Alaska Rejects Exxon's $1.3B Plan for Point Thomson Field

April 22, 2008 (Dow Jones Newswires)

The State of Alaska rejected Exxon Mobil Corp.'s (XOM) latest plans to develop the giant Point Thomson oilfield, setting up a final legal showdown before it can revoke the lease.

Exxon had proposed a $1.3 billion plan to drill several wells in the field, which is east of Prudhoe Bay, and produce 10,000 barrels a day of gas condensate.

On Tuesday, Alaska Natural Resources Commissioner Tom Irwin rejected this plan as insufficient. "I could not risk further delay in development of these valuable resources," he said in a statement accompanying his decision.

The state estimates the Point Thomson field holds 8 trillion cubic feet of natural gas and hundreds of millions of barrels of oil. But Alaska has grown frustrated with Exxon's slow pace in recent years and Irwin noted that not a single well has been drilled there since 1982.

"Exxon is one step closer to losing those leases," said Kurt Gibson, deputy director of the Alaska Department of Natural Resources, in a telephone interview. "There is a bunch of oil and gas there. There is no reason not to get going on it."

Point Thomson is one of the Exxon's largest projects worldwide, in terms of net production of oil and gas, according to an analysis Exxon figures. An Exxon spokeswoman did not immediately reply to a request for comment, but the company is expected to appeal the decision.

Exxon operates the field and holds a 36% stake. Smaller stakes are held by BP PLC (BP), Chevron Corp. (CVX) and ConocoPhillips (COP).

April 22, 2008 (Dow Jones Newswires)