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A step forward: Point Thomson now under wing of ExxonMobil Development Michael Flynn, development company vice president, tells Meet Alaska that company's technical strengths give it an edge in developing the high-pressure condensate field on the eastern North Slope Kristen Nelson PNA Editor-in-Chief
ExxonMobil is the operator of the Point Thomson unit on the eastern side of the North Slope on behalf of itself and major owners BP, ChevronTexaco and ConocoPhillips. Jack Williams, Alaska production manager for ExxonMobil Production Co., told the Alaska Support Industry Alliance Meet Alaska conference Jan. 24: “We're currently pursuing a gas cycling project … We're working hard to find an economic project here. We're still not sure we have one identified, but we're certainly as focused as we've ever been.”
But, Williams said, last summer ExxonMobil “transferred the project stewardship to ExxonMobil Development Co. This is one of five upstream companies in our corporation with a focus of doing exactly what we hope to do at Point Thomson, and that is developing.”
Michael Flynn, vice president of the Americas for ExxonMobil Development, said only recent technology developments have made the Point Thomson project “potentially viable.”
Point Thomson “contains about 8 trillion cubic feet of gas and 400 million barrels of condensate. The project would produce the gas to remove the liquids, then re-inject the gas,” Flynn said. The condensate would be treated and sent down the trans-Alaska pipeline as a liquid.
Design work is currently under way, he said, “and we're discussing the unique aspects of Point Thomson with state and federal agencies and local communities to balance the various needs related to permitting of this important project. And all of you are painfully aware of the permitting process.”
Flynn said that Prudhoe Bay, which has the world's largest gas cycling operation, some 7 to 8 billion cubic feet of gas are handled daily. Point Thomson will handle about 1.5 bcf a day.
Injection key challenge “The key technical challenge for Point Thomson will be the high injection pressure, about 10,500 pounds per square inch, considerably higher than Prudhoe Bay, which is 4,400 (psi). “
Flynn said Point Thomson is not unique, ChevronTexaco has a field where they will inject at 9,000 psi, but to put Point Thomson “in perspective … to generate that kind of pressure you would be 20,000 feet under the sea.
“It is a huge amount of pressure to contain within pipes and pressures. The machines that are built for this service are generally built by one specialty company, but the technology does exist.”
Two rigs are planned at Point Thomson, Flynn said, and extended reach drilling will be used to produce offshore reserves from shore, with some wells having a horizontal reach of about four miles.
“Another major drilling challenge is well complexity, which consider a combination of factors including depth, temperature and pressure” and will require 16 pound per gallon drilling mud.
“Industry has recently developed extensive experience with extended reach wells of this type, with this complexity,” Flynn said.
Technology makes project possible “Technology has enabled us to pursue this project,” he said. The old development scenario for Point Thomson — 10 to 15 years ago — called for eight well pads. The plan today is for three, Flynn said.
And compared to the old plan, “the average well production rate has increased from 40 million to over a 100 million cubic feet a day.” That rate is in line with a record Gulf of Mexico well ExxonMobil has at its Mobile Bay facility, which produced 126 million cubic feet a day, he said.
Because of higher well production rates, the planned re-injection “rate of 1.5 billion cubic feet per day is three times higher than the earlier scenarios, resulting in higher liquids recovery, which is what we need to make the project economic.”
Compared to the old development plan, these costs, adjusted for inflation, “are actually lower.”
Technology achievements for the project are impressive, Flynn said, but more progress is needed “as the project goes ahead because it is not robust.”
What is needed The schedule is important, as are timing and reasonable stipulations, and there are already schedule pressures.
“Project funding and schedule are dependent on timely permitting, with reasonable and acceptable stipulations that acknowledge the environmental mitigation that's already been included in our plan,” Flynn said.
ExxonMobil's “goal is to optimize the design and flawlessly manage to ensure costs and schedules are contained,” he said.
But there is already “pressure in meeting the early milestones.”
Flynn said “a clear and predictable regulatory process” is important.
So is certainty in the state fiscal regime.
And from contractors, he said, “we need locally knowledgeable, globally competitive companies committed to our priorities: … safety, quality, cost, schedule and working together as a team.”
Work on EIS under way Flynn did not talk about the schedule but Williams reviewed project status at the Resource Development Council's annual conference in November.
ExxonMobil has filed for pipeline right of way, he said, and has signed a memorandum of understanding with the U.S. Environmental Protection Agency and with the state of Alaska.
The EPA is the lead agency for the project environmental impact statement.
“If the EIS process is completed on schedule and the state permitting process runs in parallel then the Point Thomson owners will be in a position to make a decision to proceed with development during the first quarter of 2004,” Williams said.
And if the project gets a green light, startup is planned for early 2007 with peak rates of about 75,000 barrels a day in 2008.
“A year from now,” Williams said in November,” I hope to be up here telling you that the draft EIS has received public comment and efforts have begun on a final EIS. Such, again, that we could make a final decision in the first quarter of 2004.”
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