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AUGUST 18, 2011
Exxon, U.S. Government Duel Over Huge Oil Find
By RUSSELL GOLD
Exxon Mobil Corp. is fighting with the U.S. government to keep control of one of its biggest oil discoveries ever, in a showdown where billions of dollars hang in the balance for both sides.
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The massive Gulf of Mexico discovery contains an estimated one billion barrels of recoverable oil, the company says. The Interior Department, which regulates offshore drilling, says Exxon's leases have expired and the company hasn't met the requirements for an extension. Exxon has sued to retain the leases.
The court battle is playing out at a time in which the Obama administration has made an issue of unused leases, which deprive the Treasury of valuable taxes. It also comes as regulators are being careful not to be seen as lax in their dealings with large energy companies in the wake of last year's BP PLC spill.
The stakes are high: Under federal law, the leases—and all the oil underneath—could revert to the government if Exxon doesn't win in court.
The loss of the leases would be an enormous black eye for Exxon. The company hadn't previously disclosed the size of the discovery in what is called the Julia field until it was mentioned in the suit Exxon filed against the Interior Department last week in federal court in Lake Charles, La.
The Texas behemoth faces the sobering prospect that it may have made the largest discovery ever in the Gulf of Mexico only to lose it. Tens of billions of dollars of oil could slip through its hands because it failed to follow federal rules for getting a lease extension while it moved forward with plans to get the oil out of the ground. http://online.wsj.com/article/SB10001424053111903596904576514762275032794.html?mod=mktw
Exxon, U.S. Government Duel Over Huge Oil Find
By RUSSELL GOLD
Exxon Mobil Corp. is fighting with the U.S. government to keep control of one of its biggest oil discoveries ever, in a showdown where billions of dollars hang in the balance for both sides.
View Full Image
The massive Gulf of Mexico discovery contains an estimated one billion barrels of recoverable oil, the company says. The Interior Department, which regulates offshore drilling, says Exxon's leases have expired and the company hasn't met the requirements for an extension. Exxon has sued to retain the leases.
The court battle is playing out at a time in which the Obama administration has made an issue of unused leases, which deprive the Treasury of valuable taxes. It also comes as regulators are being careful not to be seen as lax in their dealings with large energy companies in the wake of last year's BP PLC spill.
The stakes are high: Under federal law, the leases—and all the oil underneath—could revert to the government if Exxon doesn't win in court.
The loss of the leases would be an enormous black eye for Exxon. The company hadn't previously disclosed the size of the discovery in what is called the Julia field until it was mentioned in the suit Exxon filed against the Interior Department last week in federal court in Lake Charles, La.
The Texas behemoth faces the sobering prospect that it may have made the largest discovery ever in the Gulf of Mexico only to lose it. Tens of billions of dollars of oil could slip through its hands because it failed to follow federal rules for getting a lease extension while it moved forward with plans to get the oil out of the ground. http://online.wsj.com/article/SB10001424053111903596904576514762275032794.html?mod=mktw
