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which obligations came into existence when the wells were
drilled. As Exxon on brief explains:
it is preposterous to think that Exxon could avoid
having to plug wells simply by refusing to file a
notice of abandonment. * * * Filing the notice is just
a step in performing the well plugging obligation
already imposed by Paragraph 20 of the lease.
Further, in the oil industry, oil well plugging and site
cleanup relating thereto are common events. Although variations
in plugging procedures may occur, we believe sufficient oil
industry experience and practice are established with regard to
the frequent procedure of well plugging and well-site cleanup
that possible changes in technology and Alaska regulations do not
render Exxon’s Prudhoe Bay DRR obligations with regard thereto
indefinite and contingent.
Respondent contends that Exxon’s well-site DRR obligations
should not be regarded as fixed because of the possibility that
Exxon might surrender or assign its interest in PBU, along with
the related DRR obligations, to some other oil company. The mere
possibility of assignment, however, is not sufficient to prevent
tax accrual because the same argument could be made with respect
to every fixed liability that a taxpayer otherwise would accrue.
In any event, the PBU partners are not permitted to assign their
interests in the PBU without approval from Alaska, and the State
would not approve an assignment that would ignore the well
plugging and well-site DRR obligations. Further, the Unit
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