Friday, August 3, 2012

Point Thomson could put 1,000 to work this winter

Tim Bradner
Alaska Journal of Commerce

A final environmental impact statement, or EIS, has been issued for the ExxonMobil-led Point Thomson gas cycling and condensate production project east of Prudhoe Bay, an ExxonMobil official told Alaska legislators on July 30.

A Record of Decision by the U.S. Army Corps of Engineers, which prepared the EIS, is expected, Lee Bruce, ExxonMobil Corp.’s manager for the project, told the Legislature’s natural gas caucus, a panel that meets to review gas projects.

ExxonMobil is now hoping for its federal and state permit by late fall, which would allow site construction at Point Thomson to begin in December, Bruce said. The company needs the Corps’ Section 404 permit and other state and federal authorizations. The project will put about 1,000 to work this winter if it proceeds on schedule, he said.

Point Thomson is a large gas and condensate field 60 miles east of Prudhoe Bay. It was discovered in the mid-1970s and delineated with drilling through the 1980s, but development has been stymied for lack of a gas pipeline. The field has an estimated 8 trillion cubic feet of proven gas reserves and about 200 million barrels of liquid condensates.

For several years ExxonMobil and its partners in the field, BP, ConocoPhillips and previously Chevron, were locked in a bitter dispute with the state of Alaska over having failed previous work obligations. An interim agreement allowed preliminary drilling to proceed on the current project in 2008 and 2009, and a full settlement reached this past March resulted in the full project getting underway.

“It is our vision to build trust with the state of Alaska that we can deliver this project as promised, and on time,” Bruce told the legislators.

ExxonMobil purchased Chevron’s interest in Point Thomson at the same time the settlement was reached.

The current project is a limited gas cycling and condensate production project that would ship 10,000 barrels per day of condensates to the Trans Alaska Pipeline System while re-injecting about 200 million cubic feet of gas back to the reservoir. Because Point Thomson reservoir pressure is over 10,000 pounds per square inch, the project would be the world’s highest-pressure gas compression and injection project, Bruce said.

Construction has already started on critical components for the project including storage tanks for 2.4 million gallons of fuel and steel Vertical Support Members for a 22-mile, 12-inch pipeline that will connect Point Thomson with the existing Badami pipeline that extends about 25 miles east of Prudhoe Bay.

A Doyon, Ltd. subsidiary has been awarded the contract to install the pipeline, and Doyon, which is based in Fairbanks, has subcontracted for the VSM fabrication, which is under way at North Pole, east of the Interior city.

Alaska Frontier Construction, another Alaskan firm, has the contract to do civil work at the Point Thomson site. Work in building roads, a 5,600-foot airstrip and expansion of gravel pads will be underway this winter. General Communications Inc., or GCI, is contracted to supply telecommunications to the site.

The infrastructure and pipeline engineering is nearing completion by PND Engineers and Michael Baker Jr., Bruce said, and the engineering on production facilities, by WorleyParsons/Fluor, is about 40 percent complete. A Hyundai subsidiary in Korea has been contracted to build the large process modules, which will be moved to the North Slope by sealift.

ExxonMobil has not released cost estimates for the project. Those were originally estimated at $1.3 billion but the estimates have escalated substantially since, according to state of Alaska officials who spoke on background. Bruce told the legislators that $700 million has been spent in an initial drilling of two development wells in 2008 and 2009.

Bruce said that what is being developed now is a first phase that would test the reservoir’s performance with gas cycling. It the reservoir performs well the condensate production can be increased. Alternatively, the facilities being built now could be used to support gas production for a gas pipeline or, absent that, for gas to be shipped west to the Prudhoe Bay oil field for enhanced oil recovery.

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