Today hundreds of Alaskans are employed working toward the first production at the largest undeveloped oil and gas field in Alaska -- Point Thomson. This follows years of disputes, hearings, litigation, and an out-of-court settlement achieved in 2012. Now we have Bill Walker maligning those who worked selflessly on behalf of the state by claiming in a recent opinion piece that the settlement is the "worst, dirtiest backroom deal in the state's history."
As one of the dozens of state employees representing the state in the litigation against Exxon and negotiating that settlement, I am disappointed to see Walker claim that the settlement was the product of a crooked scheme to cheat the state. To the contrary, the settlement was a hard-fought compromise that forced Exxon to end its warehousing of Point Thomson's massive gas reserves by spending billions of dollars in Alaska, which in turn has resulted in unprecedented progress at Point Thomson and in advancing the North Slope gas commercialization efforts.
Walker defensively begins his hit piece by trying to justify his decision to sue the state over the Point Thomson settlement. Walker claims his lawsuit will not stop the billions in investment at Point Thomson. He is wrong. This lawsuit seeks to kill the development plan incorporated into the settlement agreement. This means that there will be no approved plan for the field. Without an approved plan, state law prohibits any activity from going forward. Walker is therefore trying to shut down operations at Point Thomson.
Worse, a court victory for Walker will also jeopardize the ongoing efforts with the AK LNG project to commercialize Alaska's vast gas reserves; the only reason why the AK LNG project is moving forward is because the state and Exxon settled the Point Thomson dispute. Thus, in the unlikely event that Walker wins, the hundreds of people working on the AK LNG and Point Thomson projects will know who to blame when their jobs are put at risk.
Walker's most inflammatory charge is that the Point Thomson settlement is the product of a "dirt(y), backroom deal" that had no public input or involvement. Nothing could be further from the truth.
Far from being a "backroom deal," more than 20 state employees from three state agencies played a critical role in the negotiations. The public and the Legislature also influenced the settlement that we achieved. For example, the demands that we made in the negotiations were based on what we learned at public hearings held before the Legislature, the Alaska Oil and Gas Conservation Commission, and the Department of Natural Resources. At these hearings, the oral testimony and thousands of pages of written testimony covered geologic, geophysical, engineering, economic and legal issues. No development plan in the state's history has ever been subjected to this level of scrutiny, nor has any development plan ever received this amount of public input.
But the state was ultimately able to get a strong development plan for Point Thomson because Gov. Parnell gave the settlement team the time (nearly three years) and support to reach a deal that advanced the public's interest. I witnessed Gov. Parnell repeatedly get Exxon's senior management to back off on unreasonable demands related to the pace of development and the amount of acreage Exxon should keep if it failed to perform. And on more than one occasion, I was relieved when Gov. Parnell rejected Exxon's settlement offer after he concluded the offer was not in the state's interests. Contrary to what Walker says, Alaskans should know that Gov. Parnell only agreed to settle once the parties arrived at a deal that gave the state what we demanded: a commitment to production, a path to full-field development, progress on North Slope gas commercialization, and the automatic termination of leases if Exxon failed to perform.
Walker's mischaracterization of the settlement process also extends to specific provisions contained in the settlement agreement. I'll touch on three.
First, Walker argues that the settlement is "blatantly illegal." In response to criticism that Walker raised in 2012, the Department of Law testified twice before the Legislature and explained why the settlement complied with the law. The Legislature then had its own attorney independently review the settlement, and he also concluded that the settlement was legal.
Second, Walker maintains that Exxon can retain the entirety of the field until 2030 by producing only 10,000 barrels per day. Walker completely ignores the provisions in the agreement expressly providing that Exxon will lose significant acreage in 2018 (see section 4.7 of the settlement agreement) and 2019 (see section 4.5.3) if it refuses to submit a plan that commits to additional development.
Third, Walker claims that the state has forfeited its right to oversee development. Again, this is simply wrong -- future development plans must comply with state law and be approved by DNR and the Alaska Oil and Gas Conservation Commission. (See sections 4.6 and 5.7.)
Finally, Walker claims credit for the state's decision to terminate the Point Thomson unit in 2006. This is comical -- Walker had next to nothing to do with the 2006 termination decision. Division of Oil and Gas Director Mark Myers and Commissioner Tom Irwin started the process in 2004 when they told Exxon that the failure to submit a development plan would put them in default. When Exxon refused to commit to drill a well, Myers followed through and placed the unit in default in 2005. When Exxon failed to cure the default, the unit was terminated in 2006. It is true that Walker spent the Port Authority's money on a Houston attorney who filed a brief and testified in favor of termination during the 2006 hearing, but Walker and his Texas attorney had virtually no influence over DNR's termination decision.
If Bill Walker truly wants to put Alaskans first, he needs to take the time to understand the facts around these complicated issues. It is easy to write blustery op-eds defaming dedicated public servants and run ads with catchy slogans, but it takes sustained commitment, prudence, and a backbone to achieve real results for the people of Alaska.
Jonathan Katchen worked as an attorney in the Oil, Gas, and Mining Section at the Department of Law and as Dan Sullivan's special assistant at the Department of Law and the Department of Natural Resources. He is currently working at a law firm in Anchorage.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.