Long the bad boys of the oil and gas industry in Alaska, Exxon Mobil is making progress on one of the most important developments in the state, a long-fallow natural gas field that appears to be quietly moving ahead as other big projects struggle.
Dubbing its Point Thomson project a "new era" for Exxon in Alaska, the long despised oil giant -- infamous for the Exxon Valdez oil spill in 1989 and for years of bitter litigation against fishermen and the state -- has already spent some $1 billion getting the remote gas field ready for development, an executive said.
Exxon's history at Point Thomson, a huge natural gas field containing a quarter of the North Slope's massive reserves, is another reason the company has been hated by many Alaskans. Exxon had dragged its feet on development for years, forcing the state to sue in an attempt to take back the leases.
The 2012 settlement that resulted, and the work that has taken off in the past year, comes on the heels of 21 other development plans that were scrapped by Exxon over more than three decades.
The work happening now represents important milestones, including that this field will be the first Exxon-operated field in Alaska, said Karen Hagedorn, the company's production manager in Alaska. Also, it's the first time a field containing primarily natural gas -- not oil -- is being developed on the North Slope.
Where other big Alaska natural resource projects are struggling -- from the embattled ore prospect called Pebble to Shell's oil exploration in the Arctic Ocean -- Exxon is opening up a new development front some 60 miles east of Prudhoe Bay on the edge of the Arctic National Wildlife Refuge.
"It really represents a strategic next step for Alaska," said Hagedorn, speaking at the Anchorage Chamber of Commerce luncheon on Monday. With an attractive investment climate, it will set the stage for large-scale natural-gas production and provide infrastructure useful for other developments.
The state believes Point Thomson contains 8 trillion cubic feet of natural gas, making the project a critical part of the proposed 800-mile-long pipeline that Alaskans have long sought so the gas can be sold overseas. The 150-square mile unit, located onshore and in the Beaufort Sea, also contains about 200 million barrels of condensate.
So far, the plans at Point Thomson are small, with Exxon planning to strip liquid condensate out of natural gas, then reinject the gas back into the ground. Initial plans call for 10,000 barrels of condensate to be shipped into the trans-Alaska oil pipeline per day. That condensate will be counted as oil, slightly increasing the state's dwindling oil production that's currently about 540,000 barrels per day.
The condensate production is supposed to begin in early 2016. With the agreement between the state and Exxon calling for at least 30,000 barrels of condensate production, and Exxon building a pipeline that can handle 70,000 barrels of condensate daily, the production could grow.
But the project is technically and economically challenging because the gas under the ground is highly pressurized.
Some highlights of the project so far:
• Exxon has contracted with more than 65 Alaska companies and hired more than 1,000 Alaskans, including more than 500 working at the site at a single time last summer.
• Doyon Associated has installed about 2,300 vertical support members that will carry a 12-inch pipe some 22 miles so it can be tied into the trans-Alaska pipeline network.
• Alaska Frontier Constructors is currently in the lead contracting role, and has built such things as a 5,600-foot airstrip that can now take large cargo planes, a pier to handle barges, and opening up a gravel mine in the tundra.
• Camps have been installed to handle more than 600 workers, and four huge tanks holding some 2 million gallons of diesel fuel help power the operation.
This winter, plans call for the construction of the 22-mile-long pipeline as well as 5 miles of smaller, gathering pipeline. Some 50 miles of ice road will be built to facilitate that work. Also, Exxon plans to build 70 square miles of gravel pads to support the two pads where drilling will eventually occur.
Things start to get "really interesting" next winter, said Bryan Johnson, construction manager for Exxon. In early 2015, a drill rig capable of conducting directional drilling will arrive at the two well pads.
In late summer 2015, Exxon plans to ship in 12,000-ton production modules that are currently being built by Hyundai Heavy Industries in Ulsan, South Korea, Johnson said.
"It will take several months to get those things up and running," he said. The production modules will play the key role in stripping the condensates out of the gas.
The field's first class of long-term operators has also been hired and has received about six months of classroom training, said Hagedorn. They are 11 Alaskans fresh out of technical schools, from places such as Barrow, Fairbanks, Homer, Kenai and Soldotna.
"We are calling them the class of 2013," she said.
A couple of weeks ago they started an on-the-job training rotation at an Exxon high-pressure gas facility in Mobile Bay, Ala.
"They're a great group of people and really energetic and excited," she said.
Contact Alex DeMarban at alex@alaskadispatch.com