Alaska Department of Natural Resources, Commissioner Joe Balash, Communications Coordinator, Elizabeth Bluemink

April 22, 2008

Pt.%20Thomson

Decision on Remand to Dept. of Natural Resources

Today I issued my decision on the issue remanded to Department of Natural Resources from Superior Court Judge Sharon Gleason in the Point Thomson litigation. I found that the proposed 23rd Plan of Development is not an appropriate remedy for the previous failure to submit an acceptable 22nd Plan of Development, and I determined that the proposed 23rd Plan of Development does not serve the State's best interests or meet the legal standards in DNR's regulations. I did not approve the 23rd Plan of Development and terminated the Point Thomson Unit.

I found that I could not risk further delay in development of these valuable resources by accepting the proposed 23rd Plan of Development. In light of the history of this unit, I did not trust the appellant's commitment to follow through with their 23rd Plan of Development. Despite the fact that this unit was formed in 1977, none of its oil or gas resources have been produced. This unit includes an estimated 8 TCF of gas and hundreds of millions of barrels of oil. The unit operator has not drilled any wells since 1982. In this Plan of Development the working interest owners proposed to drill at least 5 wells over the next 6 years to better understand the reservoir and to produce 10,000 barrels a day of gas condensates (oil extracted from gas) and transport it down the Trans Alaska Pipeline beginning in 2014. The 23rd Plan of Development did not include a commitment to produce any gas from this unit.

This decision was on the issue remanded to DNR by Judge Gleason on December 26, 2007. Judge Gleason affirmed DNR's rejection of the 22nd Plan of Development for the Point Thomson Unit and found that DNR had the authority to terminate the unit. However, she held that the Appellants' (ExxonMobil, BP, Chevron, Conoco and numerous minor interest holders) due process rights may have been violated because they did not have adequate notice that the unit would be terminated. She directed DNR to give them a fair opportunity to present alternative remedies to unit termination for their failure to submit an adequate plan of development.

Appellants submitted a 23rd Plan of Development on February 19, 2008. I held a hearing March 3 through 7, 2008 to allow Appellants to present testimony and argue in support of that 23rd Plan of Development. They were also allowed to submit supplemental evidence after the hearing. I carefully reviewed the extensive record of the Point Thomson Unit and all of the evidence submitted during this remand proceeding on remedy to make my decision.

Appellants have twenty days to request reconsideration of this decision. If they do so, I will look at their request and issue a decision on reconsideration. Judge Gleason gave DNR a deadline of June 15 to have our final decision back to her.

Because this matter is still being litigated before Judge Gleason, it is not appropriate for me to make any substantive comments. My thoughts are included in the decision, and I will not be able to offer any additional comments. I encourage you to read the decision: Decision on Pt. Thomson Unit

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