Exxon Moving Forward with Alaska Natural Gas & Oil

JUNEAU, Alaska — Exxon Mobil Corp. has hired contractors with plans to begin work on an oil and gas field the state of Alaska wants to take back.

The state's Department of Natural Resources rejected Exxon Mobil's most recent development plan for the Point Thomson field. The dispute is still in court, but the Irving, Texas, company announced Monday it's still moving forward with work.

The field's rich cache of oil and gas sit at the heart of a dispute over a proposed natural gas pipeline, which some lawmakers believe cannot be successful until the state's dispute gets resolved.

Exxon Mobil is the operator for leases purchased 31 years ago, but never developed; BP PLC and Chevron also have a stake in the unit.

The state has been trying to strip Exxon and its partners of the leases since late 2006 under both Gov. Sarah Palin and her predecessor, former Gov. Frank Murkowski.

Exxon Mobil recently told lawmakers that it's serious about this development plan and considers it vital to any gas pipeline project that would go into Canada and eventually serve U.S. markets.

The Alaska Legislature should within a week take a vote on whether to issue a state license to TransCanada Corp. to build a pipeline that would take natural gas from Alaska's North Slope into Canada and then down to the Lower 48.

ConocoPhillips and BP have joined forces on a competing pipeline that is not seeking a state license or the accompanying $500 million in state incentives.

Exxon Mobil's $1.3 billion Point Thomson plan includes drilling that will begin the 2008-2009 winter season.

It's considered a first phase that will initially produce about 200 million cubic feet of natural gas, plus 10,000 barrels per day of liquid condensate removed from the gas and sold through existing and new pipelines.

The state's natural resources commissioner Tom Irwin, however, rejected this plan proposed in February. A Superior Court ruling is expected by year's end.