|
Exxon disputes Pt Thomson denial
ExxonMobil Production Co. has responded to the rejection of portions of its Point Thomson plan of development by the Alaska Division of Oil and Gas.
In an Aug. 29 decision, division Director Chantal Walsh said the division was approving the initial production system plan of development which ExxonMobil submitted as Point Thomson unit operator, but denying the expansion project planning POD as “inconsistent with the Settlement Agreement” of 2012 between the Point Thomson unit working interest owners and the state.
“All actions by ExxonMobil have been and continue to be in full compliance with the terms of the Settlement Agreement, dated March 29, 2012, with the State of Alaska,” Cory Quarles, ExxonMobil’s Alaska production manager, said in an Oct. 12 response addressed to Department of Natural Resources Commissioner Andy Mack.
Quarles said the POD “is a single plan of development for the Point Thomson Unit as contemplated by the Point Thomson Unit Agreement, the Settlement Agreement and DNR regulations,” not two separate PODs, one for the initial production system and one for the expansion.
Production issue Walsh had said ExxonMobil was in violation of the settlement agreement because it failed to: “Sustain production of at least 10,000 barrels of condensate per day and drill and place additional wells on production as necessary to maintain this rate of production.”
Quarles denied that the company had breached terms of the settlement, and quoted the agreement requirement that ExxonMobil construct and start up a facility “designed with the capacity to produce and reinject (cycle) 200 million cubic feet per day of gas, utilizing reciprocating compression and with the objective of a minimum of 10,000 barrels per day of condensate.”
He said ExxonMobil drilled and placed on production wells capable of producing and injecting 200 million cubic feet of gas per day, demonstrating that the facilities can produce and reinject 200 million cubic feet of per day and said the settlement agreement states that continuous operations exist even when planned or unplanned maintenance, repairs or upset conditions result in the temporary cessation of production.
Debottlenecking The division also said the settlement required ExxonMobil “to identify and pursue debottlenecking work that would increase capacity at its facilities,” but said the company had not identified and pursued debottlenecking as required.
In his response Quarles said ExxonMobil has evaluated potential debottlenecking opportunities and while “rigorous production system testing has not identified any action that could be undertaken at this time” the company “will continue to explore potential debottlenecking opportunities.”
Permitting for East Pad Walsh said that the proposed POD did not address permitting for the East Pad, an East Pad well or any additional wells.
Quarles said that ExxonMobil continued permitting for the East Pad and East Pad well after the settlement was reached, and said its “current assessment is that an East Pad and well would not be necessary for the Point Thomson Expansion Project.”
Quarles said “ExxonMobil began permitting and engineering for an expansion project consistent with the terms of the Settlement Agreement and that work activity is continuing,” but, he said, certain work has to be done before other work can occur.
As an example, he said, detailed engineering and permitting work which would be done during FEED, front-end engineering and design, “could be influenced by the arrangements reached with the Prudhoe Bay Unit owners for delivery of gas to Prudhoe Bay.” It is not, Quarles said, as the division asserts, that all planning work is conditioned on an agreement, “and engineering and permitting work is ongoing.”
He said that as unit operator ExxonMobil must obtain authorization from the working interest owners to progress expansion work - and noted that the work is detailed in an attachment included with the letter.
The expansion In responding to a division request for information on what would be used in an expansion, Quarles referred to the POD and said current planning for the expansion is to produce 920 million standard cubic feet per day of gas and more than 50,000 barrels per day of condensate.
Permitting efforts for a potential expansion, ExxonMobil said in an attachment to Quarles’ letter, have been ongoing since early 2016, with the initial focus a major gas sales in conjunction with an Alaska LNG project.
“The current focus is on a gas ‘blowdown’ to Prudhoe Bay through PTEx. PTEx would utilize similar facilities as those contemplated for a major gas sales project, and much of the earlier work has been able to be leveraged,” the company said.
Phased project ExxonMobil said work plans in the plan of development “incorporate a project execution strategy that uses a disciplined stepwise approach to identifying, designing, and ultimately building and operating a viable development project.”
The POD references some earlier and ongoing work, the company said, “but focuses on the activities planned to occur during the POD period.”
ExxonMobil said in the attachment that it “recognizes DNR is seeking a better understanding of expansion project plans,” said it appreciated a “cooperative meeting” held Oct. 9 and noted the attachment provides “explanatory detail and clarification regarding development planning and processes for Point Thomson.”
Quarles said in his letter that “ExxonMobil remains committed to continued discussions with the DNR to ensure a full understanding of the POD and owner plans necessary to confirm ongoing compliance with the Settlement Agreement,” and said the company would continue operation of the IPS as provided in the POD.
- KRISTEN NELSON
| 