Exxon plan rejected by state

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Further litigation between the state and Exxon will be required before any decision is final. File photo, Alaska Suerstation ABC®.

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Story Created: Apr 22, 2008 at 12:47 PM AKDT

Story Updated: Apr 22, 2008 at 12:47 PM AKDT

A development proposal by oil companies in the midst of litigation over a rich cache of oil and gas on the North Slope has been rejected by the state of Alaska. The plan, said Tom Irwin of the Department of Natural Resources (DNR), "does not serve the state's best interests."

31-years ago ExxonMobil, BP and Chevron won the rights to drill at Point Thomson, however they have not yet produced any oil or gas from the tracts.

In late 2006 the state moved to reclaim the leases in order to grant them to other companies who could move forward with development. However the state was ordered by a judge to discuss alternative proposals.

Further litigation will be required due to the rejection of the ExxonMobil proposal. This could also create uncertainty for a proposed gas pipeline project out of the North Slope.

As a proposed solution to the dispute, $1.2-billion is requested by the proposal for the purpose of gas recycling and a condensate production project.