CSSCR 3(JUD): Urging the governor and the attorney general to expedite the resolution of the appeal from the decision by the commissioner of natural resources to deny the proposed plans for development of the Point Thomson Unit and to terminate the Point Thomson Unit.
00 CS FOR SENATE CONCURRENT RESOLUTION NO. 3(JUD) 01 Urging the governor and the attorney general to expedite the resolution of the appeal 02 from the decision by the commissioner of natural resources to deny the proposed plans 03 for development of the Point Thomson Unit and to terminate the Point Thomson Unit. 04 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 WHEREAS the Department of Natural Resources estimates that the Thomson Sand 06 Reservoir contains at least 8 trillion cubic feet of gas and 200 million barrels of gas 07 condensate and oil and that the shallower Brookian reservoirs are estimated to contain 08 hundreds of millions of barrels of oil; and 09 WHEREAS the Point Thomson Unit consisted of 45 state oil and gas leases 10 encompassing approximately 106,200 acres, and the state owns the entire subsurface estate 11 within that unit area; and 12 WHEREAS 25 lessees held working interest ownership in the Point Thomson Unit on 13 October 27, 2005, when the director of the division of oil and gas in the Department of 14 Natural Resources denied the Twenty-second Plan of Development for the Point Thomson 15 Unit; and
01 WHEREAS, in 2000, the lessees asked the Department of Natural Resources to 02 approve an expansion of the Point Thomson Unit by 12 leases and about 40,000 acres; and 03 WHEREAS the Department of Natural Resources and the lessees entered into an 04 expansion agreement by which the department would approve the unit expansion on condition 05 that the lessees would perform certain items of work and put the unit into production with at 06 least seven development wells by 2008; and 07 WHEREAS, as of November 27, 2006, the lessees had failed to satisfy any of the 08 work commitments in the expansion agreement and had relinquished two expansion leases 09 back to the state along with a payment of $940,000; and 10 WHEREAS the expansion agreement required the lessees to drill a well not later than 11 December 2006; and 12 WHEREAS the lessees failed to drill the well required by the expansion agreement 13 before the end of December 2006, and the expansion agreement requires the lessees to 14 relinquish all 29,000 acres of the remaining expansion leases and pay the state $20,000,000; 15 and 16 WHEREAS the expansion agreement provided that the lessees could have voluntarily 17 contracted the expansion leases out of the Point Thomson Unit with a lesser financial 18 obligation to the state if the lessees determined that production was uneconomic, but the 19 lessees have not exercised this option; and 20 WHEREAS the lessees failed to drill exploratory wells to delineate the various 21 hydrocarbon accumulations in response to an offer by the Department of Natural Resources to 22 extend the expansion agreement if those exploratory wells were drilled; and 23 WHEREAS the director of the division of oil and gas in the Department of Natural 24 Resources disapproved the Twenty-second Plan of Development proposed by the lessees 25 because that plan of development did not set out a plan to bring the unit into commercial 26 production within a reasonable time; and 27 WHEREAS the lessees have failed to provide a new or revised acceptable plan of 28 development for the Point Thomson Unit since the director of the division of oil and gas 29 disapproved the Twenty-second Plan of Development; and 30 WHEREAS the commissioner of natural resources, on November 27, 2006, upheld 31 the denial of the proposed plans for development of the Point Thomson Unit, terminated the
01 Point Thomson Unit, and found that lessees had breached an expansion agreement, thereby 02 causing 29,000 acres of expansion leases to revert automatically to the state; and 03 WHEREAS the acting commissioner of natural resources, on December 27, 2006, 04 denied reconsideration of the commissioner's decision dated November 27, 2006; and 05 WHEREAS ExxonMobil Corporation, as the operator of the Point Thomson Unit and 06 as a lessee, along with BP Exploration, Chevron U.S.A., and ConocoPhillips Alaska, Inc., 07 appealed the decision of the commissioner of natural resources to the superior court in 3AN- 08 06-13751CI and commenced a separate action in superior court in 3AN-06-13826CI; and 09 WHEREAS ExxonMobil Corporation, BP Exploration, Chevron U.S.A., 10 ConocoPhillips Alaska, Inc., and Devon Energy Production Company, L.P., are pursuing 11 administrative appeals of the individual lease terminations in accordance with 11 AAC 02; 12 and 13 WHEREAS, under art. VIII, sec. 1, Constitution of the State of Alaska, the policy of 14 the state is to encourage the development of its resources by making them available for 15 maximum use consistent with the public interest; and 16 WHEREAS it is in the best interest of the state to develop the oil and gas resources 17 within the Point Thomson Unit for the benefit of the people of the state; and 18 WHEREAS an unnecessary delay in the resolution of the appeal of the 19 commissioner's decision will contribute to further delay in the development of the oil and gas 20 resources in the Point Thomson Unit to the detriment of the people of the state; 21 BE IT RESOLVED that the Alaska State Legislature respectfully asks the governor 22 and the attorney general to allocate adequate resources and take all steps necessary to expedite 23 the court's consideration of the appeal in 3AN-06-13751CI or facilitate a successful resolution 24 to the unit and lease dispute so that the oil and gas resources within the Point Thomson Unit 25 may be developed for the benefit of the people of the state without further delay.