Judge rules for Alaskan family in BP oilfield dispute

ANCHORAGE, Alaska Wed Feb 9, 2011 3:38pm EST

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ANCHORAGE, Alaska (Reuters) - A federal judge has ordered the U.S. Bureau of Indian Affairs to pay $4.92 million to an Alaska family that claims the agency failed to collect adequate compensation for use of private land at the BP-operated Niakuk oilfield on the North Slope.

Judge Nancy Firestone of the U.S. Court of Federal Claims in Washington, D.C. ruled in favor of the heirs to Andrew Oenga, an Inupiat Eskimo hunter who held title to land on Heald Point, a small peninsula jutting out into the Beaufort Sea.

Oenga used the site -- which became his through a Native allotment -- for hunting and fishing, but in the 1980s signed a lease agreement allowing oil companies to use the land to develop and produce Niakuk crude.

However, Oenga's heirs maintained BP and its Niakuk partners -- ConocoPhillips, Exxon Mobil Corp and Chevron Corp -- expanded their use of the family's land beyond what was allowed in the lease agreement. The BIA violated its fiduciary duty to collect fair compensation for commercial use of that Native land, the family argued.

Firestone, in a ruling issued late Tuesday, agreed with the family. "The rent paid thus far to the Oengas has covered only the authorized use of the allotment," she said in the ruling.

While the ruling is against the BIA, the case affects BP and its Niakuk partners.

BP in December shut in production from a small pool called Raven that was accessed from Heald Point. BP shut in the wells -- two production wells and an injector -- at the direction of the BIA. About 850 barrels per day of production was affected.

Those wells remained shut in Wednesday, said Steve Rinehart, spokesman for BP Exploration (Alaska) Inc. Future operations near Heald Point are still being evaluated, he said.

"We are considering alternative ways to reach and develop resources in that area," he said.

The BIA is the entity ordered to pay the family, but the agency could turn to the oil companies to collect the money, Rinehart said.

"BP and other working interest owners may be asked to pay a share of that award," Rinehart said.

Other Oenga family claims for related underpayment of rents are still pending. In all, the family could collect up to $17 million, including interest, according to the attorney representing Oenga's heirs.

In a statement released by the attorney, one of the family members said the ruling was an important victory.

"The BIA has to start living up to its trust responsibility," Joe Delia, a grandson of Andrew Oenga, said in the statement. "The days of being buddy-buddy with big oil companies like BP are over."

(Editing by Bill Rigby and Sofina Mirza-Reid)

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