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Banned
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ace.... Exxon and Chevron have little or no credibility. It's not me saying it, it's commisioner Irwin in the state of Alaska. It's an eyeopener, but your post indicates you've already ignored my last post on this issue. Maybe the visuals will make it easier for you...
Quote:
http://news.yahoo.com/s/nm/20080422/...obil_alaska_dc
Alaska rejects final Exxon plan for giant gas field
By Yereth Rosen Tue Apr 22, 7:45 PM ET
ANCHORAGE (Reuters) - Alaska on Tuesday rejected Exxon Mobil Corp's (XOM.N) latest plan for the giant Point Thomson natural gas field on the North Slope despite industry warnings of another lengthy setback to development of an Alaska gas pipeline.
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Exxon said it will appeal the decision, which terminates the Point Thomson development unit and could lead to the cancellation of the field leases. A spokeswoman said the energy company plans to "pursue all alternatives to protect our rights to develop these resources."
Chevron Corp (CVX.N), which holds a 25 percent stake in Point Thomson, vowed to sue over the decision.
"We are shocked and very disappointed by this decision," Scott Davis, the Chevron executive overseeing its Alaska business, said in a statement. "With this decision the state has taken a giant step backward in bringing North Slope gas to market."
Point Thomson, discovered in 1977, is thought to hold at least 8 trillion cubic feet of natural gas reserves and 200 million barrels of liquids and would be a vital source of supply for any Alaska natural gas pipeline project.
The state has accused the oil companies of deliberately delaying development of Point Thomson. The majors reject that charge, saying the giant gas field cannot be put into production until a pipeline is constructed to ship Alaska gas to the rest of the United States.
Field operator Exxon owns about 36 percent of Point Thomson, and BP Plc (BP.L) owns 32 percent of the field.
The Alaska Department of Natural Resources ruling said Exxon's failure to develop the field under 22 previously submitted development plans compromised the credibility of its latest proposal.
"The history of this unit and the evidence offered by the Appellants have convinced me that approving the (development plan) will not result in timely development of these valuable state lands," DNR Commissioner Tom Irwin wrote.
Alaska Gov. Sarah Palin, a strong critic of the oil industry, welcomed the decision.
"I support the commissioner's decision because I want development and Alaskans are ready to see real progress at Point Thomson, finally, after 30 years," she said in a statement.
Alaska and the companies have been sparring over Point Thomson since late 2005 when the state made the first step to break up the field unit and possibly cancel the leases.
The state so far has been successful in early legal battles. Officials concede that a lengthy period of litigation may ensue.
BP and ConocoPhillips both hold stakes in Point Thomson and have been spearheading efforts to build a $30 billion Alaska natural gas pipeline.
Plans for that project still are moving forward, according to BP Alaska spokesman Steve Reinhardt. Still, he cautioned that doubts about the availability of Point Thomson gas could delay or even kill the pipeline.
If the companies are unable to develop Point Thomson, they also will miss out on adding the reserves from the field to their reserve base. All the companies involved have struggled in recently to add oil and gas to keep up with their production, prompting questions about their long-term growth prospects.
Exxon has 20 calendar days to appeal the DNR's decision. Following an unsuccessful appeal with the DNR, Exxon would have recourse to state courts under Alaska law.
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The Appeal:
Quote:
http://www.theusdaily.com/articles/v...dx=3&id=391976
News: Page (1) of 1 - 05/13/08
Exxon wants over $800 mln if Alaska leases lost
By Yereth Rosen
A sign displays prices at a gas station in Washington July 27, 2006. REUTERS/Yuri Gripas
ANCHORAGE, Alaska (Reuters)
.....Exxon raised the specter of a financial claim at the same time the company and its Point Thomson partners -- BP <BP.L>, Chevron <CVX.N> and ConocoPhillips <COP.N> -- formally asked state Natural Resources Commissioner Tom Irwin to reconsider his rejection of the latest Point Thomson development plan.
The documents were filed Monday, the deadline for the reconsideration request.
Exxon said in a letter with the state Department of Natural Resources (DNR) that its group would be entitled to compensation for investments made in the field and damages from further delay....
.... Irwin's April 22 decision to reject the 23rd Point Thomson development plan was the latest official action taken by the state to revoke leases at the field where state leaders say oil company inaction justifies repossession of that state property.
The unit, created in 1977 and containing leases that date back to the 1960s, holds 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of condensates and oil, according to state officials.
No well has been drilled at Point Thomson since 1982. State officials consider Exxon, the operator of the unit, and the other Point Thomson partners to be in gross violation of lease obligations.
While the natural gas cannot be commercialized without a highly expensive and yet-to-be-built gas pipeline, state officials have long maintained that Point Thomson's liquids can be produced.
State efforts to revoke the leases started in 2005, when the partners reneged on a 2001 pledge to drill development wells.
