Judge rules for Exxon in Alaska oil-lease dispute

ANCHORAGE, Alaska Jan 12 (Reuters) - An Alaska judge has overturned the state's termination of the Exxon Mobil Corp-operated (XOM.N) Point Thomson oil and gas field unit and the leases within it.

Superior Court Judge Sharon Gleason, in a decision released late Monday, said the state breached its contract with the oil companies.

The Alaska Department of Natural Resources, while it holds the right to reject development plans and terminate oil-field units, is obliged to consider leaseholders' offers to remedy deficiencies, Gleason said.

But the department failed to give Exxon and its partners -- BP (BP.L), Chevron (CVX.N) and ConocoPhillips (COP.N) -- "their constitutional right to procedural due process" because state officials did not give the companies' latest development plan a fair hearing, the judge said in her ruling.

Both sides said on Tuesday they are considering their next moves.

"ExxonMobil is encouraged that Judge Gleason has agreed with our position regarding the process DNR followed in considering the Plan for Development for the Point Thomson Unit," Exxon spokesman David Eglinton said in an email.

The company believes its most recent plan is "the right path forward to develop the Point Thomson Unit oil and gas resources," Eglinton said.

Point Thomson, on the eastern North Slope, holds an estimated 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of crude oil and gas condensate, according to state officials.

It has been the subject of years of dispute between the state and the oil companies. The state claims the companies have delayed meaningful development of the liquids.

State officials terminated the unit in 2006 and have declared intentions of auctioning off the leases to potential new developers.

The companies argue that they have worked diligently at Point Thomson's, but special circumstances, including extremely high reservoir pressure and remoteness, make development difficult.

Senior Assistant Alaska Attorney General Richard Todd said that the decision focuses on process and procedural issues and does not reverse the court's earlier decision affirming DNR's right to approve or reject plans of development.

"Nor did the court require DNR to accept ExxonMobil's (latest) Plan of Development. We are evaluating our legal options and next steps," Todd said in a statement.

Exxon and its partners won a reprieve a year ago, when Alaska Natural Resources Commissioner Tom Irwin ceded them two of the 45 Point Thomson leases, on condition that two wells be drilled there by the end of 2010.

Since then, Exxon and its partners have built a 50-mile (80-km) ice road, mobilized equipment, built a camp and started drilling the wells.

The companies seek to start production of at least 10,000 barrels a day at Point Thomson by 2014, a project they say will cost $1.3 billion.