Murkowski: Interim Point Thomson ruling good for Alaska gas line

ANR Commissioner Thomas E. Irwin's interim conditional decision to let leaseholders drill on two expired tracts this winter is good news for the Alaska gas line project, US Sen. Lisa Murkowski said on Jan. 28.

Nick Snow
Washington Editor

WASHINGTON, DC, Jan. 29 -- Alaska Natural Resources Commissioner Thomas E. Irwin's interim conditional decision to let leaseholders drill on two expired tracts this winter is good news for the Alaska natural gas pipeline project, US Sen. Lisa Murkowski said on Jan. 28.

Point Thomson field holds about 25% of the Alaskan North Slope's 35 tcf of proved gas reserves and is significant to plans for a large-diameter pipeline to the Lower 48 states, Murkowski said. Disagreements between lessees and the state on how to best produce the estimated 9 tcf of gas there have complicated negotiations to build the pipeline, Murkowski explained.

"Now that we are seeing positive steps toward resolving these issues, it is my hope that we can quickly see progress on beginning actual construction of the gas line. ExxonMobil [Corp.] and its partners have held the rights to Point Thomson for decades. I hope their renewed commitment to those leases results in speedy development of the state's resources," she said.

The field covers 106,201 coastal acres west of the Arctic National Wildlife Refuge, according to Murkowski. ExxonMobil is operator and holds a 53%, with BP PLC holding 30%, Chevron Corp. 14%, ConocoPhillips Co. with 3%, and other partners 1%, she said. A state-commissioned study last year found that in addition to the gas, the field holds 490-600 million bbl of natural gas liquids and 580-950 million bbl of oil, she said.

"Alaska natural gas is key to meeting our national energy needs and reducing carbon emissions, but we cannot afford further delay. We need to get our gas to markets in the Lower 48 before the country becomes dependent on foreign gas, just as we are dependent on oil from overseas," said Murkowski, who is the Senate Energy and Natural Resources Committee's ranking minority member.

Basis of decision
In his Jan. 27 interim conditional decision, Irwin said the lessees testified earlier in the month in an appeal of his Aug. 4, 2008, decision that 31 leases in the field had expired that their plans to drill two of the leases could go forward if the Alaska Department of Natural Resources gave them an ice road permit before the end of January and authorized drilling activities on two of the leases.

"Appellants have testified that this project provided for the drilling and producing from wells by 2014. Appellants have specifically testified that they are unconditionally committed to the initiation and continuation of drilling during this 2008 and 2009 winter season," Irwin said. This includes "drilling a well out of the conductors with a rig capable of drilling through the Thomson Sands on that lease, and completing the drilling of two wells, both penetrating the Thomson Sands reservoir, by 2010," he said.

The lessees also testified that they have mobilized equipment and materials to the ANS and hired subcontractors to support the operation, modified a drilling rig to make it suitable for the high-pressure Thomson Sands reservoir, and applied for and pursued all necessary permits, Irwin said.

He said he would reinstate Leases ADL 47559 and ADL 47471 if the appellants abide by the unconditional commitments they made for the record, obtain Alaska Oil & Gas Conservation Commission and DNR approval for the precise location and bottom hole of each well and DNR approval of the wells' operating plans, and diligently pursue all necessary permits. The appellants also will need to supply him with drilling plans for the wells, including rig contracts, and other relevant documents within two weeks, he said.

"This conditional interim decision is intended to effect more expeditious production of state oil and gas resources. However, I would remind [the] appellants that, under the terms of these two leases, the failure to diligently pursue drilling operations for the purpose of production will result in the automatic termination of these leases," Irwin indicated. The ruling does not apply to the other 29 leases, he said.

Contact Nick Snow at nicks@pennwell.com.

More in Pipelines & Transportation