24 April 2008

Alaska says no to Exxon's North Slope gas plan

It will most likely end up in court, as Alaska rejected Exxon Mobil Corp’s plan for the giant Point Thomson natural gas field on the North Slope.

Exxon said it would appeal the decision, which terminates the Point Thomson development unit and could lead to the cancellation of the field leases. A spokesperson said the energy company plans to “pursue all alternatives to protect our rights to develop these resources.”

One partner in the plan, Chevron Corp., which holds a 25% stake in Point Thomson, said it would take the issue to court.

“We are shocked and very disappointed by this decision,” Scott Davis, who oversees Alaska for Chevron.

Point Thomson, discovered in 1977, may hold at least 8 trillion cubic feet of natural gas reserves and 200 million barrels of liquids.

The state has accused the oil companies of deliberately delaying development of Point Thomson. The oil companies said no. They said they could not start producing from the giant gas field until a pipeline is up and running so they can ship Alaska gas to the rest of the U.S.

Field operator Exxon owns about 36% of Point Thomson, and BP Plc owns 32%.

The Alaska Department of Natural Resources ruling said Exxon’s failure to develop the field under 22 previously submitted development plans compromised the credibility of its latest proposal.

BP and ConocoPhillips hold stakes in Point Thomson and want to build a $30 billion Alaska natural gas pipeline. Plans for that project still are moving forward, according to a BP Alaska spokesperson. He did say, however, if there is a doubt about the future of Point Thomson, it could delay or even kill the pipeline.

For related information, go to www.isa.org/productivity.