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