In their 23rd development plan, the Point Thomson partners pledge a $1.3 billion investment to start production of 10,000 barrels a day by 2014.......
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Quote:
http://www.agiweb.org/legis105/anwrhear.html
American Geological Institute
Government Affairs Program
Another Legislative Drive to Open ANWR? (8-10-98)
...Congress tagged 1.5 million acres of arctic coastal plain for further reserch into its wildlife and petroleum resources. Representatives of the USGS, led by Acting Director Tom Casadevall, testified on the petroleum reserves estimated to be in-place, technically recoverable, and economically recoverable. Kenneth Boyd, a geologist with the state of Alaska, commented on the data available to him from the USGS study. At the end of the hearing, Committee Chair Frank Murkowski (R-AK) announced his plans to draft a bill calling for a seismic survey to be conducted in ANWR and for the USGS to have the "resources necessary to assess the country's jewels".
Excitement over ANWR was recently stirred up after the USGS released its updated estimated reserves of the area, which were made public at the annual meeting of the American Association of Petroleum Geologists in Salt Lake City on May 17th. Information surrounding the history and activity of ANWR evaluation is given in a June 1998 AGI update and a July 1998 Geotimes article. The USGS increased its estimate on the mean reserves from 898 million barrels of oil in their 1995 assessment to 7.7 billion barrels of oil in the May 1998 report. The other major difference from their 1995 report is the shift in geographical location of the major reserves from the eastern part of ANWR in the 1995 study to the western part in the most recent study. With declining production of Prudhoe Bay, oil companies are looking for replacement reserves to keep the capcacity necessary to maintain the Trans-Alaska Pipeline System. ....
<img src="http://pubs.usgs.gov/fs/fs-0028-01/image1.gif">
<img src="http://pubs.usgs.gov/fs/fs-0028-01/image2.gif">
<h5>Figure 2. Map of the ANWR 1002 area. Dashed line labeled Marsh Creek anticline marks approximate boundary between undeformed area (where rocks are generally horizontal) and deformed area (where rocks are folded and faulted). Boundary is defined by Marsh Creek anticline along western half of dashed line and by other geological elements along eastern half of dashed line. Exploration wells are coded to show whether information from them was available for the 1987 USGS assessment of in-place petroleum resources. Dashed red line shows the offshore extent of the entire assessment area. Source: USGS</h5>
....Compared to the USGS's 1987 evaluation, the mean estimate of in-place reserves increased from 13.8 BBO to 20.7 BBO. The May 1998 study places 85% of the reserves in the undeformed western region of the 1002 area and is less optimistic for the eastern half of ANWR. Murkowski presented the USGS's view of the eastern part as being overly pessimistic. In 1986, the Kaktovik Inupiat Corporation in partnership with British Petroleum and Chevron drilled the only well ever inside ANWR. This well was located in the deformed eastern part of the ANWR 1002 area. Although the results are being held confidential by industry as proprietary information, Murkowski inferred that the eastern part must be rich in oil because those companies have continued financial investment in this part of ANWR. While acknowledging that the USGS study was not able to include the data from that well, Dr. David Houseknecht, the USGS energy program coordinator who was accompanying Dr. Casadevall, reiterated that the study was based on all data available which which indicated a questionable presence of Ellesmerian reservoir rock in the east.
Mr. Kenneth Boyd, Director of the Alaska Division of Oil and Gas was called to testify about the USGS findings. He reviewed the factsheet available to the public and not the full report which will be finalized within the next two to three months as assured by Dr. Houseknecht. Mr. Boyd made the following general observations from the USGS fact sheet:
1. "the estimates for finding recoverable oil are quite high, and in fact, have been increased from previous assessments;
2. "these scientists believe the bulk of the undiscovered oil resides in the northwest part of the 1002 area rather than to the east as was assessed in previous studies;
3. "more oil has been allocated to the younger (Brookian) reservoirs in stratigraphic traps; less oil has been allocated to the deeper Ellesmerian reservoirs in structural traps;
4. "the assumed 512 million barrel commercially developable field size for ANWR is probably too conservative for the undeformed, western part; smaller accumulations are likely to be economic, especially if infrastructure is established in the Point Thomson, Sourdough and Flaxman areas."
Boyd stressed that the improved visualization that 3D seismic surveys bring to exploration and production has led to a decrease in development risk and a reduction of environmental impacts. He commented that legislation from the past few years has been partly responsible for the good business climate (likely referring to a law, P.L.104-58, passed by the 104th Congress allowing Alaska to export oil to the foreign market). He testified that the threshold size for an economic field continues to shrink with greater technological innovation, such as 3D seismic, directional drilling, coiled tubing drilling, and through-tubing rotary drilling. Mr. Boyd cited favorable development costs for fields of 120-365 million barrels compared to the USGS assigned 512 million barrels for a stand-alone field to be commercial.
