Processing Magazine

Alaska, Exxon Mobil work to resolve lease dispute

October 22, 2008

According to the Associated Press, Exxon Mobil Corp. and Alaska officials are trying to settle a complex lawsuit over a North Slope natural gas field deemed essential to a successful 1,170-mile pipeline project. The disputed leases are at Point Thomson, which holds nearly one-fourth of the North Slope''s 35 trillion cubic feet of known reserves. Exxon Mobil and its 26 partners have long held that developing this field is critical to launching a pipeline that would help deliver up to four billion cubic feet of natural gas to Midwest homes and business. But it hasn''t developed the field in the 30 years it has held lease rights. The state nearly two years ago decided the company was not meeting its development obligations and announced plans to yank leases from them. In December, Superior Court Judge Sharon Gleason said Exxon Mobil deserved a chance to tell the state why its leases on fields holding about 8 trillion cubic feet of natural gas reserves should not be revoked. In February, the company filed another development plan for the field, its 23rd in three decades. This plan is the basis of one of a series of lawsuits, trying to prove it meets lease provisions covering the 106,200-acre unit. The two sides have held several meetings the last few weeks over the lawsuits, according to company and state officials and court documents filed last week in Alaska Superior Court. The state still wants full revocation of the leases, and Exxon has sued to keep them. Meanwhile, Exxon Mobil says it''s ready to begin a six-year, $1.3 billion project in an effort to save the leases, potentially worth billions. Last week the state and Exxon Mobil had to file status updates with the court. Exxon Mobil recommended mediation and suggested two retired judges and a private attorney to serve in those capacities. The state, however, called mediation "premature."