ExxonMobil working on plan for Point Thomson gas at Prudhoe
With the Alaska LNG Project far from a sure thing, ExxonMobil is preparing to stuff natural gas from its Point Thomson field into the Prudhoe Bay oil and gas pool in order to make good on its 2012 settlement with the State of Alaska.
ExxonMobil outlined the major, long-term project concept in the 2017 Point Thomson unit plan of development it submitted to the Division of Oil and Gas June 30.
Moving natural gas from Point Thomson for injection into the Prudhoe Bay field could be a way to further enhance oil recovery from Prudhoe. The reinjection of gas produced during oil production efforts at Prudhoe has been a primary driver behind BP’s ability to extract more than 30 percent more oil — currently about 12.5 billion barrels in total — from the massive field than was expected when it came into production 40 years ago.
Production facilities at Point Thomson would first be expanded to handle production of more than 50,000 barrels per day of natural gas liquids, or condensates, and 920 million cubic feet per day of gas.
Point Thomson is one of the highest pressure producing gas fields on Earth, at about 10,000 pounds per square-inch. A positive of the reservoir pressure is that it makes separating the liquids from the gas much easier. According to ExxonMobil officials, the liquids essentially “fall out” of the gas once the pressure is relieved.
Overall, the field holds about 8 trillion cubic feet of natural gas, which is about 25 percent of the known gas reserves on the North Slope. The Point Thomson and Prudhoe gas reserves would be the initial resources to supply a gasline project, such as the $40 billion Alaska LNG Project the state is pursuing with assistance from BP.
ExxonMobil, which operates Point Thomson, and BP, its primary working interest owner partner, spent roughly $4 billion developing the gas field since 2012. Production started in late April of last year.
Currently, the Point Thomson facilities were designed with an expected production capacity of about 10,000 barrels of condensates and 200 million cubic feet of gas per day. The condensates are sent down the Trans-Alaska Pipeline System and the gas is reinjected.
Fine-tuning the facilities allowed production to exceed 200 million cubic feet of gas and 10,000 barrels of condensate on Dec. 20, 2016, according to the planning document.
Getting the gas from Point Thomson to Prudhoe would require construction of a 62.5-mile, 32-inch diameter gas pipeline between the fields and production would be ramped up with the drilling of three new wells, according to the plan of development.
The two wells now used for gas injection would also be converted to production.
ExxonMobil Alaska Production Manager Cory Quarles wrote in a letter attached to the plan that the preferred way to further develop Point Thomson would be through a gasline project, but the expansion plan the company submitted is necessary under the terms of the 2012 settlement because a major gas project was not sanctioned by June 1, 2016.
Quarles additionally wrote that the company will continue to work towards making gas available to any gasline project, including the state-led Alaska LNG Project effort, “under bilateral, mutually-agreed and commercially reasonable terms.”
The 2012 Point Thomson Settlement Agreement reached by former Gov. Sean Parnell’s administration ended a longstanding dispute between the state and ExxonMobil over developing the field.
Moving Point Thomson gas to Prudhoe is one of a couple options Exxon had under the settlement once a gasline project was not sanctioned. The other was simply expanding condensate production by at least 20,000 barrels per day and continuing to reinject the gas.
Some former state officials that worked on the Alaska LNG Project have questioned the economics of the concept.
An ExxonMobil spokesman said the company could not provide a cost estimate for the project at this point.
Development plans are usually annual documents but the Point Thomson settlement prescribes that ExxonMobil does not need to submit another for the gas field until 2019, which is when the company and its working interest owners have to commit to further development of some fashion — again if a gasline is not sanctioned by then.
Alaska Gasline Development Corp. President Keith Meyer has said he hopes to reach a final investment decision on the Alaska LNG Project by early 2019.
Last year and so far in 2017 Exxon and the working interest owners in Point Thomson and Prudhoe — primarily BP and ConocoPhillips — started work to identify the commercial agreements that would be needed to move gas between the fields, according to the development plan.
ConocoPhillips sold its 5 percent interest in Point Thomson earlier this year.
Next year the companies will work on a “Heads of Agreement” outlining the operating structure of the project while negotiating the potentially complex commercial arrangements that would be needed and start detailed engineering leading to a commitment decision at the end of 2019, the document states.
Elwood Brehmer can be reached at [email protected].