Gas pipeline improves Point Thomson economics

Kay Cashman

Petroleum News Publisher & Managing Editor

When North Slope producers, BP, ConocoPhillips, ExxonMobil, and MidAmerican Energy Holdings Co. filed natural gas pipeline applications with the state of Alaska (see page A1 story) this month, they brought a North Slope gas pipeline a step closer to reality. They also increased the likelihood of Point Thomson unit development because a gas pipeline to take the slope’s stranded gas to market vastly improves the economics of the eastern North Slope unit, which contains a world-class natural gas resource.

Point Thomson’s principal owners — operator ExxonMobil, BP, Chevron and ConocoPhillips — have been trying to find a way to make a gas cycling project work for the unit. Their intent was to produce liquid condensate until a gas pipeline was built that could deliver Point Thomson’s 8 trillion cubic feet of gas to market.

But ExxonMobil told the state in December that a standalone gas cycling project was not economic. (See follow-up story on page A11.)

A gas pipeline from the North Slope would give Point Thomson owners the option of selling gas along with liquids, Bill Van Dyke, petroleum manager with the Alaska Division of Oil and Gas, told Petroleum News in a Jan. 21 interview.

“There are several scenarios open for Point Thomson with a gas line in place, not just one,” Van Dyke said.

One scenario would be “no cycling at all, so they wouldn’t have to re-inject the gas, avoiding the re-injection capital and operating expense. They could just produce gas, strip out the liquids, and move the liquids to TAPS and the gas to the gas line. That would dramatically change the economics for the better, but it would also ultimately negatively impact the liquids recovery from the field,” he said.

Another scenario would be partial gas cycling: “If you were producing 2 bcf a day, for example, you could sell 1 bcf and cycle the other bcf back into the reservoir.,” Van Dyke said.

“A gas sale also opens up options to move some or most of the processing to Prudhoe Bay. Point Thomson could essentially be just a drill site. You could take the fluids through a flow line to Prudhoe where they already have separation equipment. You could have a sparse operation at Point Thomson. You can probably do everything cheaper at Prudhoe which is not as remote. You also might not need a road to Point Thomson,” he said. (See related road story on page B1.)