The state and Exxon Mobil have reached an agreement in the years-old lawsuit over the Point Thomson oil and gas field on the North Slope, a major hurdle that needed to be crossed before a major gas pipeline could be economically viable.
Alaska Department of Natural Resources Commissioner Dan Sullivan told the Senate Resources Committee on Monday that the state and Exxon Mobil, which is a partner with TransCanada Corp. in the proposed natural gas pipeline through Canada, have reached a "resolution in principle" on the terms of settling the lawsuit. Exxon is now meeting with its other partners in the development, also parties to the lawsuit, to see if all of them can agree on a final agreement.
Point Thomson was discovered 30 years ago and is considered primarily a gas field, although it does have oil production potential as well. In 2005, the state under then Gov. Frank Murkowski, moved to break up the operating unit, saying the oil companies had taken too long to produce any resources. The companies challenged that action in court and it most recently has been in front of the Alaska Supreme Court which has been trying to encourage a settlement. However, more rounds of briefs were recently filed and the case looked like it would continue to trial.
Sullivan said he couldn't publicly disclose the terms of the state's agreement with Exxon, although he offered to brief lawmakers in secret if they'd agree to keep the information confidential. Senate Resources Committee co-chairman Joe Paskvan immediately accepted the offer.
Sullivan also said he didn't know when a final settlement would be reached. And he pointed out that Exxon and its partners -- primarily Chevron, BP and ConocoPhillips -- have been at odds with each other in recent months over the lawsuit.
TransCanada's Alaska head, Tony Palmer, is slated to testify before the committee on Tuesday morning and Sullivan suggested Palmer might have an update on how the lawsuit and its settlement might factor into the gas pipeline company's plans.
Sullivan also assured the committee that natural gas prospects and either a large gas line through Canada or a smaller in-state "bullet line" -- or both -- are very much top priorities for his agency. He said the department has been focused on finding ways to get more oil development and "fill up" the trans-Alaska pipeline where throughput continues to drop as North Slope oil production declines.
Sullivan suggested that the TransCanada project -- subsidized by the state under the Alaska Gasline Inducement Act -- and a smaller in-state line could be integrated, much the way a spur line might come off a larger-diameter pipeline. He said TransCanada has been having discussions with the state's bullet-line about possible integration.
Sullivan deflected at least one question about whether it would be cheaper for consumers to have just one project, for instance a large gas line with a smaller spur, than to have two separate projects.
Sullivan also addressed questions about whether the state is seeking markets in Asia for its gas and said that while it has talked to Mitsubishi in Japan about that company's interest in switching from nuclear to liquefied natural gas, it is really the balliwick of the gas owners -- the major North Slope companies -- to be having those discussions.
"We haven't gone overseas to any of these markets," he said, adding that whether it companies in the Lower 48 or Asia that might be interested in Alaska's LNG "we certainly take all meetings."
Contact Patti Epler at patti(at)alaskadispatch.com