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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Exxon wins right of way

New Alaska North Slope pipeline will carry Point Thomson natural gas condensate

Wesley Loy

For Petroleum News

ExxonMobil’s planned Point Thomson development is over another hurdle, as Alaska officials have granted a right of way for a new pipeline to support the project.

It’s the second major authorization the company has received since late October. The first was a wetlands permit from the U.S. Army Corps of Engineers.

ExxonMobil still needs a variety of state and local permits, but the way now appears nearly clear for the company to begin construction this winter as planned.

Dan Sullivan, Alaska’s natural resources commissioner, signed the right-of-way lease for the pipeline on Oct. 31. Taking the lease was PTE Pipeline LLC, an ExxonMobil unit formed to build and operate what will be known as the Point Thomson Export Pipeline.

Long time coming

The Point Thomson field is situated on state-owned land along the Beaufort Sea coast, about 60 miles east of Prudhoe Bay.

Although Exxon discovered Point Thomson with wells drilled in the late 1970s, the field has yet to produce any oil or natural gas. It remains one of the largest proven, undeveloped fields not only in Alaska but in North America.

Point Thomson is believed to be especially rich in gas, holding an estimated 8 trillion cubic feet or about a quarter of total North Slope reserves. But the lack of a North Slope gas pipeline has precluded development of the gas.

Under a recent legal settlement with the state, ExxonMobil agreed to go forward with the initial project to produce condensate, a light liquid hydrocarbon associated with natural gas. The project could lead to a fuller development of Point Thomson, at a potential investment cost of billions of dollars.

On Oct. 26, the Army Corps issued a permit for construction of well pads, roads and other field infrastructure, plus the export pipeline. The permit allows activity that disturbs wetlands and navigable waters.

30-year lease

The above-ground Point Thomson pipeline will be 22 miles long and will run west along the Beaufort Sea coast, connecting to BP’s existing Badami pipeline. From there, Point Thomson production ultimately will flow into the 800-mile trans-Alaska oil pipeline.

ExxonMobil has estimated the cost of the new line at $253 million.

The common carrier pipeline will feature “an eventual design capacity for up to 70,000 barrels a day.” But ExxonMobil expects production of only 10,000 barrels per day of condensate to start. The company is aiming to begin production at Point Thomson in the winter of 2015-16.

The state right-of-way lease is good for 30 years, expiring on Oct. 31, 2042.

The lease calls for the lessee, PTE Pipeline, to pay the state an annual rental amount of $819,755.64 during the period of pipeline construction. Going forward, the rental payment will be subject to adjustment based on appraisals.

PTE still needs a further authorization from the Regulatory Commission of Alaska in the form of a certificate of public convenience and necessity to build and operate the Point Thomson Export Pipeline.

The RCA held a hearing on the matter on Oct. 23, and could issue the certificate by the end of November.

Other major stakeholders in the Point Thomson field include BP and ConocoPhillips.



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