State changes course, approves Pt. Thomson plan on “new information”

State Natural Resources officials approved ExxonMobil’s long-term plan of development to grow the Point Thomson gas field Friday after getting a letter from the companies Alaska leaders that caused the state to change course, according to the approval documents.

The approval comes despite Division of Oil and Gas Director Chantal Walsh first resoundingly rejecting the plan Aug. 29, contending at the time it contained too many “ifs” and “woulds,” depending on economics and its partners’ decisions and allowed Exxon to back out of its 2012 Point Thomson settlement with the state that bound it to develop the long-awaited project.

The conditional language indicated Exxon was not committed to expanding natural gas and condensate production despite the state’s assertion the 2012 settlement was a contract that bound the company to do the work.

ExxonMobil outlined its plans to move gas from Point Thomson and inject it into the Prudhoe Bay oil and gas pool as a way to further enhance oil recovery from the large oil field in its June 30 development plan — the one first rejected.

Walsh wrote in the Friday approval document that the Oct. 12 letter from Exxon — considered by the state to be a revision to the original plan — lays out a plan for the company to advance expansion in five areas, including negotiating agreements with the Prudhoe Bay operators, engineering, permitting and other unspecified work.

In rebutting Exxon’s claim that the Point Thomson work is contingent on agreements with the Prudhoe Bay working interest owners, she noted in her August rejection letter that the Prudhoe owners, BP, ConocoPhillips and Exxon, are the same companies in charge of Point Thomson, meaning they would be negotiating with themselves.

ConocoPhillips relinquished its 5 percent stake in Point Thomson to the field’s other owners earlier this year.

DNR and Exxon officials also had an Oct. 9 meeting, according to Exxon’s letter.

A press release from Gov. Bill Walker’s office called the plan approval “a positive step to achieve major gas sales and increase oil production. Point Thomson holds roughly 25 percent of the gas that could feed the Alaska LNG Project.

“Our approval of the Point Thomson to Prudhoe Bay pipeline plan adds to the momentum of the Alaska LNG Project and demonstrates the commitment of the Point Thomson working interest owners into (the) Alaska Gasline Development Corp.’s 800-mile pipeline,” Walker said in a formal statement.

However, Walsh also made it clear in the approval that the state expects the expansion project to move forward regardless of extenuating circumstances.

“If the Point Thomson Unit working interest owners do not fund the planning work or enter a commercial agreement with the Prudhoe Bay working interest owners, those events will not in any way absolve Exxon from fulfilling its obligation to complete the planning work promised in the revised planning POD,” she wrote.

Production facilities at Point Thomson would first be expanded to handle production of more than 50,000 barrels per day of the diesel-like condensates and 920 million cubic feet per day of gas.

The current Point Thomson facilities have a production capacity of about 10,000 barrels of condensates and 200 million cubic feet of gas per day.

Getting the gas from Point Thomson to Prudhoe would require construction of a 62.5-mile, 32-inch diameter gas pipeline between the fields and production would be ramped up with the drilling of three new wells, according to the plan of development.

 

Elwood Brehmer can be reached at [email protected].

Updated: 
12/22/2017 - 3:56pm

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