ANCHORAGE (CN) - North Slope municipalities are fighting the State of Alaska over the taxes and profits from the proposed Trans-Alaskan Pipeline, with many Alasakans saying that they and the state -- not the federal government and oil companies -- should be the prime beneficiaries.
Whether it's North Slope Borough trying to protect its tax base, or state senators pushing for incentives for gas companies, one thing is certain: With oil production on decline in Alaska, a lot hinges on the decisions coming out of Alaska's courts.
First, you need to know where to drill. A state judge in March upheld a ruling that found an out-of-state contractor lowballed estimates of oil reserves in the North Slope, which were used to forecast the useful life of the Trans-Alaska Pipeline.
Anchorage Superior Court Judge Andrew Guidi ruled on March 6 that the most accurate predictions of oil reserves in the North Slope were done by a veteran, in-state contractor, Dudley Platt of the North Slope Borough's Mayor's office, not by Platt's replacement, a Colorado contractor.
Platt formerly did production forecasts for the Alaska Department of Revenue, first as an employee in 1989, then as a contractor.
The two contractors, Platt and Frank Molli, used different methodologies to determine oil reserves: Platt used a "pool" method that both Judge Guidi and now-U.S. District Court Judge Sharon Gleason agree is more accurate than "well-by-well" analyses.
Platt puts the "end of life" of the pipeline sometime between 2065 and 2068, whereas the state's Molli estimated it would run out 20 years sooner, between 2042-2046, according to reports in the Fairbanks Daily News,
The estimates have implications on how the state assesses taxes on the property and who would benefit more from the Trans-Alaska Pipeline - the municipalities or the federal government.
Judges Gleason's and Guidi's decisions could give municipalities such as Fairbanks and Valdez a greater stake in their oil and gas resources.
Many Alaskans feel that they - not the federal government and oil companies - should benefit from development, which has been declining for the past decade.
Platt, who holds a bachelor's degree in petroleum engineering from Marietta College, has done oil- and gas-field reserves analysis for native organizations, private landowners and the state since 1992.
Since 2010, he's worked mainly with Mayor Charlotte Brower of North Slope Borough to "foster responsible onshore and offshore oil and gas development while preserving the traditional Inuit lifestyle," Platt wrote on his LinkedIn web page.
Platt told Petroleum News in 2007 that bi-annual, field-by-field assessments allow him to adjust his projections and look for mistakes. Oil reserves fluctuate, and as healthy as North Slope ones are, infrastructure such as wells, lines and transport, as well as interruptions, all affect production. What company is operating in an area and its expectations are also determining factors.
Platt said a lot of it comes down to timing.
"You drill one, maybe two wells a year to see if it works. And you wait a year, and you do two more wells, and then you wait again," Platt told Petroleum News' Kristen Nelson in a 2007 article, "Alaska Oil Forecast Shaky."
Platt said pipelines do not last forever. They require replacement, and if facilities are not expanded to handle more gas and water, production declines.
In 2007, Platt said, there were few undiscovered resources, the North Slope being the "heaviest and shallowest."
Point Thompson in the North Slope remains North America's largest known field. It is being studied - and its leases litigated - by ExxonMobil - which recently released its Point Thompson EIS (environmental impact statement) and plans to go active by 2016.
Point Thompson is thought to have 8 trillion cubic feet of natural gas and hundreds of millions of barrels of petroleum liquids, one-fourth of the known gas resources on the North Slope.
ExxonMobil is the largest leaseholder in Point Thompson, with more than half of the shares.
The State of Alaska has been trying to win back control of Point Thompson land in a decade-long dispute. ExxonMobil and the other leaseholders (BP, Chevron, ConocoPhillips and Leede Operating Co.) claim to have the most knowledge of the area, but not all of the companies have signed on yet.
The state claims that ExxonMobil has failed to develop the field, while the companies cite technical challenges and the absence of new pipeline.
Judge Gleason ruled on the Point Thompson case at the trial court level, and it's been appealed to the Alaska Supreme Court. Oral arguments were held Feb. 8.
Legislation is also pending. In February, Gov. Sean Parnell asked for public comment on Alaska Senate Bill SB 192 , "An Act relating to the oil and gas production tax; and providing for an effective date."
Many Alaskans believe the Act will give oil and gas revenue to gas companies with nothing in return, because it does not address the production decline.
Parnell welcomed public comment on the bill at Legislative Information Offices throughout the state. A talking points memo distribut