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Point Thomson owners slow up project State of Alaska extends unit contraction deadline, ups ante to $10 million Kristen Nelson Petroleum News Editor-in-Chief
Point Thomson development planning is taking longer than expected and a draft environmental impact statement due out early next year will likely be delayed.
Owners at the Point Thomson unit have asked the state of Alaska for extensions on development dates for the eastern North Slope field, and have met with agencies working on the environmental impact statement for the project.
“We are in a reevaluation stage at this point,” ExxonMobil spokesman Bob Davis told Petroleum News Aug. 11.
He said there are “cost challenges” on the gas cycling project “and also challenges relating to the reservoir.”
Davis said the Point Thomson partners are “looking at project options — potentially a revised gas cycling project and other options for development of the unit.” The plan being evaluated in the EIS included 13 production wells, a processing facility and a 22-mile pipeline to Badami.
The reevaluation is based on two factors, he said: “one is the cost of the original project relative to what we feel we could extract from the reservoir” and the other is “some new information that came in recently on the makeup of the reservoir that does present some challenges.” The companies are “still looking at gas cycling,” Davis said, but “it may be a different configuration or different facility from the original design and we’re looking at some other options as well.”
The companies should be in a position later this year to be more specific about those other options, he said.
Four companies hold more than 98 percent ownership in leases in the Point Thomson unit: ExxonMobil Production is the field operator; the other major owners are BP Exploration (Alaska), Chevron U.S.A. and ConocoPhillips Alaska. More time to complete assessment Division of Oil and Gas Director Mark Myers told Petroleum News that the state has given the owners “a six-month extension on the ability to drop out. They were supposed to pay $8 million at the end of June and give back all the expansion part of the unit if they didn’t make a decision to move forward with development (by June 30).” With the six-month extension came an increase in the drop-out penalty to $10 million, “pro-rated over a six-month period.”
The additional time, Myers said, will allow ExxonMobil “to complete its geological assessment and advance the EIS process.” He said the companies have “reprocessed some seismic, giving them a better view of the geologic structure” and should “have a lot better understanding of the reservoir modeling” by the end of the six-month extension.
The EIS was also taking longer than expected, Myers said. He said “a lot of reservoir is offshore” and so pad placement is a “big issue” in cost evaluation. There are also EIS issues for the pipeline to Badami, he said. “There are substantial issues around pipeline elevation: if portions have to be elevated and how high.” Two-year extensions requested In April, the companies requested two-year extensions from the Alaska Division of Oil and Gas for three commitments the companies agreed to as part of the state’s 2001 approval of unit expansion.
The division has agreed to only part of the requested extensions, which were for: the one-time election to contract the unit by June 15, 2003; to begin development drilling by June 15, 2006; and to complete seven development wells by June 15, 2008.
The division approved a one-month extension of the contraction election deadline in May. In June, the owners requested a six-month extension of the contraction election deadline, which the division granted, extending that deadline to Jan. 15, 2004, and increasing the charge for that contraction from $8 million to $10 million, with the amount to be paid prorated if the companies elect to contract new acreage prior to Jan. 15.
ExxonMobil’s Davis said no specific cost numbers have been released for the Point Thomson project, but the companies have invested some $800 million to date on exploration and other work in the unit. Point Thomson, which has been a unit since 1977, is in its 20th plan of development. 2001 expansion added some 40,000 acres The 2001 expansion added 40,350 acres to the Point Thomson unit, expanding it by almost 40 percent, and bringing total unit acreage to some 116,600 acres.
In addition to the one-time option to contract all expansion acreage out of the unit and pay the state $8 million to compensate for unrealized bonus payments during period acreage was withheld from leasing, the owners also committed to pay the state $20 million if development drilling did not begin by June 15, 2006, and $27.5 million if seven development wells have not been drilled by June 15, 2008. The 2008 date also triggers contraction of all of the expansion acreage.
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