Excerpts from Fairbanks Daily News-miner 12-2-08
 
Lawmakers tried to figure out Monday why the state won't grant
lease-related concessions to two companies ready and willing to drill for
Alaska natural gas.
 
Exxon Mobil operator of the gas-rich Point Thomson unit on the North
Slope, and Escopeta Oil, a Texas company that promises fast gas from
leases it holds on Cook Inlet, are blocked by lease issues before the
state’s Department of Natural Resources.
At least one legislator speculated that the state might be using its
influence over the Point Thomson unit as leverage to prod Exxon into
committing its gas supplies to a pipeline proposed by TransCanada.
Heavily promoted by Gov. Sarah Palin, the TransCanada line earned the
state’s blessing—and $500 million—when the legislature granted a license
under Palin’s Alaska Gasline Inducement Act in Aug.  Critics, however say
the gas line is doomed without gas commitments from North Slope
producers.
Several lawmakers used the joint House Judiciary and Resource committees
hearing to note the discrepancy between Palin’s call for drilling while
on the national campaign trail and state-level resistance the oil
companies are facing on her home turf.
“Are we open for business in Alaska? We have a governor out there saying
‘Drill,Baby, Drill.’”  Rep. Craig Johnson, an Anchorage Republican, asked
DNR officials.
Both oil companies face lease issues blocking development of natural gas.
 Escopeta’s leases expire in a month, while DNR terminated the Point
Thomson unit earlier this year due to inaction.  At question during the
hearing was whether DNR is fostering development of Alaska resources, or
whether the state agency is attempting to warehouse leases in order to
collect more bonus payments by re-selling them to fresh buyers.  Rep.
Ralph Samuels, an Anchorage Republican, pointed representatives from both
oil companies and DNR to a bigger theme—how development of the state’s
natural gas resources could affect plans to build a large-diameter,
transcontinental gas line.
DNR officials, bound to some degree by court-ordered, high-level
negotiations with Exxon, danced around the question.  “When you tell
folks what you plan on doing, your leverage can evaporate,” Division of
Oil and Gas Director Kevin Banks said.  He defended DNR’s sturdy stance
on drawing the line with non-performing leaseholders. “There comes a time
when the state sometimes has to say no,” he said.  “We will lose control
of how our land is developed.”
Judiciary Committee chairman Rep. Jay Ramras, a Fairbanks Republican,
expressed frustration that viable projects are in limbo on DNR’s desk
while constituents clamor for better, cheaper energy.  DNR Commissioner
Tom Irwin was unable to talk specifics, as an appeal is pending before
him on the Thompson unit’s termination.  Instead, Banks fielded lawmaker’
inquiries.  He offered a detailed history of Escopeta and Exxon’s leases,
laying out the failure of both companies to come through as promised with
producing wells.  Banks said the unit containing Escopeta’s Cook Inlet
leases will be terminated at the end of December.
DNR Marty Rutherford said, "As we carry out those and hold people
responsible for commitments they've made, it is a fact about getting
drilling." "When people don't honor those commitments, we also have to be
good land managers."

 
 
 
 
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