The Regulatory Commission of Alaska has granted an ExxonMobil subsidiary a certificate and construction permit for a new pipeline on the eastern North Slope.
The RCA approval is the latest in a series of key authorizations ExxonMobil has secured in recent weeks for its planned natural gas condensate development in the Point Thomson field.
The pipeline will carry the liquid condensate 22 miles along the Beaufort Sea coastline, tying in with BP’s existing Badami pipeline. From there, the condensate will enter the Endicott pipeline and ultimately the trans-Alaska oil pipeline.
In a 10-page order dated Nov. 30, the RCA granted PTE Pipeline LLC a certificate of public convenience and necessity, along with a construction permit.
PTE Pipeline is an ExxonMobil subsidiary formed to build and operate what will be known as the Point Thomson Export Pipeline. The commission found that the company is “able and willing” to properly construct and operate the line.
Major authorizations in handThe certificate and construction permit were major items on ExxonMobil’s permitting checklist for the Point Thomson project.
On Oct. 26, the Army Corps of Engineers issued a permit for field construction, including three well pads, roads, pipelines and other infrastructure. The Corps permit allows activity that disturbs wetlands and navigable waters.
On Oct. 31, Alaska’s natural resources commissioner, Dan Sullivan, signed a right-of-way lease for the export pipeline, which will cross state land.
Point Thomson is a remote oil and gas field on state acreage about 60 miles east of Prudhoe Bay. Discovered in the late 1970s, the field is particularly rich in natural gas with an estimated resource of 8 trillion cubic feet. Only Prudhoe has greater proven gas reserves on the North Slope.
Lack of a multibillion-dollar gas pipeline has kept the Slope’s gas reserves stranded in the ground. But state officials nevertheless have been keen to see some sort of production from Point Thomson, and in March signed a legal agreement with ExxonMobil to begin phased development of the field.
The initial project will involve producing gas condensate, which takes a liquid form and can flow through oil pipelines.
At the request of the RCA, which on Oct. 23 held a hearing on the proposed Point Thomson pipeline, PTE Pipeline filed a document defining gas condensate.
“Gas-condensate is present as gas in the producing formation,” the filing said. “It becomes a hydrocarbon liquid when it condenses from the produced natural gas as pressure and temperature fall below original reservoir conditions during production and surface handling in processing facilities. The condensate produced at Point Thomson will be dehydrated and stabilized at the Central Pad processing facility to meet oil pipeline specifications. Thomson Sand condensate is composed of predominantly shorter chain or lighter fraction hydrocarbons than Alaska North Slope crude oil. Condensates generally have higher American Petroleum Institute (API) gravities than crude oils and lower pour points and viscosities. Point Thomson Central Pad condensate sampling analysis showed API gravities ranging from 36 to 41 degrees ....”
Full field development at Point Thomson will require billions of dollars in investment.
The export pipeline alone is an expensive undertaking, including $18 million for materials, $190 million for engineering and construction, and $45 million for contingencies. PTE Pipeline told the commission no financing will be required as all funding will come from ExxonMobil, the RCA’s Nov. 30 order said.
Pipeline operations and maintenance is expected to cost about $26 million annually.
The RCA order said PTE Pipeline must file a tariff no later than 90 days before it begins service on the common carrier line. Transportation rates are expected to be quite high until volume builds. In a previous filing with the RCA, the company said the initial tariff for the Point Thomson line is estimated to range from $15 to $20 per barrel.
The 12-inch, insulated, above-ground pipeline will feature a design capacity of 70,000 barrels per day, well above the 10,000 barrels per day of condensate ExxonMobil expects to produce initially. The surplus capacity will accommodate fuller Point Thomson development, and perhaps production from other eastern North Slope developments.
The RCA order indicated PTE Pipeline was targeting early February for pipeline construction to begin. The company had requested approval, effective Dec. 1, for building ice roads to support the pipeline construction.
The commission directed PTE Pipeline to file a complete set of construction plans and specifications by Jan. 31.
Kim Jordan, an ExxonMobil spokeswoman in Houston, provided this statement to Petroleum News:
“We’ve secured the critical permits required for this winter’s activities, and depending on weather conditions, our winter construction season will likely run until late April or early May 2013. Our work this winter will focus on infrastructure development. Planned on-site activities include constructing gravel roads, an expanded site pad, construction camps, and an airstrip. Pipeline support members will be also be installed along the pipeline right-of way. We will also construct an ice road from Badami to our Point Thomson site — approximately 22 miles long. All construction activities will be conducted with mitigation measures in place to minimize impact on tundra, wildlife, aquatic resources and subsistence activities.”
ExxonMobil already has drilled a couple of production wells at Point Thomson.
The company has promised the state it will begin production by the winter of 2015-16.
Other major Point Thomson field stakeholders include BP and ConocoPhillips.