Point Thomson construction expected to begin in January

ExxonMobil Corp. hasn’t officially given the green light on construction at the Point Thomson gas field 60 miles east of Prudhoe Bay — the company is still securing final permits, it says — but all indications are that the project is a go.

Construction of gravel pads, roads and other facilities is expected to begin in January, under the current schedule. Installation of 2,200 vertical support members, or VSM, and a 12-inch, 22-mile pipeline will begin later in the winter.

A camp, offices and warehouse have been established at Deadhorse, at Prudhoe Bay.

The first activity will be construction of an ice road from Prudhoe to Point Thomson, which should begin in December.

The companies aren’t saying what the project cost will ultimately be other than it is a “multi-billion-dollar” undertaking. Sources familiar with the planning say costs will far exceed the $1.3 billion originally estimated, however.

Randy Broiles, ExxonMobil’s vice president for the Americas, praised efforts by the state and others to overcome obstacles facing Point Thomson in the past.

“This much-needed progress is heartening and demonstrates what can be achieved by working together, but as producers, legislators, regulators and citizens, we need to maintain the momentum,” Broiles said at the Resource Development Council’s annual conference Nov. 14.

“This project is now ready to become what I hope is the first step in commercializing Alaska’s significant natural gas resources,” Broiles told the RDC.

Point Thomson construction will also be the largest North Slope project in several years and will employ several hundred people this winter, a welcome development for Alaska’s support contractors and suppliers who have been worried about a slowdown of work on the North Slope.

ExxonMobil is the operator and owner of the largest percentage in Point Thomson, but BP is also a significant owner and ConocoPhillips also has a smaller stake.

There are an estimated 8 trillion cubic feet of natural gas reserves discovered at Point Thomson as well as about 200 million barrels of liquid condensate, a natural gas liquid. There are additional pools of conventional oil near the field but the viability of producing those is not yet certain.

ExxonMobil will build a gas cycling and condensate production project as a first phase of development. Gas will be produced from the high-pressure reservoir, the liquid condensates will be stripped off, or separated, and the gas will be injected back underground.

The field is pressured at more than 10,000 pounds per square-inch, about twice as high as Prudhoe Bay’s initial pressure. This means injecting the produced gas back underground is no easy feat — the compressors needed to inject the gas will be among the most advanced in the world, ExxonMobil said.

The liquids, meanwhile, will be shipped by pipeline to the Prudhoe Bay field where they will be blended with crude oil in the Trans-Alaska Pipeline System. The project requires 22 miles of new pipeline to be built from Point Thomson to the small Badami field, where a connection will be made with an existing pipeline from Badami to Prudhoe Bay.

Two wells were drilled for the project in 2010 and are currently suspended. Three other wells are planned to support the initial production, and drilling will resume in 2015 under the current schedule.

The project will produce 10,000 barrels per day of condensates, a small amount given the scale of investment. However, the project is seen basically as a test of whether gas cycling will work in the Point Thomson reservoir, where there are still some technical questions.

If it works as expected the liquids production can be scaled up. If there are problems, the facilities being built can be converted to support conventional gas production for a pipeline or to ship gas to Prudhoe Bay for use in oil recovery. The 22-mile pipeline will have a capacity of 70,000 barrels per day to accommodate increased condensate production or, at some time, conventional crude oil production.

The startup is expected the winter of 2015-16, according to a presentation ExxonMobil made to the Alaska Oil and Gas Conservation Commission on Oct. 30.

When it begins production, Point Thomson will represent the first commercial use of North Slope gas, Broiles told the RDC Nov. 14. The project also sets the stage, in terms of infrastructure, for a large natural gas pipeline that may be built, because Point Thomson gas, which will be recycled in the current project, is critical for a pipeline.

Broiles noted key recent milestones for the project. Last March the state and the Point Thomson owners settled long-standing litigation over disputes on previous work commitments. Those disagreements had blocked progress in development.

In late summer the U.S. Army Corps of Engineers issued a long-awaited final environmental impact statement and in October issued a record of decision approving the EIS, a major regulatory milestone.

In his talk to the RDC Broiles praised the team approach the companies, the state, and the regulatory agencies have taken to secure the key permits for Point Thomson.

“Gov. (Sean) Parnell and the state of Alaska played a key role in this process,” he said.

11/11/2016 - 8:50pm