ExxonMobil Alaska Production Inc. is moving ahead with a plan to expand condensate production at the Point Thomson unit and deliver natural gas to the Prudhoe Bay unit.
In the absence of a “major gas sale,” the company is required to pursue the project under the terms of a settlement with the state over the eastern North Slope unit. In a recent plan of development describing the cycling project, Exxon said it would prefer a gas sale.
“ExxonMobil will continue to work to make gas from PTU available to any MGS project (including a State LNG project) under bilateral, mutually-agreed and commercially reasonable terms,” ExxonMobil Alaska Production Manager Cory Quarles wrote to Division of Oil and Gas Director Chantal Walsh on June 30.
The expansion project would require scrapping some of the Initial Production System brought online in early April 2016. Exxon would have to expand processing facilities to handle approximately five times as much condensate as the current configuration can accommodate, build a new natural gas pipeline connecting Point Thomson to Prudhoe Bay, drill three new wells and convert two existing injectors into production wells. The larger facilities would also require an expansion of an existing drilling pad at the unit.
Exxon requested that the plan of development go into effect retroactive to April 2, 2017. and run through the end of 2019 or to the start of a major North Slope gas sale or the start of an expansion of the existing condensate production effort launched in recent years. At the end of 2019, Exxon and its partners would decide if they would pursue the project.
Major expansion
Through its Initial Production System, Exxon produces condensate and gas from three Point Thomson wells, cycles the gas back into the Point Thomson reservoir and delivers the condensate to the trans-Alaska oil pipeline along the new Point Thomson Export Pipeline. The system can cycle some 200 million cubic feet of gas per day and ship 10,000 barrels of condensate per day, although Exxon claimed in the newest plan of development that the system has exceeded both of those figures on Dec. 20, 2016.
Under the expansion plan, Exxon would expand its facilities to handle peak production greater than 50,000 barrels of condensate per day and would deliver 920 million cubic feet per day to Prudhoe Bay along a new 32-inch pipeline running 62.5 miles between the two units. The shipments would be used to enhance oil recovery from the Ivishak reservoir at the Prudhoe Bay unit, where Exxon is the largest working interest owner.
The proposed scope of the expansion project, particularly the gas deliveries, “reflects preferred operation during the period of injection into Prudhoe Bay while also installing necessary infrastructure for a potential (major gas sale),” Exxon wrote in its plan.
To accommodate the proposed production increases, Exxon would drill two new production wells from the Central Pad at the Point Thomson unit and a new disposal well, and it would convert the PTU-15 and PTU-16 injection wells at the unit to production. The existing PTU-17 well would remain on production, for a total of five production wells.
The additional processing equipment, wells and pipeline connections would likely require an expansion at the southwest corner of the 50-acre Central Pad, according to Exxon.
The expansion system would be able to use a “majority” of the existing Initial Production System utilities, but most of the existing processing facilities would be “mothballed.”
According to the plan of development, an Exxon project team has already been studying ways to leverage existing permitting and design work toward the project, has met with the U.S. Army Corps of Engineers to describe the new project and started negotiating the commercial agreements needed to connect the Point Thomson and Prudhoe Bay units.
The company plans to use the next two and a half years to advance permitting, design and engineering work and commercial negotiations in order to have a detailed project to submit to its partners for a final decision about sanctioning in late 2019. “The work scope contained in the (plan of development) would allow for, but does not ensure the (working interest owners) will commit to the (Point Thomson Expansion) project,” Exxon noted.
Two paths
A plan of development typically outlines a work program at a particular field for the coming year, with clauses allowing an operator to revise in light of market uncertainties.
The plan of development for the Point Thomson unit is unique. Exxon is describing its work program for expanding condensate production, even though the company is opposed to the idea of expanding condensate production and would prefer to transition the unit into natural gas production to support a gas pipeline. The plan of development includes several references to pursuing a major gas sale, should one become feasible.
As part of a 2012 settlement with the state, Exxon agreed to pursue an expansion project if North Slope producers failed to sanction a major gas sale by a June 1, 2016, deadline.
