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Vol. 16, No. 17 Week of April 24, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

More Thomson delay

Corps now a year behind on weighing permit for Alaska North Slope project

Wesley Loy

For Petroleum News

The U.S. Army Corps of Engineers is now running a year behind schedule in processing ExxonMobil’s application for a wetlands permit for its planned Point Thomson development on Alaska’s North Slope.

ExxonMobil needs the permit to proceed with a $1.3 billion project to produce natural gas condensate from the field, located along the remote Beaufort Sea shoreline near the western boundary of the Arctic National Wildlife Refuge.

The company has pledged to start producing 10,000 barrels per day by year-end 2014.

But a string of delays in completing a complex environmental impact statement for the Corps permit is putting pressure on ExxonMobil’s timetable.

And it appears the company itself is partly responsible for a new delay that’s just come to light.

Delay of several months

On April 19, agencies cooperating with the Corps on the Point Thomson EIS received a revised schedule for wrapping up the document, and for issuing a “record of decision” on ExxonMobil’s permit application. The agencies include the U.S. Fish and Wildlife Service, the Environmental Protection Agency and the Alaska Department of Natural Resources.

The new target date for publication of the record of decision is Aug. 2, 2012, the schedule shows.

That’s a delay from the previous target date of March 15, 2012, and a full year beyond the original goal of August 2011.

A draft EIS will be issued for public comment in November 2011, the Corps schedule shows. The Corps had previously aimed to release the draft by July.

Reasons for delay

A number of factors account for this latest schedule slippage, said Corps spokeswoman Pat Richardson.

After the cooperating agencies reviewed a preliminary draft EIS draft in January and February, some 2,000 comments came back, Richardson said.

ExxonMobil also offered some comments, and in February it submitted a modified project design, Richardson said.

The company made changes to its planned docking facility, airstrip and gravel mine, she said. Some changes also involved access roads to the airstrip and gravel mine.

In one change, ExxonMobil expanded its dock, requiring additional dredging. Another change involved some small fills alongside the airstrip, Richardson said.

Contractor HDR Alaska Inc. is preparing the EIS on behalf of ExxonMobil, under the direction of the Corps.

With so much new information to address, and with considerable writing and organizing of the EIS document still to do, “we could just see it was going to take more time,” Richardson said.

Hence, the latest schedule extension.

Legal cloud over field

ExxonMobil is the operator at Point Thomson, which also includes major partners BP, Chevron and ConocoPhillips.

Located about 60 miles east of Prudhoe Bay, Point Thomson is believed to hold some 8 trillion cubic feet of natural gas plus hundreds of millions of barrels of petroleum liquids.

Exxon discovered Point Thomson with wells drilled in the late 1970s, but the field has yet to produce. One reason is the lack of a pipeline to carry North Slope gas.

Point Thomson currently is bound up in a court fight between the oil companies and the state, which for years has pressured ExxonMobil to get on with development.

State officials have sought to terminate the Point Thomson unit and invalidate the underlying leases, and have suggested the acreage could be leased again to new owners.

ExxonMobil and its partners are fighting to keep the unit and the matter now rests before the Alaska Supreme Court, which has granted a stay in the case while the parties try to negotiate a settlement.

Even as the court fight has played out, the DNR commissioner in 2009 gave ExxonMobil permission to drill a pair of wells on two leases within what the state now considers the former the Point Thomson unit. The company has finished the drilling and said it would withdraw its rig.

Pipeline hinges on Corps permit

ExxonMobil plans to cycle natural gas to the surface, collect the condensate, and then jam the dry gas back down into the high-pressure reservoir.

To build out the development on the North Slope tundra, the company needs the wetlands permit from the Corps.

ExxonMobil plans to lay a new $80 million, 22-mile pipeline to carry Point Thomson liquids production west to the existing Badami pipeline. From there, the liquids ultimately would flow into the trans-Alaska oil pipeline.

The Alaska pipeline coordinator’s office has said it doesn’t plan to issue ExxonMobil a Point Thomson pipeline right of way until after the Corps makes a decision on the wetlands permit.

The schedule for completing the EIS, to be used as a basis for the permit decision, has been extended a number of times.

One delay resulted, in part, from a study to evaluate potential noise impacts from Point Thomson construction and operations on ANWR, located just east.

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