The Point Thomson unit owners will share results of evaluation of all potential hydrocarbon resources with the state of Alaska during the unit’s 2004-05 plan year, but the unit’s 21st development and operation plan remains — as it was in a draft — focused on gas.
Point Thomson unit operator ExxonMobil submitted the plan to the Alaska Department of Natural Resources Division of Oil and Gas at the end of August.
In a shorter draft plan, submitted in June, the Point Thomson owners focused on gas development, and told the state that during the plan, which will run Oct. 1, 2004, through Sept. 30, 2005, they proposed to “focus on progressing technical and commercial evaluations necessary to assure” they would be in a position to participate in an open season for North Slope natural gas sales.
State officials proposed extensive changes to the draft, and specifically requested that it include work on both gas and oil resources.
The plan submitted by ExxonMobil Aug. 31 does not include the state’s wording, which said the owners “will evaluate all hydrocarbon resources within the unit area to develop a comprehensive unit plan”, but does say the owners will share with the state “results of evaluations and other work associated with potential hydrocarbon resources within the unit area, including the Brookian and Pre-Mississippian reservoirs…”
Gas injection project not viable
In an Aug. 31 letter accompanying the plan, Robert Schilhab of ExxonMobil Production, chairman of the Point Thomson unit owners committee, told division Director Mark Myers that the unit owners anticipate sharing “a large amount of data and interpretations covering geophysics, geology, reservoir modeling and economic modeling” with the state “under the terms of an anticipated memorandum of understanding covering the confidentiality of this data.”
The data, Schilhab said, will be provided to assist the state in gaining a “more complete understanding” of the development alternatives for Point Thomson, “and in anticipation of our working together to establish a reasonable course forward for field development that will accomplish the objectives” of both the state and the unit owners.
The owners have said they have not been able to identify a viable gas injection project “under current fiscal terms.” The plan the owners had been working on was to produce condensate from the high-pressure reservoir at Point Thomson, separate and sell the oil and re-inject the gas. Permitting activities for the gas injection project were suspended in the third quarter of 2003 “due to project scope, design and feasibility uncertainties.” During the 2003-04 plan the owners completed “a cost reduction and execution optimization study” begun in 2002-03 and, they told the state, while “significant cost reduction potential” was identified, “it was not sufficient to yield a commercially viable” gas injection project.
Preparing for gas sales
Major owners at Point Thomson include ExxonMobil, the field operator, BP, ConocoPhillips and ChevronTexaco. BP, ConocoPhillips and ExxonMobil are the major Prudhoe Bay natural gas owners, and all of the companies, the plan says, depend on Point Thomson gas “to underpin firm supply commitments for major gas sales.”
During the 2004-05 plan year, the unit owners will: “Develop a conceptual gas sales depletion plan … Conduct screening evaluations of Point Thomson gas sales production facilities…” and identify and begin additional “gas sales planning and technical work” as necessary to support Stranded Gas Development Act negotiations with the state.
The owners will consult with the Department of Natural Resources and review the economic spreadsheet model for the gas injection project and “carry out an economic evaluation of a gas sales only scenario,” including a preliminary economic evaluation of a gas injection followed by a gas sales scenario, and present results of all three evaluations to the department.
ExxonMobil said the owners will also “advance final negotiations toward a new unit operating agreement with the objective of securing approval by the aligned owners and the smaller interest owners.”
