On February 19, 2009, Alaska Governor Sarah Palin announced that ExxonMobil returned eight unexplored land leases in the Point Thompson area to the State of Alaska’s Department of National Resources (DNR) (Leases, 2009, ¶1) following the payment of a $20 million penalty and the filing of a legal action in the state’s Superior Court (Leases, 2009, ¶3). Under a 2002 agreement, ExxonMobil was to pay the $20 million penalty and relinquish the leases without legal action if it failed to drill (Leases, 2009, ¶2). The company paid the fine, but had breached the agreement by filing the legal action (Leases, 2009, ¶3).
“These events reflect continuing progress in this administration’s efforts to bring the world-class resources in the Point Thomson area to market. Because the state has diligently pursued its legal options and strictly enforced its contractual rights, ExxonMobil is now preparing to mobilize a rig and begin to drill a well. For the first time in more than 25 years, Exxon will be drilling a well at Point Thomson” (Leases, 2009, ¶4).
“In a recent decision, DNR Commissioner Tom Irwin conditionally granted ExxonMobil and its partners the right to operate on two leases. Those two leases comprise less than 5 percent of the original unit area. ExxonMobil and its partners have promised to drill a well on each of those leases by the end of 2010, and to construct a pipeline and processing facilities to bring those leases into production no later than 2014. If these commitments are not honored, these leases will automatically terminate” (Leases, 2009, ¶5).
A decision pertaining to other expired leases is pending before Commissioner Irwin. “[T]he appellants have until the middle of March to file post-hearing briefs. Commissioner Irwin will make a decision after reviewing all of the evidence filed and the briefs” (Leases, 2009, ¶6). Meanwhile, “[a]n appeal of DNR’s decision to terminate the Point Thomson Unit is pending in Superior Court before Judge Gleason” (Leases, 2009, ¶7).
Commentary
Governor Palin’s subject matter expertise on energy matters shines brightly in this release.
Oil companies often lease land on which to drill, but never actually drill. The salient point is in ¶4. When a large corporation flouts the laws of a state, this is an area that’s open for all manner of corruption. How tempting it could have been for the state or various elements within Governor Palin’s administration to look the other way in exchange for some favor from the company or some lobbyists. That did not happen under her watch. Instead, the company was forced to honor its agreement and consequently is now moving forward on honoring other agreements.
This is “peace through strength” — a Reagan term normally used for military matters — applied to business deals and contracts.
Aggressive enforcement of these contracts ensures that domestic oil and gas reserves will be developed and brought to market, furthering the goal of energy independence, which results in improved national security and lower energy prices.
References
Point Thomson expansion leases returned to state by ExxonMobil. (2009, February 19). State of Alaska, Governor. Retrieved February 20, 2009 from: http://www.gov.state.ak.us/news.php?id=1658
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