By Tim Bradner
Alaska Journal of Commerce

ExxonMobil Corp. told state Department of Natural Resources officials March 3 that development of the Point Thomson gas and condensate field east of Prudhoe Bay could be delayed 15 to 17 years if the state proceeds with an effort to terminate leases and succeeds in court.

The company is proposing a new plan for a gas recycling and condensate production project for Point Thomson and hopes to resolve a longstanding dispute with the state over the pace of development. In late 2006 the state moved to terminate the Point Thomson unit and cancel leases held by ExxonMobil, BP and Chevron, but an Alaska court halted the action and gave the companies more time to propose a remedy to the dispute. ExxonMobil, operator at the field, put forth the new plan Feb. 19 with the support of the other leaseowners.

Craig Haymes, ExxonMobil's Alaska production manager, told state natural resources Commissioner Tom Irwin that the new plan would result in a $1.3 billion investment and production of 10,000 barrels per day of condensates by 2014.

If the state rejects the plan and continues efforts to terminate the leases, Haymes cited estimates by the state Department of Law that it would be 2010 or 2011 before appeals went through the Alaska Supreme Court. After that, Haymes said it would be another 10 years or more for the state to re-lease the acreage for new owners to form a new unit and perform the drilling, reservoir assessment and engineering needed to plan a development project.

If the state approves the companies' plan, however, Haymes said production could begin as early as 2014. Facilities to produce gas from Point Thomson to an Alaska natural gas pipeline could be built by 2017 or 2018.

Point Thomson has an estimated 8 trillion cubic feet of gas and 200 million barrels of condensates, but the reservoir is complex and there are uncertainties as to how efficiently gas will cycle through the reservoir from injection to production wells.

The project proposed by the companies would result in liquids production and also answer many of the technical questions facing the companies, Haymes said.

Hearings being held by the state Department of Natural Resources began March 3 and will continue through March 7.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.