Judge Rules Against Alaska on Point Thomson Lease Rights

HOUSTON (Dow Jones), Jan. 13, 2010

An Alaska Superior Court judge has ruled that the state improperly canceled Exxon Mobil Corp.'s (XOM) lease rights to develop Point Thomson gas fields on the North Slope.

Judge Sharon Gleason said the Department of Natural Resources commissioner did not follow proper procedures in hearings on the ExxonMobil case, resulting in a "denial of due process" to the company, according to court documents. The decision was released Monday.

ExxonMobil said the company is "encouraged" that the judge has agreed with its position. "We are studying the decision issued by Judge Gleason to consider the full implications for Point Thomson development," said David Eglinton, an spokesman with Exxon Mobil said in an emailed statement.

Several years ago, Alaska's government canceled Exxon Mobil's license to drill in several leases at Point Thomson because of the company's failure to develop the gas-rich area over several decades. Exxon Mobil now says that the area's resources are vital to the successful development of a pipeline to bring Alaskan natural gas to the lower 48 states.

The license, called an "operating unit," had given Exxon Mobil control over development of the oil and gas leases that it and other oil majors held at Point Thomson. The state has revoked most of those leases, and the companies are struggling to get them back.

Exxon Mobil, the largest U.S. oil company by market value, is pursuing a number of legal actions to get the operating unit back, both through administrative proceedings and in court.

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