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Months of anticipation and excitement Quarles characterizes the successful startup of ExxonMobil’s Point Thomson field on the North Slope as a new legacy for the company ALAN BAILEY Petroleum News
After the anticipation and excitement of the last few months, as the Point Thomson field on Alaska’s North Slope moved towards production startup, initiating the flow of condensate into the field’s export pipeline around noon on April 2 marked the beginning of a new legacy for ExxonMobil, Cory Quarles, the company’s Alaska production manager, told a meeting of the Resource Development Council on May 5. The safe execution of the Point Thomson project and the company’s $4 billion investment in the field demonstrates the company’s full commitment to the economic development of resources on the North Slope, Quarles said.
ExxonMobil publicly announced the field startup on April 22. Although initially only producing condensate, a mixture of low-density hydrocarbons, ExxonMobil anticipates the field, with about 8 trillion cubic feet of natural gas, to ultimately supply gas for a proposed gas export pipeline from the Slope, in a project called Alaska Liquefied Natural Gas, or AKLNG.
“Point Thomson marks the very first time that ExxonMobil has operated on the North Slope,” Quarles said. “It established strategic infrastructure for future North Slope gas production.”
The 11 million work hours that went into construction for the Point Thomson project did not result in any lost time incidents, a safety record that ExxonMobil plans to maintain, Quarles said. And the Alaska Oil and Gas Association has named Point Thomson as the project of the year for environmental stewardship and innovation, he said.
Condensate and gas The Point Thomson field reservoir contains a mixture of condensate and natural gas at an exceptionally high pressure. Because the reservoir pressure must be maintained to prevent condensate dropping out of solution inside the reservoir, and hence degrading the condensate production at the surface, gas at high pressure has to be continuously cycled through the reservoir using an appropriate configuration of injection and production wells. For initial production, ExxonMobil is using two injection wells, drilled from the field’s central pad, and a single production well on the west pad.
Because the reservoir extends beneath the waters of the Beaufort Sea, the wells have had to be drilled directionally from onshore to strategic points within the reservoir. The need for directional drilling into such a high pressure reservoir has compounded the technical difficulty of developing the field.
The initial field configuration has been designed in expectation of producing about 10,000 barrels of condensate per day. If the field is expanded for gas production that volume would presumably increase, although the efficiency of condensate production would decrease as gas production takes its toll on the reservoir pressure.
Quarles said that, recognizing that 10,000 barrels per day of condensate production is not the end game for the field, ExxonMobil built the field’s condensate export pipeline with a maximum capacity of 70,000 barrels per day.
Three factors Quarles said that there are three factors underpinning success at Point Thomson: technology, people and the company culture.
From the perspective of technology challenges, Quarles particularly homed in on the field’s exceptional 10,000 pounds per square inch reservoir pressure, a pressure that he said corresponded to the effect of an elephant standing on the end of someone’s thumb. That reservoir pressure is the highest in ExxonMobil’s global portfolio, and probably the highest of any producing field in the world, he said. And, to re-inject gas back into the reservoir, it is necessary to compress the gas to more than 10,000 pounds per square inch, he explained.
Technology also plays a significant role in environmental protection at Point Thomson. Having, for example, consulted with the nearby community of Kaktovik, ExxonMobil has implemented a system for the satellite image surveillance of caribou, rather than using low flying aircraft for this purpose. The local people were concerned about the potential disturbance caused by aerial surveys, Quarles said.
“To our knowledge this is the first time that satellite imaging has been used to monitor caribou on the North Slope,” Quarles said.
People and culture Likening the Point Thomson team to a second family, Quarles emphasized the importance of people in overcoming the field’s technical challenges and in efficiently bringing the field into production. The majority of both the construction team and the field’s operations team consist of Alaskans, he said. After sending the operations team for training at ExxonMobil facilities in the Lower 48, Quarles received feedback that this was the best group of new hires that the trainers had ever seen, he said.
And company culture forms the glue holding the company family together, Quarles said. ExxonMobil’s culture is rooted in the company’s Operations Integrity Management System, a system born from the learnings from the Exxon Valdez oil spill in 1989.
“It sets very clear and high expectations for things that matter most, and that’s keeping people safe and protecting the environment,” Quarles said.
Within ExxonMobil people hold each other accountable, to make sure that everyone does what they say they will do and that they place the highest value on risk management, he said.
The AKLNG project Quarles also talked briefly about the AKLNG project, re-iterating that ExxonMobil does not see the $4 billion that the company has spent on the Point Thomson field as being the end game for the field. With an estimated $45 billion to $65 billion price tag, AKLNG would be the largest investment of its kind in U.S. history - Point Thomson is a pre-investment in major natural gas sales from the North Slope, he said. AKLNG is currently pressing ahead through its pre-front end engineering and design phase, prior to making a decision on whether to proceed to the massive expense of engineering and design. A current focus is investigating options to reduce project costs, to make the project more competitive with other LNG projects globally, Quarles said.
The timing of the AKLNG project depends on three major drivers: the need to beat the market, the cost of the LNG supply and fiscal stability, he said.
The best option Asked what would happen to Point Thomson if the AKNLG project does not move forward, Quarles said that, while AKLNG represents the best option for the field, there are other options, which are being evaluated.
Asked a similar question during an ExxonMobil earnings call on April 29, Jeff Woodbury, vice president of investor relations, said that ExxonMobil takes a long term perspective and has “a constructive view” of what gas will do over time. The company is confident that Alaska gas will be commercialized at some point, although the means of doing that may vary from what is currently being considered, Woodbury said. ExxonMobil has been active with its partners in identifying the highest value opportunity that can compete globally. Putting in place a transparent, predictable and stable fiscal structure will be critical in underpinning such a significant investment, he said.
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