Anchorage Daily News

A team of oil company lawyers began a fervent appeal Monday to try to persuade state officials they wrongly canceled leases in a rich but long dormant North Slope oil and gas field.

Click to enlarge

Story tools

Comments (0)

E-mail a friend

Print

Share on Facebook

Digg this

Seed Newsvine

Send link via AIM

Follow on Twitter

Font size : A | A | A

Lawyers for Exxon Mobil Corp. and other major firms outlined plans for drilling in the Point Thomson field, saying they have a powerful rig the size of the Statue of Liberty ready to sink holes right away if only the state will grant the necessary permits.

"We're ready to begin drilling this winter," said Craig Haymes, Exxon's Alaska production manager. "We're ready to begin drilling in six weeks."

Haymes spent nearly a full day testifying at a Department of Natural Resources hearing in downtown Anchorage.

His company, with partners BP, Chevron and Conoco Phillips, are trying to reverse a department decision last year to cancel leases within the 106,201-acre field. Without valid leases, Exxon can't drill.

State officials accuse the oil companies of failing to produce any oil or gas on leases dating back as far as 1965, and have taken steps to reclaim the state-owned land and lease it to new players.

That's triggered a huge fight -- in court and within several state agencies -- for control of an asset worth tens of billions of dollars.

Blue-suited lawyers on Monday sat at tables two rows deep for a hearing that could last 10 days.

The man who will hear all the company arguments and make a decision is Tom Irwin, the state's natural resources commissioner. The lawyers want him to reverse the Aug. 4 decision of state oil and gas director Kevin Banks to cancel 31 leases at Point Thomson.

Exxon's attorneys contend the lease cancellation was improper. They argue that seven old wells the oil companies drilled at Point Thomson, and which the state certified as "capable of producing oil or gas in paying quantities," serve to nail down their claim to the field.

They also contend they're legally entitled to keep the leases so long as they're drilling or making preparations to drill.

Haymes said his company in recent months has spent $120 million, engaged 50 contracting companies and employed 150 people to prepare for drilling several costly high-pressure wells at Point Thomson, a remote seaside location 60 miles east of Prudhoe Bay. Haymes said Exxon aims to have production by 2014.

Irwin's department, however, has essentially locked Exxon out, refusing to grant the company a drilling permit or permission to build an ice road, which is needed for rolling the colossal rig from Deadhorse to the site.

Banks, in "talking points" he handed out at the hearing, said Exxon and its partners at Point Thomson have a "long history of broken promises."

State officials and Exxon representatives are trying to negotiate a settlement, but the state can't accept a deal that allows the oil companies "to continue to warehouse these valuable resources," Banks said.

But Haymes insisted Exxon is ready now to give the state what it wants -- drilling and production.

If Irwin rules the lease cancellation was correct, the oil companies can appeal to state Superior Court.

The public hearing continues this morning at the Regulatory Commission of Alaska office, 701 W. 8th Ave.

Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.

ADVERTISEMENT