Point Thomson owners: No well in 2006

On Aug. 31, Point Thomson operator ExxonMobil submitted a revised 22nd plan of development to the Alaska Division of Oil and Gas, acceding to the division’s concerns that the field’s owners describe their plans to develop all potential hydrocarbon reserves at the field, not just the natural gas.

The plan remains focused on gas development, which ExxonMobil said would yield the best return for both producers and state.

But ExxonMobil is still not proposing to drill during this plan, which runs through Sept. 30, 2006, and has asked the state to defer the June 15, 2006, exploration well deadline to June 15, 2007. They have also asked to defer the drilling of seven development wells from June 15, 2008, to June 15, 2009, linking production to a North Slope natural gas pipeline project vs. developing the condensates in the reservoir first, which the state believes would capture more of the resources than a project which begins with gas sales.

In lieu of drilling in 2006, ExxonMobil is proposing a joint planning effort with the state to define the value of the information which would be gained from a well, and to determine whether the value would be great enough to justify the cost of a well.

The owners committed to begin development drilling by June 2006 when the unit was expanded in 2001. This summer ExxonMobil proposed that development drilling be deferred to coincide with a gas sales project. The division said it would accept an exploration well by June 15, 2006, to delineate the Thomson reservoir west of the Point Thomson Unit No. 1, in lieu of the start of development drilling, which could happen the following year (seven development wells by June 15, 2008).

Division Director Mark Myers told ExxonMobil that the state would enforce the expansion agreement if the owners fail to meet the work commitment: that means the expansion acreage would contract out of the unit. (The 2001 expansion-contraction agreement brought the unit which borders the coastal plain of the Arctic National Wildlife Refuge on the east to some 116,607 acres, with 40,364 acres added and 7,572 acres dropped.)

The division wanted the owners to apply to the Alaska Oil and Gas Conservation Commission for a conservation order for field gas off take, and ExxonMobil said the owners would do that. They will also prepare a schedule of activities to obtain permits, compare core samples from Badami wells with Point Thomson unit wells to evaluate Brookian reservoirs at Point Thomson and jointly with the state evaluate the value of information from another exploration/delineation well.

ExxonMobil told the state that not only is an exploration/delineation well not “justified at this time,” but the well planning to safely drill into the high-pressure Point Thomson formations has not been performed. The thorough planning effort necessary for such a well would not be possible until the well objectives are defined, the company said, and that definition would be an outcome of the joint work with the state.

—Kristen Nelson