipeline owners — BP, Conoco and Exxon — and did not give fair access to other companies willing to explore for and develop gas in northern Alaska.

Vince LeMieux, manager of Alaska new ventures for Chevron North America Exploration and Production Co., said the proposed fiscal contract “has the potential of creating two classes of gas producers on the Alaska North Slope,” the producers who execute the contract and all other North Slope gas producers.

As of Jan. 3, the state had not yet responded to the lawsuits filed by the four Point Thomson unit owners. DNR spokesman Dan Saddler told Petroleum News that the department’s general practice “is not to comment on matters currently before the courts.”

“The Department of Law has received these lawsuits and complaint, and will have no comment until after they’ve had the chance to review them more closely,” Saddler said.

DNR said the Point Thomson unit has 45 leases on approximately 106,000 acres of state land just west of the Arctic National Wildlife Refuge. It holds an estimated 300 million barrels of oil and natural gas condensates and 8 trillion to 9 trillion cubic feet of natural gas.

—Kay Cashman

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