ExxonMobil said April 22 that it has begun production at Point Thomson. In addition to being the first ExxonMobil-operated field on Alaska’s North Slope, Point Thomson is also the most easterly production on the Slope. Production from that field is a long-awaited culmination of a process which began with initial leasing in 1965, progressed through exploration drilling and then through a long struggle with the state over development at the high-pressure condensate field.
Point Thomson production is natural gas condensate, with the liquid extracted from the natural gas, which is then reinjected into the high-pressure reservoir to maintain pressure and for future natural gas production.
Central pad facilities at the field are designed to initially produce some 5,000 barrels per day of condensate and 100 million cubic feet per day of recycled gas, ExxonMobil said. At full production, anticipated when the west pad comes online in a few months, the facility will produce some 10,000 bpd of condensate and 200 million cubic feet of recycled gas.
Major working interest owners at Point Thomson are ExxonMobil, BP Exploration (Alaska) and ConocoPhillips Alaska.
Resource
ExxonMobil said the reservoir at Point Thomson holds an estimated 8 trillion cubic feet of natural gas and associated condensate, representing 25 percent of the known natural gas on the North Slope. The company said potential future development is dependent on factors such as business considerations, investment climate and fiscal and regulatory environment.
Major North Slope producers, with ExxonMobil in the lead, are working with the state on an Alaska liquefied natural gas project which would be based primarily on natural gas from the Prudhoe Bay field, but also include natural gas from Point Thomson.
“The successful startup of Point Thomson demonstrates ExxonMobil’s project management expertise and highlights its ability to execute complex projects safety and responsibly in challenging, remote environments such as the North Slope in Alaska,” Neil Duffin, president of ExxonMobil Development Co., said in a statement.
The company said ExxonMobil and working interest owners at Point Thomson invested some $4 billion in the development of production facilities at the field through the end of 2015, with some 100 Alaska companies working on the project.
“Our strong partnership with Alaskans and Alaska-owned companies played a critical role in helping to complete this major project,” Duffin said. “It further reinforces our commitment to pursuing the development of Alaska’s natural gas resources.”
A long struggle
The state has been struggling to get Point Thomson brought online for years.
The first leases in the field date from 1965 and the Point Thomson undefined oil pool was discovered in 1977 by Exxon at the Point Thomson Unit No. 1 well and confirmed in 1978 and 1979 by the Point Thomson Unit No. 2 and No. 3 exploratory wells. The Point Thomson area was unitized in 1977.
By 1983, Exxon and other companies had drilled 17 wells.
There were technical, economic, legal and regulatory challenges to development, but the issue came down to prioritizing condensate vs. prioritizing natural gas production.
For years the state deferred pressure on the Point Thomson owners to develop the field because there was no way to get resources, either oil or gas, to market.
Badami, about midway between Prudhoe and Point Thomson, came online in 1998, providing an oil pipeline covering half the distance. A connecting line from Badami to Point Thomson was built as part of the current development project.
There is still no gas pipeline to take the field’s major resource to market, but one would be built as part of the proposed Alaska LNG project, if that development moves forward.
2005 default
In 2005 the Alaska Department of Natural Resources put the unit into default and terminated it in 2006, a decision which the companies appealed. Alaska Superior Court sided with the companies, sending the issue back to DNR, which ultimately rejected a new plan of development in 2008.
The working interest owners appealed that decision to Superior Court, which sided with the companies.
The state petitioned the Alaska Supreme Court for review, halting the Superior Court litigation.
Meanwhile, ExxonMobil gained permission from the state to drill the first new wells at the unit in several decades, PTU No. 15 and PTU No. 16.
2012 settlement
A court-ordered settlement was reached in 2012, and the state and ExxonMobil created a timetable for bringing Point Thomson online by early 2016. The settlement included three alternatives for expansion beyond the 10,000 bpd of condensate in the settlement.
The first alternative is sanctioning of major gas sales by June 2016. That alternative is off the table as the pre-front end engineering and design phase of AKLNG is not scheduled to be complete before year end. The project partners - ExxonMobil, BP, ConocoPhillips and the state - will then determine whether to proceed to the front end engineering and design phase, which will have to be concluded prior to a project sanctioning decision.
The second option is expanding liquids production to at least 30,000 bpd by 2019. The third option is integrating Point Thomson and Prudhoe Bay operations to improve recovery.
When ExxonMobil applied to the Alaska Oil and Gas Conservation Commission for pool rules for Point Thomson it said it would prefer to transition from the present phase, the initial production system, directly into exporting natural gas.
ExxonMobil told the commission it was skeptical about expanding condensate production, with major impediments including limited condensate recovery and the high cost of the facilities and wells.
Integrating Prudhoe Bay and Point Thomson would involve using Point Thomson gas for Prudhoe Bay field operations. ExxonMobil said while that could accelerate Point Thomson gas sales by two years, that acceleration would be unlikely to justify the cost of implementation.
