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ExxonMobil: ‘We're go' at Point Thomson

Tim Bradner

ExxonMobil Corp. has mobilized contractors to start construction on a multi-billion-dollar natural gas cycling and condensate production project at Point Thomson, a large but undeveloped Alaska gas discovery, a company spokeswoman said Dec. 7.

"We are a 'go' for this winter," spokeswoman Kim Jordan said.

Point Thomson is about 60 miles east of Prudhoe Bay on the North Slope.

Construction this winter has long been anticipated, but this is the first formal acknowledgement by ExxonMobil that it has authorized contractors to proceed. Point Thomson is the largest new North Slope project built in several years, and is being welcomed by the state's oil contractor and support industry concerned about the slowdown in new development work on the Slope.

An initial project will be construction of a 22-mile ice road to Point Thomson, but Jordan couldn't confirm whether ice road work has started yet. Winter weather has been warmer than usual on the North Slope, which could delay the start of work on the ice road.

Construction is normally done in winter on the North Slope, with work typically beginning in December when the tundra freezes sufficiently to allow equipment to work.

About 8 trillion cubic feet of gas and 200 million barrels of liquid gas condensates were discovered in 1977 by ExxonMobil but development has been stymied because of the remote location and lack of a way to move natural gas off the North Slope.

The state and the Point Thomson leaseowners, which include BP and ConocoPhillips as well as ExxonMobil, were previously engaged in litigation over a dispute on work obligations, but the suit was settled this past March.

ExxonMobil owns 62 percent of Point Thomson; BP owns 32 percent and ConocoPhillips owns about 5 percent. Chevron Corp., a previous owner, sold its share of Point Thomson to ExxonMobil last March when the settlement with the state was reached.

The companies' plan now is to produce natural gas, remove the liquid condensates, and inject the produced gas back underground. About 10,000 barrels per day of condensates would be produced in a first phase of development. The liquid condensates would be shipped to Prudhoe Bay by a 12-inch pipeline and mixed with crude oil in the Trans Alaska Pipeline System.

Production of condensates is expected to begin in the winter of 2015-16 and no later than May 2016, ExxonMobil has said in presentations to state officials.

Estimated cost of the project has not been disclosed but ExxonMobil has previously acknowledged that it is in the multi-billion-dollar range.

"Depending on weather conditions, our winter construction season will likely run untll late April or early May 2013," Jordan wrote. "Our work will focus on infrastructure development. Planned on-site activities include constructing gravel roads, an expanded site pad, construction camps, and an airstrip."

Construction crews will also install vertical support members, or VSM, for an elevated 22-mile pipeline from the field to a connection with the existing Badami field pipeline, which extends 25 miles east from Prudhoe Bay. About 2,200 VSM are to be installed this winter.

The pipeline is designed to transport 70,000 barrels per day to allow for transport of additional condensates or any crude oil developed separately in the area.

"We will also construct an ice road from Badami to our Point Thomson site, approximately 22 miles long," to allow access for vehicles and equipment moving from Prudhoe Bay, Jordan said.

Three production and facility pads are planned at Point Thomson. The main "Central Pad" will be 55 acres and will be expanded from an existing 12-acre pad built to support a well drilled previously.

The Central Pad will accommodate the large processing facility to be installed, living quarters, maintenance and warehouse facilities.

Two other pads will include a 17-acre West Pad that will have space for 8 production well slots. A 19-acre East Pad will also have room for 8 production well slots.

With the pipeline vertical support members installed this winter, the schedule calls for construction of the 12-inch pipeline next winter, 2013-14, and installation and hookup of the production modules and facilities in 2015. Those large units will be shipped to the North Slope by sealift but there will be additional components fabricated and trucked to the North Slope.

The project is seen as a first phase to test the performance of a gas cycling operation in the Point Thomson reservoir. If the project performs, it can be expanded to produce more liquid condensates, the company has previously told state officials.

If performance is inadequate the facilities can be converted to a conventional gas production project to support a proposed large-diameter North Slope gas pipeline, or the gas can be shipped to Prudhoe Bay to be used to re-pressure the reservoir there and produce more crude oil, state officials have been told.


By TIM BRADNER
Alaska Journal of Commerce