Wednesday, August 22, 2012

Corps’ moving target; Alaska leaders decry potential for further permitting delay on Point Thomson

Wesley Loy
For Petroleum News

The U.S. Army Corps of Engineers says more time might be needed to decide on a permit for ExxonMobil’s proposed Point Thomson development on Alaska’s North Slope.

Since late 2009, the Corps has been considering ExxonMobil’s application for a dredge and fill permit to construct a natural gas condensate development at remote Point Thomson, located about 60 miles east of Prudhoe Bay.

On Aug. 14, the Corps issued a statement on the status of the permit.

The Corps said it remains hopeful it can render a “record of decision” on the permit application by its target date of Sept. 21. However, the timing could change, the agency said.

“The target dates are estimated dates only and are established based on the volume and complexity of information we are reviewing in order to make a decision to ensure we are approving the least environmentally damaging practicable alternative,” the statement said.

The record of decision and permit “may not be complete until as late as Nov. 21,” the Corps said.

‘Bureaucratic foot-dragging’

The Corps issued the statement apparently in response to criticism from Alaska’s governor, Sean Parnell, and its senior U.S. senator, Lisa Murkowski. The two Republican leaders issued weekend press releases decrying what Murkowski’s release termed “bureaucratic foot-dragging” by the Obama administration.
A two-month delay in securing the permit could keep ExxonMobil from starting work in the upcoming winter construction season, they said. That, in turn, could jeopardize the company’s commitment to commencing first production from the field by the winter of 2015-16.

“This unexplained delay threatens to set production at Point Thomson back another year, costing the state of Alaska both jobs and millions of barrels of crude oil that’s urgently needed to boost throughput in the trans-Alaska oil pipeline,” Murkowski said in her Aug. 11 press release.

Parnell sent a three-page letter to Interior Secretary Ken Salazar, asking him to do something about “continued federal permitting delays” on Point Thomson.

The governor noted the Point Thomson project already is a year behind due to Army Corps delays in completing an environmental impact statement.

Parnell and Murkowski said they don’t want a repeat of the long permitting delays ConocoPhillips experienced on its CD-5 oil development in the National Petroleum Reserve-Alaska.

Exxon’s measured response

ExxonMobil spokesman David Eglinton on Aug. 15 provided Petroleum News this statement by email:
“U.S. Army Corps of Engineers approval is critical to progressing the project work required to put Point Thomson into production during winter 2015-16. We continue to work closely with the U.S. Army Corps of Engineers to provide requested information to support its work required for a final decision to allow Point Thomson construction to proceed. We will assess any schedule impacts following the Corps of Engineers’ final decision.”

The Point Thomson field is on state land along the Beaufort Sea coastline, adjacent to the Arctic National Wildlife Refuge.

State officials have pushed for its development for decades, and in March signed a legal settlement with ExxonMobil and its partners laying out a development schedule.

The initial project involves development of three well pads and gas-handling facilities, as well as a 22-mile pipeline. First production is expected to be 10,000 barrels per day of liquid condensate.

Point Thomson development will require billions of dollars in investment, ExxonMobil has said.

The company is working on multiple fronts to permit the site construction and pipeline, and to arrange the many contractors needed for the job. Generally, construction on the North Slope must be done in winter when the fragile tundra is frozen.

What should go where?

ExxonMobil is operator of the Point Thomson unit, with other major stakeholders including BP and ConocoPhillips.
Whether ExxonMobil will get the permit isn’t the issue; it probably will.

The question is what conditions will be attached. Specifically, it appears final decisions have yet to be made on placement of certain well pads, pipelines, roads and other features.

A number of scenarios were offered in the massive final EIS the Corps released July 27.

Because the majority of the Thomson Sand reservoir is beneath the Beaufort Sea, offshore development would maximize access. But such an approach was ruled out because of the added environmental risk and the availability of long-reach drilling technology, allowing for wells drilled from onshore pads, the EIS said.

ExxonMobil prefers placing the pads right on the coastline, and the state concurs. But some federal officials favor pushing some of the pads and other infrastructure inland.

While the Army Corps is the lead permitting agency for Point Thomson, two other federal agencies have been providing input — the Fish and Wildlife Service and the Environmental Protection Agency.

“In evaluating the proposed project under the Clean Water Act, we are committed to making a decision that balances protecting aquatic resources with reasonable development,” the Corps said in its Aug. 14 statement.

ExxonMobil has provided “some conceptual alternate location maps and figures” that weren’t in its permit application, the Corps said. The plans “depict a geographic shift” of the project’s east and west pads away from the coast “in an attempt to meet agency environmental concerns.”

In his letter to Salazar, Parnell wrote: “The Corps has received agency input on the Point Thomson project for almost three years. Any major amendments to the proposed project should not happen during the last stages of the permitting process.”

He asked the secretary to “exercise your authority to improve and coordinate permitting” of Alaska energy projects.

The Corps cautioned it was addressing many issues on the large Point Thomson proposal, and “target dates may move” on making a permit decision.

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