Alaska Warns Oil Cos About Point Thomson Lease Expirations

HOUSTON Feb. 22, 2007 (Dow Jones Newswires)

After years of struggle over the development of Alaska's massive gas reserves, Alaskan authorities told major oil and gas companies that their Point Thomson Unit leases are ending.

In a letter dated Feb. 13, the Alaska Department of Natural Resources told Point Thomson operator Exxon Mobil Corp. (XOM) that its lease in the project's core area will be terminated on March 27.

Leases in Point Thomson's expansion area terminated on Dec. 31, 2006, another document said. Companies have 20 days starting Feb. 13 to appeal the decision, the letters said. There are 45 leases in the Point Thomson unit. Exxon couldn't be reached for comment late Wednesday.

The letters are the latest installment in Alaska's drive to end to the stalled 30-year old project, which companies say cannot be developed commercially without changing tax rules or building a multi-billion dollar North Slope pipeline.

The state says that the Point Thomson area contains millions of barrels of hydrocarbon liquids that can be exploited using existing infrastructure.

In late 2005, Alaska rejected Point Thomson's 22nd development plan, finding Exxon at fault. After successive appeals, the DNR's acting commissioner decided on Dec. 27, 2006 to uphold a decision to terminate the agreement, in which Chevron Corp. (CVX) and BP PLC (BP) also hold significant stakes.

In January, Exxon and other leaseholders filed a lawsuit with the state's Superior Court to reverse the decision.

Alaska's newly-elected governor Sarah Palin has publicly scolded Exxon for delays in the exploitation of the state's gas reserves and the construction of a long-awaited Arctic pipeline.

Exxon's plan "did not have the support of the public or the legislature," she said in a statement posted on the governor's Web site. The governor will introduce an Alaska Gasline Inducement Act by the end of February to speed up the development of the pipeline, the statement said.

Copyright (c) 2007 Dow Jones & Company, Inc.

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