Houston (Platts)--5Aug2009

The Texas Railroad Commission should penalize ExxonMobil for
"intentionally" damaging oil and gas wells when capping them on a South Texas
leaseholding, Texas General Land Office Commissioner Jerry Patterson
reiterated this week in the latest salvo between him and the company.

In addition, he said that the company lied in Texas Railroad Commission
(RRC) filings about how it capped the wells and should be punished for that.

The thrust of his argument, and ongoing litigation on the subject, is the
allegation that the filings misled subsequent leaseholders about the capping
procedures and that they would not have pursued the wells had they known how
difficult it would be to re-enter them.

"If these intentional false filings and improper pluggings do not result
in substantial penalties by the Railroad Commission, then the oil & gas
industry in Texas will be on notice that [the] Railroad Commission's rules and
forms are optional, not mandatory," Patterson wrote to the RRC on Tuesday.

RRC staff "is currently evaluating the correspondence from Exxon and
Commissioner Patterson on this issue," spokeswoman Ramona Nye wrote Wednesday
in an e-mailed response to questions.

ExxonMobil, for its part on Wednesday, had no further comment beyond its
July 31 letter that blasted Patterson by calling him misinformed. "...our
letter brief submitted to the Railroad Commission speaks for itself," company
spokesman Len D'Eramo wrote in an e-mail. That letter responded to an earlier
one by Patterson. In it, ExxonMobil attorney Timothy George said Patterson's
letter was "rife with false statements, exaggerations, misrepresentations
about court actions in the referenced lawsuits, and baseless allegations
contradicted by the evidence in the pending litigation."

But, in his response to that Tuesday, Patterson said ExxonMobil was
cherry-picking from the court record to make itself look better. "The selected
anthology of Exxon's trial evidence provided with Mr. George's letter is a far
cry from the jury's findings," Patterson said, referring to the litigation.

'JUNK' ALLEGEDLY LEFT IN WELLS BY EXXONMOBIL

The oil and gas wells in question are on land held by the O'Connor family
near Refugio, Texas, and first began producing in the 1950s. ExxonMobil later
found them largely depleted and completed abandonment work in 1991. Later,
Emerald Oil & Gas alleged that when it attempted to drill, it encountered
"junk" that made it uneconomic to pursue the wells.

Underlying the volley between the land commissioner and ExxonMobil is
the pending litigation among ExxonMobil, the landowners and subsequent
leaseholder Emerald, the latter have claimed ExxonMobil deliberately capped
the wells to block others from re-accessing them. ExxonMobil has said it
capped them to prevent leaking.

The Texas Supreme Court in late March had remanded to a trial court the
fraud claim. It dismissed other related claims due to an expired statute of
limitations. Rehearing with the supreme court is pending. On the remanded
fraud question, the court said: "Thus, legally sufficient evidence in the
record supports the claim that Exxon had information that would lead a
reasonable person to conclude there was an especial likelihood these
plaintiffs would rely on Exxon's inaccurate filings with the Railroad
Commission at the time it filed them."

--Katharine Fraser, katharine_fraser@platts.com