Exxon to expand Point Thomson under settlement terms

  • ExxonMobil is in early stages of planning to expand production at Point Thomson on the eastern North Slope. Liquids production began in April from the $4 billion project, but with no major gas sales sanctioned yet, the company is obliged to ramp up production under terms of the 2012 settlement with the state. Photo/Courtesy/ExxonMobil

ExxonMobil is in the early planning stages to at least triple production from its Point Thomson natural gas facility.

Corporate spokesman Aaron Stryk wrote in a response to questions from the Journal that the company is progressing planning for “potential gas expansion concept” that would ultimately supply natural gas to the $45 billion-plus Alaska LNG Project.

Expanding the gas processing facilities and increasing production from the large Eastern North Slope gas field would also comply with the development schedule laid out in the Point Thomson Settlement Agreement the company reached with the state in March 2012.

After reaching the agreement, ExxonMobil and the Point Thomson working interest owner companies, primarily BP, quickly spent $4 billion over the next several years and brought the gas field into production in late April.

The current facilities at Point Thomson are capable of producing up to 10,000 barrels per day of kerosene- or diesel-like natural gas condensates, or liquids, and 200 million cubic feet of natural gas.

Once produced, the liquids are sent down a 22-mile pipeline with a 70,000-barrel per day capacity — part of the $4 billion Point Thomson development project — to a common carrier line and into the trans-Alaska Pipeline System.

Natural gas produced from the field with 8 trillion cubic feet, or tcf, of gas is reinjected into the reservoir.

Point Thomson is one of the highest pressure producing gas fields on Earth, at about 10,000 pounds per square-inch. A positive of the reservoir pressure is that it makes separating the liquids from the gas much easier. According to company officials, the liquids essentially “fall out” of the gas once the pressure is relieved.

The settlement calls for the field owners to begin engineering and permitting for a gas cycling expansion project or one to ship gas 60 miles east to Prudhoe Bay for injection into the oil field to enhance oil recovery if a major gas project was not sanctioned by June of 2016.

It also set first gas and condensate production from Point Thomson to be no later than May 1 of this year. Stryk said it is too early to have a cost estimate for the expansion project.

Holding more than 35 tcf of natural gas combined, Prudhoe and Point Thomson are the gas sources for the Alaska LNG export project.

The viability of a Prudhoe gas injection project has previously been dismissed. The gas expansion project prescribed in the settlement calls for production of at least an additional 20,000 barrels of natural gas liquids.

ExxonMobil and the other Point Thomson owners have through 2019 to commit to expanding condensate production if a gas project has not been sanctioned.

Even on the expedited project timeline being pursued by Gov. Bill Walker’s administration, the earliest the Alaska LNG Project would be sanctioned is late 2018, according to Alaska Gasline Development Corp. leaders.

As the operator of the field, ExxonMobil must submit its first plan of development for an expansion project to the Division of Oil and Gas next spring, per the settlement as well.

Oil and Gas spokeswoman Diane Hunt said in a formal statement that it is the division’s understanding that ExxonMobil is in the pre-permitting stages of gas facility expansion “and is setting up meetings with villages, native interests and other local stakeholders.”

First discovered in 1977, Point Thomson’s development is a saga that stretches back to former Gov. Frank Murkowski’s administration.

The Murkowski administration pulled ExxonMobil’s Point Thomson leases in 2006, contending the company did not uphold its responsibility as a leaseholder to develop the field at the time.

A subsequent lawsuit reached the state Supreme Court in 2012, and former Gov. Sean Parnell’s administration reached the Point Thomson Settlement Agreement before a court ruling.

09/21/2016 - 7:07pm