Point Thomson: offshore drilling commenced onshore.

• Author: Stomierowski, Peg
• Position: OIL & GAS

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In a high-stakes game of hurry up and wait, drilling resumed last year in a remote and long dormant oil and gas field at Point Thomson on Alaska's eastern North Slope. By the second week of February, even as ExxonMobil officials, in a UPI report, heralded its first development well at the site as a milestone toward meeting anticipated heightened energy demands, there were no sure bets on what lies ahead at Point Thomson.

Although it is believed to hold 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of liquids, both crude oil and condensate, the Point Thomson site has never produced oil or gas, as Reuters has reported, despite leases dating back to the 1960s.

NEW ACTIVITY

The new busyness followed grueling construction last year of an ice road to the area, opening the way to development that eventually could help underpin a proposed natural gas pipeline to the Lower 48. Work at the site proceeded after State officials reversed course and permitted limited development by ExxonMobil and its work partners, B P, Chevron and Conoco Phillips. Previously, State officials had challenged the status of the unit and the leases on State land in the 106,201-acre Point Thomson field. The challenge was linked to inactivity in regard to the leases over several decades.

Another switch occurred when State Superior Court Judge Sharon Gleason in January reversed the State's decision to revoke ExxonMobil and partners' Point Thompson unit, suggesting the lessees had not received a constitutionally mandated hearing before the unit was revoked.

In ensuing weeks, some parties in the dispute were tight-lipped and cautious about commenting as their next moves were contemplated. Motives of state officials were being publicly questioned and hearings appeared to be a possibility.

"ExxonMobil has consistently stated that the essential elements for the success of an Alaska gas pipeline include excellence in project execution, durable and predictable fiscal terms, and alignment between the State of Alaska and producers," ventured Exxon's David Eglinton. "We believe that these key requirements can be achieved."

LEGAL OPTIONS

Kurt Gibson, deputy director of the Alaska Division of Oil and Gas, said in late January that Alaska's attorney general was evaluating legal options. While there is some question how aggressive they may be, State officials have been pressing Exxon on North Slope development for years in the lease dispute.

The parties have been in settlement discussions since fall 2008 and will continue to be, Gibson said, declining to speculate on the immediate potential of hearings or movement for clarification or an appeal. Officials have tried to emphasize that whether or not a gas line happens, Gibson said, movement of condensate and development of the underlying oil rim are valuable in and of themselves.

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OPEN SEASON

Meanwhile, on Jan. 29, Wall Street Journal online sources were reporting on the filing of plans with the U.S. Federal Energy Regulatory Commission (FERC), for the first time in North Slope history, seeking approval to conduct the first natural gas pipeline open season to begin development of Alaska's natural gas resources.

The Alaska Pipeline Project (APP), a joint effort of Exxon Mobil and TransCanada Corp., will begin its open season in April, reportedly providing its offering to shippers for assessment over 90 days. Denali Pipeline, a rival venture of BP PLC and ConocoPhillips, also was expected to file paperwork this month (April), Gibson said, and didn't seem likely to begin its open season until July, around the time when the competing exercise...