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Vol. 15, No. 40 Week of October 03, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Corps of Engineers permitting for Point Thomson lags 6 mos.

The U.S. Army Corps of Engineers is running six months behind schedule in completing the environmental impact statement, or EIS, for ExxonMobil’s natural gas cycling development at Point Thomson on Alaska’s eastern North Slope.

Just what this means for the company’s high-profile pledge to start producing from the disputed field by the end of 2014 is unclear. ExxonMobil spokesmen in Houston and Anchorage failed to provide any comment on the matter. But Petroleum News sources said no additional drilling is likely to occur for at least a year.

The Corps, in charge of preparing the EIS, originally estimated it would sign a “record of decision” in July 2011 and publish it in August 2011. (The need for an EIS was triggered by Exxon’s application for a Corps of Engineers wetlands permit.)

Now the target date is Jan. 19, 2012, the Corps says.

Corps representatives say their schedule, known as a “milestone tracker,” is regularly revised according to progress on the EIS.

A delicate subject

ExxonMobil had hoped for a record of decision on the EIS by mid-2011.

The company and its contractors need to get on with site work for the project at the field. One job is to develop a gravel mine, said Hank Baij, the Point Thomson EIS manager for the Corps.

Point Thomson is a delicate subject for ExxonMobil, which is locked in a court battle with the state for control of the field. Alaska officials have moved to reclaim the state acreage, frustrated that rich reserves of gas and petroleum liquids have yet to be produced decades after their discovery.

ExxonMobil and other stakeholders including BP, Chevron and ConocoPhillips are fighting to keep their leases and preserve the Point Thomson unit.

The state action spurred the operator, ExxonMobil, to drill two wells at Point Thomson to kick off a promised $1.3 billion project to cycle gas and collect condensates for shipment down the trans-Alaska oil pipeline.

ExxonMobil has said repeatedly it would begin production of 10,000 barrels a day of condensate by year-end 2014.

But it’ll need federal permits to develop and operate the Point Thomson production facilities.

Reasons for delay

Part of the reason the Corps schedule has stretched is to allow more time for studies and analyses necessary to write sections of the EIS, Baij said. One study, for example, is looking at noise expected to come from Point Thomson construction and operations. Another study involves mapping wetlands.

The Corps of Engineers is the lead federal agency for the EIS, while the Environmental Protection Agency, the U.S. Fish and Wildlife Service and the Alaska Department of Natural Resources are “cooperating agencies.”

Officials with DNR on Sept. 29 provided Petroleum News a summary of the EIS schedule.

The process began in October 2009 when ExxonMobil submitted its wetlands permit application and project description to the Corps.

The schedule slipped from the original decision target of August 2011 for a variety of reasons, DNR said.

• Agencies needed extended time to finalize project alternatives, and extra time was needed to rewrite a baseline environmental report.

• The method to evaluate project noise expanded. In particular, some people raised concerns about the potential for noise in the Arctic National Wildlife Refuge just east of Point Thomson. The original proposal for six days of monitoring was expanded to 50 days — 25 in summer and 25 in winter.

“As of this date, the issue of noise and how to address it is still not fully defined,” DNR said.

• The Corps changed Point Thomson EIS project managers, naming Baij to replace Julie McKim in June. The change resulted in additional delays, DNR said. (McKim took a new job in the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects.)

• The Deepwater Horizon oil spill was a distraction as people involved with the Point Thomson EIS in cooperating agencies — the EPA and the Fish and Wildlife Service — were diverted to the Gulf of Mexico disaster.

—Wesley Loy

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