A new special session begins today in Juneau, the first having expired a few days ago (special sessions can only last 30 days). The new one is charged with consideration of Gov. Sarah Palin’s “short-term” energy plan, which involves a lump-sum payment to citizens and repeal of the state’s fuel tax. Legislators will also continue their deliberation over the proposed state pipeline license for TransCanada Corp. The goal is to get a final vote on that by July 16. Meanwhile, we continue our “background” reports on issues of interest to legislators. Because Point Thomson will be discussed again in an evening session in Juneau (it can be watched on KTOO Juneau’s gavel-to-gavel coverage carried on the public cable channel) we delve into Point Thomson issues a bit more.

Point Thomson: What are the issues?

Point Thomson, an undeveloped field 60 miles east of Prudhoe Bay, is unusual in that its reservoir pressure is very high – 10,200 pounds per square inch – and it is a gas condensate reservoir, also known as a retrograde condensate reservoir. This means that the underground formation contains gas as well as condensate, a natural gas liquid. There are technical issues with Point Thomson besides the high pressure. Here is how Cathy Foerster, a commissioner on the Alaska Oil and Gas Conservation Commission, described the problem in her presentation to the Legislature: “In a reservoir like Point Thomson, the hydrocarbons are in the gas phase (in the reservoir rock) until the pressure drops below a certain point, called the dew point. When the pressure drops below the dew point some of the hydrocarbons, the condensates, switch to the liquid phase and drop out of the gas. When this happens a substantial portion of those liquids can be trapped and can never be recovered.”

“In many retrograde condensate reservoirs gas cycling is done, reinjecting gas (that is produced) over and over again (cycling) to maintain high reservoir pressure until the liquid condensate has been recovered (or produced). Looking simply at the reservoir mechanics, and not getting into financial concerns or politics, cycling the gas until most of the liquids have been recovered is the way to achieve greater ultimate recovery and prevent waste from a gas condensate reservoir such as Point Thomson,” Foerster told the Legislature.

Estimates of liquids at Point Thomson range from 200 million to 800 million barrels

Publicly available estimates of the liquid hydrocarbons associated with the gas at Point Thomson vary from 200 million to 500 million barrels, depending on the method of development, Foerster said. “If we produce Point Thomson as a gas reservoir without cycling first, a significant portion of those liquids are at risk. Don’t let me underestimate the value of the liquid resource; it’s the sized of another Alpine field,” she said. Another problem with the reservoir is that loss of the liquids could damage the ability to produce gas because the condensates will become liquid first at the points of the lowest pressure, which is around the well bores. “This is important because it will result not only in liquid losses but also in gas losses,” Foerster said. Yet a third problem is that there is a very thin oil layer, of heavy oil, at the bottom of the reservoir holding gas and condensates. If gas is produced first, before the oil is produced, much of it will be lost, she said. And there is yet another problem. “We don’t know if there is adequate connectivity in the gas condensate part of the reservoir for cycling even to work. (Foerster refers to the connections between micro-pores in the rocks, which allow the hydrocarbon fluids to flow to the producing wells. If the pores aren’t connected well enough the oil and gas can’t move, and can’t be produced.) The only way the reservoir can be tested is to develop a small gas cycling project and see if it works. A small cycling project (still at $1.3 billion) is just what ExxonMobil, BP, Chevron and ConocoPhillips, the major Point Thomson leaseowners, have proposed, but state Resources Commissioner Tom Irwin rejected the companies’ plan.

Foerster also said it may not be feasible to produce the heavy oil at the bottom of the Point Thomson reservoir. “The oil may or may not be too viscous (thick) to produce; the gas above or the water below it may ‘cone’ (reach to the producing well in the reservoir) and drown out the oil production. “We just don’t know enough. Without a bit of drilling, producing and cycling we never will,” Foerster said. Ironically, the Department of Natural Resources agrees that a small gas cycling project is needed to test the productivity of Point Thomson, although DNR’s Commissioner Irwin rejected the companies’ proposal.

Foerster’s main point is that if a gas cycling project shows the Point Thomson reservoir can perform, the  cycling project will need to expand to produce most of the liquids before the gas can be produced. That’s because the gas, being reinjected underground, maintains the pressure of the reservoir, which allows the liquids to be produced. If the fluids do flow through the rock, and cycling works, Point Thomson will have to produce liquids for a few years before gas can be produced. However, if the reservoir rocks cannot perform the liquids loss will have to be accepted and the field facilities will be converted to gas production.  Point Thomson gas would then be available much sooner.

The schedule in Juneau, July 9 – July 13:

Wednesday, July 9:  Roundtable on in-state energy, 1:30 p.m. – 4:30 p.m.

Includes: Alaska Natural Gas Development Authority; Alaska Gasline Port Authority; Enstar Natural Gas Co.; Steve Porter (legislative consultant); Dan Dickinson (legislative consultant); TransCanada Corp. (Tony Palmer); state administration (Revenue Commissioner Pat Galvin).

Presentation on Point Thomson, 6 p.m.-8 p.m.

Steve Porter, legislative consultant

Thursday, July 10: Presentations

Denali pipeline, 8 a.m. to 10 a.m.

TransCanada, workforce issues, 10:30 a.m. – noon

TransCanada, 1:45 p.m. – 2:45 p.m.

ExxonMobil, 3 p.m. – 5 p.m.

CBI Mediation Group – 6:30 p.m.-8 p.m.

Friday, July 11: Roundtable on economic issues, 9 a.m. – 5 p.m.

Shippers:  ExxonMobil, BP, ConocoPhillips, Chevron, Pioneer, Anadarko,

Steve Porter, legislative consultant

Dan Dickinson, legislative consultant

Cathy Foerster, AOGCC Commissioner

Tony Palmer, TransCanada

State Administration

U.S. Sen. Ted Stevens will address legislators from 12:15 p.m. to 1:15 p.m.

Analysis of presentations: Steve Porter, legislative consultant, 6 p.m. to 8 p.m.

Saturday, July 12: Economic issues, Project risk, oil and gas offtake

Shippers:  ExxonMobil, BP, ConocoPhillips, Chevron, Pioneer, Anadarko,

Steve Porter, legislative consultant

Dan Dickinson, legislative consultant

Cathy Foerster, AOGCC Commissioner

Tony Palmer, TransCanada

State Administration

Sunday, July 13: Legal issues, AGIA license, Canadian First Nations

Bradners’ Legislative Digest is a private subscription service publishing reports on the Alaska Legislature and state government. This briefing is a special service, and is provided in cooperation with the Alaska Journal of Commerce.