Posted on 10/05/2005 10:07:16 PM PDT by NormsRevenge
JUNEAU, Alaska - Alaska's oil and gas chief is threatening to revoke leases held by Exxon Mobil Corp. and other producers for not drilling the rich fields near the Arctic National Wildlife Refuge.
Division of Oil and Gas director Mark Myers says Exxon Mobil, the operator and largest leaseholder of the 106,200-acre Point Thomson unit, which has sat undeveloped for nearly three decades, has made a "mockery" of their obligation to bring oil and gas from Point Thomson to market.
The producers, which also include BP Exploration (Alaska) Inc., Chevron USA Inc. and ConocoPhillips Alaska Inc., have said it's not commercially viable to develop Point Thomson. But with gas and oil prices at all-time highs, Myers is taking a hard line.
"We believe it's time for the field to come into that development stage," Myers said. "It hasn't made that jump in the last 28 years."
The Point Thomson unit, 30 miles east of Prudhoe Bay and on ANWR's western border, is believed to hold 8 trillion cubic feet of natural gas and hundreds of millions of barrels of oil and condensed natural gas. Unlike ANWR, which has been off-limits to oil companies but could be opened by Congress this fall, all the Point Thomson land has been leased since 1977. The land available for drilling was expanded in 2001.
But not much has happened. Exxon Mobil filed a new development plan this summer that would have delayed drilling even longer. In a decision last Friday, Myers found Exxon Mobil in default, saying the company had no plan to bring Point Thomson into commercial production within a reasonable time.
If a new development plan mapping the path to production for Point Thomson isn't submitted by the end of the year, officials say they could shut the unit down and revoke all 45 leases. Myers says Point Thomson's individual leases call for production by 2009.
Exxon Mobil says developing Point Thomson is not possible without first changing the state's tax and royalty laws and without a gas pipeline from the North Slope. The company proposed folding Point Thomson's development into the gas pipeline fiscal contract now being negotiated with the state, and also delaying drilling deadlines set in 2001 by another two years.
The state rejected the plan, calling it "inappropriate" to tie Point Thomson to the gas line negotiations. Hundreds of millions of barrels of oil and condensed natural gas could be fed from Point Thomson through the existing oil pipeline system, Myers wrote in the rejection.
Exxon Mobil spokeswoman Susan Reeves declined to answer specific questions, but forwarded a statement that said the producers are disappointed with the state's denial and they disagree with the decision. The producers plan to appeal.
AKA AK hardball.
If this author wanted to inform readers what is really going on, he should have gone into more detail about Alaska's new tax and royalty demands on oil production... The oil companies are in a war with the state, delaying and halting production. I think the state got too greedy this time.
"...and the appeal, will be fierce- said the spider to the fly..."
Makes recent claims of gouging by Big Oil seem more credible.
This time?
Read the story: the Point Thomson land has been leased since 1977.
This is the ORIGINAL lease that they have been sitting on for 28 YEARS.
It does not fall under the new development lease pricing for leases issued later.
The oil company is waiting for ANWAR to open, and the gas line to be built. They can lay 30 miles of pipe and tie into the Trans Alaska Pipeline for shipping Oil, but they don't want to drill till they can extract both gas and oil.
You failed to read the story, not me.
The oil companies cited in the article explicitly stated these taxes and royalties as a major reason for the drilling delay in these areas. It's all part of the grand bargaining war. They're using a drill blockage on these lands as a bargaining chip.
These are the original leases with the original royalty agreements. Nothing has changed.
They are vary likely to lose thier leases, as there are a half dozen other companies willing to assume these leases at the original pricing.
You failed to comprehend both the article and what I wrote.
I give up.
I understood you precisely. But you are just plain wrong.
The oil the refuse to drill is 30 miles from the oil that they are already pumping. Both leases are at the same royalty rates. How can it be profitable to pump in one place but not another that is only 30 miles away?
You again confirm that you misread both the article and both items I have written. I do give up.
http://www.reformation.org/energy-non-crisis.html
This book (which is free to read at this site) goes into a lot of detail about the real problem.
What the energy scam really boils down to is the international community trying to build a new world order based on a global economy. Since so many countries have no other resource except oil, it is important that we prop up their economy by buying their oil. The only problem is all it has done is build a world full of enemies bent on our demise or destruction.
Well, you haven't made yourself very clear. When did Alaska change it's laws regarding royalties and did they make it retroactive to cover leases not drilled yet?
Oops. Guess I asked the wrong person that question but I'm still curious about your contention the oil company is waiting for ANWAR to be opened up. It seems they must view this lease as not worth the expense until they can defray the costs by incorporating it into a much larger project. From a major oil company's perspective even several hundred million barrels of oil doesn't represent much of a play.
Example I live i Fairbanks plumb in the center of the state and we have the pipeline that goes straight to a refinerary within 12 miles of Fairbanks yet the heating oil and gasoline that comes out of that refinery that is shipped by rail all the way to Anchorage is 8 or more cents cheaper per gallon than in the town it is refined in.
There have been a lot of under the table deals done here and how they continue to hold together no one seems to understand.
Example the oil in the pipeline is currently being pumped at a rate of about 40% of capacity the same rate as it was before Katrina., This is not due to a lack of oil in the fields, but it seems that the Oil companies are buying their oil in bulk from "unfriendly countries." Countries that charge much higher royalties per gallon than alaska gets.
Locally there was hot discussion on talk radio when talking about what Venezuala or Mexico and INdonesia gets for royalties as opposed to the state. Alaksa seems to be getting 50% less than these other places.
Apparently they are deliberately underpumping, which some say is illegal according to the lease and pipeline agreements with the state.
Anyway it appears that Frank Murkowski is starting to do some good. He was really hated when he first became governor. I personally think that the political morass up here is so complicated that it takes a while to get your feet and know how to get something done.
This place has probably three bureaucrats for every citizen.
Someone recently said the cost of state government in Alaska is 100,000 per citizen. And bear in mind we pay no state income tax here so guess where all this cash comes from?
I beleive that next to missisppi Alaska is proabably the largest welfare state per capita in the U.S. but no one wants to talk about that here. Talk is always of senator stevens and all the cash he pours in alaska. And there is some real fear of when he is gone what will become of this state.
Are you suggesting oil companies are withholding reserve numbers and refinery capacity in AK so as to make the market seem tighter and therefore affect the price of oil products to an artificially high margin?
The oil companies have done well up here, buying off the politicals; they own both parties. That's the history of Alaska.
For 15 years, I've watched the legislators pass tax reform bills that give sweetheart incentives to promote oil production, and that's good but the least OIL could do is open up the flow.
Many years back, it was decided that Alaska's oil wealth would fund state government. If it ever comes down to forcing the people of Alaska (where less than 1% of the land is in the private sector) to fund government; you'll see democrats elected. People up here are socialists when it comes to state government programs but still hate taxes.
What fields do you claim are not being produced at their maximum sustainable flow rate with the existing infrastructure?
I beleive that next to missisppi Alaska is proabably the largest welfare state per capita in the U.S. but no one wants to talk about that here.
Let us talk about that. What other state has private ownership of land at less than 1% of the total area? What other state does the Federal Government own the majority of the land in an area larger than the state of Texas? What other State is tried to turn into a giant park by outsiders and is then surprised when it cannot support itself?
Because one is an oil field and Point Thompson is a gas field. They neglect to point out the the "liquid" from Point Thompson is Natural Gas Liquids that have to be separated from the Gas. And there is no pipeline to move the gas to market. It is estimated that the pipeline would cost between $12~$20 Billion dollars.
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