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Vol. 16, No. 18 Week of May 01, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Exxon’s Thomson warning

Permit delay ‘will directly impact’ start-up of Alaska North Slope gas project

Wesley Loy

For Petroleum News

ExxonMobil is suggesting its Point Thomson project on Alaska’s eastern North Slope might not make its projected start-up date due to further delays in securing a federal wetlands permit.

The U.S. Army Corps of Engineers, which is the lead agency reviewing ExxonMobil’s project, is now running a year behind on its original estimate for concluding an environmental impact statement and rendering a permit decision.

ExxonMobil had pledged to construct facilities and begin production from Point Thomson by year-end 2014. But that timeline now looks questionable.

“ExxonMobil can confirm that the revised schedule for the U.S. Army Corps of Engineers Record of Decision for the Point Thomson Project Environmental Impact Statement will directly impact timing of project site work and ultimately start-up,” company spokeswoman Margaret Ross said in an April 21 e-mail to Petroleum News.

Decision delayed to August 2012

This would appear to be the first time ExxonMobil has wavered on its target for first production from Point Thomson.

ExxonMobil is operator at Point Thomson, located along the Beaufort Sea coast just west of the Arctic National Wildlife Refuge. Other major stakeholders include BP, Chevron and ConocoPhillips.

ExxonMobil is planning a development to cycle natural gas and collect condensate from the high-pressure field.

The company is aiming to produce 10,000 barrels of condensate per day, sending it through a planned 22-mile pipeline that would link up with the existing Badami pipeline to the west. Ultimately, the liquid would go down the trans-Alaska oil pipeline.

ExxonMobil already has drilled two wells at Point Thomson for the project.

But before it can build a production base to process the gas and gather the condensate, it needs the wetlands permit from the Army Corps.

After receiving ExxonMobil’s permit application, the Corps began work on the EIS at the end of 2009. Originally, the Corps projected a record of decision in August 2011.

But a series of schedule extensions, the latest coming on April 19, has pushed out the decision date to August 2012, a full year beyond the original estimate.

The Corps has attributed the schedule slips to such factors as completing certain studies, weighing input on the EIS from other agencies, and considering ExxonMobil’s project design changes.

“ExxonMobil has worked collaboratively with the Corps to fully support the EIS process with timely submission of technical information,” the e-mail from ExxonMobil’s Ross said. “We will continue to work with the Corps, and the cooperating state and federal agencies, to seek EIS schedule improvement opportunities while maintaining the quality of the process.”

Important court date nears

Point Thomson is a hugely important but contentious issue for the state and industry.

The field is believed to be extremely rich in natural gas as well as petroleum liquids, and development of those resources would mean taxes and royalties for the state and good work for oil field contractors.

But Point Thomson has yet to produce anything, despite having been discovered more than three decades ago.

Tired of the slow progress toward development, the state in recent years has taken action to break up the Point Thomson unit and invalidate leases on the state acreage. ExxonMobil and the other oil companies are fighting to preserve the unit, and the matter currently stands before the Alaska Supreme Court.

Lawyers for the state and ExxonMobil have been trying to hammer out a settlement, which has kept the case on hold for several months. But the high court has signaled a limited appetite for waiting much longer, and has set a May 5 deadline for the two sides to either show a deal is near or get on with the proceedings.

Thus, we could learn much by that date on Point Thomson’s fate.

“ExxonMobil remains committed to finalizing settlement of Point Thomson Unit issues with the State and continuing with timely, cost effective and prudent resource development,” the company said.

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