Boyd addressed the application of 3D seismic to unitization and royalty issues. He referred to how British Petroleum's Sourdough field abuts the northwest corner of ANWR (see fig. 2). Murkowski expressed concern about the potential drainage of "taxpayers oil" by British Petroleum if their field extends into ANWR. This appeared to be a main factor in Murkowski's decision to introduce a bill allowing a 3D survey within ANWR. With that reasoning, the federal purse would benefit from Sourdough royalties. The well spacing and associated drainage areas on the North Slope are generally small due to the higher viscosity of the oil. Therefore, if the reserves associated with Sourdough are the only consideration for a survey, one question to ask would be, "Are the potential lost reserves in excess of the cost of a 3D survey?" Boyd's written testimony expounds on the clarity a 3D survey would lend to the deformed areas of ANWR that the 2D seismic cannot resolve. However, the deformed areas are in the east in contrast to the Sourdough well being in the west.....
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Quote:
http://www.adn.com/money/story/389829.html
Oil production from Sourdough wells might impel feds to lease in ANWR
ADJACENT: Reservoir seems to extend beneath the refuge.
By KAY CASHMAN
Petroleum News
(04/28/08 23:02:06)
Although Exxon Mobil's most recent plan of development for the Point Thomson natural gas and oil field did not include a commitment to produce the Sourdough oil discovery there, whenever the field is developed the plan will almost certainly include a Sourdough plan. That's because geologists think Sourdough's reservoir stretches under the Arctic National Wildlife Refuge just to the east.
Since the 100 million-barrel Sourdough discovery announcement in 1997, state officials have said developing the prospect could be the first step to opening ANWR to oil and gas exploration and development. ANWR's coastal plain is considered the nation's best onshore prospect for huge oil discoveries, but Congress has kept it closed to oil companies because of the area's environmental sensitivity.
Oil produced from Sourdough would be the first oil drained from the ANWR coastal plain, and possibly prompt Congress to allow a lease sale that would, at the very least, allow access to western ANWR reservoirs by drainage, and possibly directional drilling, from adjacent state land.
Most of those reservoirs, including Sourdough, are in the defunct Point Thomson unit, although the Sourdough wells were drilled and paid for by BP and Chevron, not Exxon and other unit owners.
If, for example, Sourdough were developed and produced on the state side and the feds don't hold a lease sale for their side of the reservoir, legal experts say the federal government probably couldn't claim any revenue from federal oil drained from Sourdough's state leases.
In his April 22 rejection of Exxon's plan of Point Thomson development, Tom Irwin, state commissioner of natural resources, made it clear that the Palin administration, like those that preceded it, wants a commitment to produce Point Thomson's "considerable oil reserves," including the discoveries at Sourdough and Flaxman adjacent to ANWR. (Other wells along the border in Point Thomson also might hold oil, but not all well results have been made public.) If the state ultimately prevails in court and takes back Exxon and other oil company's leases at Point Thomson, the state could sell leases to the field again.
BP and Chevron received permission to drill Sourdough from Point Thomson operator Exxon in the early 1990s. BP subsequently drilled two wells in the prospect, which lies in the southeast corner of the Point Thomson unit, adjacent to the Staines River that runs along the border between ANWR and Point Thomson.
ANWR's coastal-plain area is roughly a half mile from the Sourdough discovery well.
RULE OF CAPTURE
In 1997, David Johnston, then chairman of the Alaska Oil and Gas Conservation Commission, said the federal government would not be able to claim correlative rights if Sourdough was developed -- correlative rights would give the feds taxes and royalties on ANWR oil pumped from Sourdough.
These rights, which the commission enforces, do "not protect against drainage," he said. The rule of capture would prevail.
What correlative rights do is ensure adjacent landowners have "the opportunity to extract their fair share of the resource," Johnston said. If a landowner does not wish to drill on his side of the property line, that's his choice.
"The federal government does not have to lease this land. Nobody is compelling them to lease it." But if the feds do not lease the coastal plain area adjacent to Sourdough, then the "rule of capture applies," he said.
The rule of capture is the same federal law that applies to the ownership of a wild horse that roams across several property lines -- whoever captures it, owns it, Johnston said.
Attorneys interviewed by Petroleum News agreed, as did a 2003 article in Duke University School of Law's Alaska Law Review, which said, "The owner of the drained land has no legal remedy, but may protect his rights by drilling a well of his own in order to capture the same resource."
But Johnston and Robert Corbisier, author of the law review article, said there was also a possibility of the state oil and gas commission making Sourdough an oil field unit, and including ANWR acreage in the unit -- something the agency might have to do under its legal mandate to prevent the waste of oil and gas resources.
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