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Extra time for Pt Thomson POD
The Alaska Division of Oil and Gas has given ExxonMobil Production extra time to submit a new plan of development for the Point Thomson field, necessitated by terms of the 2012 settlement the state reached with the company for the field’s development.
In an April letter, Division Director Chantal Walsh said the settlement agreement provides that the POD for the initial production system runs through May 1, 2017. The settlement specifies that an expansion planning POD will be submitted by July 1 (90 days after the first anniversary of IPS startup) and approved Aug. 30.
ExxonMobil requested the division to confirm that the initial IPS POD would remain in effect until the division has approved the expansion planning POD.
But, Walsh said, the settlement agreement says the IPS POD is effective only until May 1, 2017, thus Point Thomson would be “without an operative POD” from May 2 through late August.
“The unit agreement and regulations require a POD at all times,” Walsh said.
She went on to say that with the IPS POD supplied by the settlement expiring, future PODs, aside from specific PODs addressed in the agreement, are governed by the unit agreement and unit regulations, and the division has regulatory authority to extend a POD.
“To align the POD dates and maintain a POD for the IPS until a new POD can be approved,” Walsh said, the division is extending the existing POD until Sept. 29, and requires ExxonMobil to submit a POD 90 days earlier, on July 1.
“Exxon may choose to submit a single POD for the unit or separate PODs for IPS and Expansion Planning,” she said.
PODs in settlement agreement Leasing began at Point Thomson in 1965, oil was discovered in 1975 and the unit was formed in 1977. Additional wells were drilled, but no development occurred and in 2005 the director of the Division of Oil and Gas denied approval of the 22nd POD, the unit was terminated in 2008 and the owners appealed - the issue was in the Alaska Supreme Court when the settlement agreement was reached in 2012.
The agreement provides that if a major gas sale is sanctioned prior to the end of 2019, ExxonMobil will submit a future POD within 90 days of the sanction date which includes work plans and project activities needed for a major gas sale.
If a major gas sale has not been sanctioned by June 1, 2016, the settlement requires the working interest owners to begin engineering and permitting an expansion project and submit a future POD including work plans for evaluation and selection of an option of developing the Point Thomson reservoir expansion.
“The Expansion Planning POD shall be effective one year following IPS Project Start-up but no later than May 1, 2017,” the settlement says, and be in effect until the effective date of the expansion project, the effective date of a major gas sale POD or until Dec. 31, 2019, “if a Major Gas Sale has not been Sanctioned and the WIOs do not Commit to a Point Thomson Expansion Project prior to that date.”
Expansion project The settlement says that if a major gas sale has not been sanctioned by June of 2016, “the WIOs have committed to begin engineering of a Point Thomson Expansion Project.”
The cycling project expansion calls for additional condensate production. The IPS was designed to produce up to 10,000 barrels per day. The settlement agreement says expanding the cycling project (which produces and reinjects 200 million cubic feet per day) would take total condensate production to 20,000 to 30,000 bpd, “depending on the level of expansion.”
If reciprocal compression is used for gas cycling expansion a minimum of 10,000 bpd would be added to condensate production; a minimum of 20,000 bpd would be added if centrifugal compression is used.
The settlement agreement says the working interest owners have the discretion to decide on which method to use in an expansion.
The alternate is to deliver Point Thomson gas to Prudhoe Bay for injection, significantly increasing the rate of condensate production at Point Thomson and also serving as pre-investment for a major gas sale as it would “essentially complete installation of the Point Thomson wells and facilities required for a Major Gas Sale,” as well as materially increasing production from the Prudhoe Bay field, resulting in enhanced recovery from that field.
Securing acreage The agreement says certain acreage within Point Thomson would be secured at completion of and production from the initial production system and key commitments - to a major gas sale or Point Thomson gas development for Prudhoe Bay enhanced oil production.
The agreement also provides for automatic release of certain acreage to the state if the IPS is not completed or key commitments or decisions are not made.
- KRISTEN NELSON
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