Point Thomson Project Gets The Green Light

 The Point Thomson project moved a step forward today, when the US Army Corps of Engineers issued Exxon Mobil Corporation and PTE Pipeline LLC a wetlands permit allowing construction of three drill pads in the Arctic Coastal Plain off the Beaufort Sea. 

 State Department of Natural Resources Commissioner Dan Sullivan says the wetlands permit allows the state and the North Slope Borough to finalize remaining permits that will allow Point Thomson construction to begin.  And development there points to future development of Alaska’s natural gas.

 ” This should be a pre-investment for commercializing North Slope gas. A lot of the infrastructure that’s going to be built over the course of the next couple of years can be used, we’re certainly pushing for it to also be used, in a large – scale gas commercialization effort. ”  Sullivan said.

Point Thomson is thought to contain 8 trillion cubic feet of natural gas, about 25 percent of the North Slope’s gas resource.

The Corps’ permit allows Exxon Mobil to conduct directional drilling into the Thomson Sand Reservoir off shore Alaska’s coast along the Beaufort Sea.   The Corps’ Mike Holley says the wetlands permit is the last and most important federal permit for the development.  Holley said directional drilling is usually used onshore.

“The resource is actually located slightly off-shore, but they’ll be able to get to the resource using extended reach drilling from on shore pads. This may be one of the first, or one of the very few, that are actually hitting an off shore resource.”

It has taken about 3 and a half years for the Corps to complete an environmental impact statement on the project, as required by the National Environmental Policy Act [NEPA] Holley says the Corps evaluated five alternatives, and selected that which is the least environmentally damaging, as mandated by law.

The permit covers construction of three drill pads, one of which will be a facility for hydrocarbon processing and the construction of an export pipeline to the Badami field, 23 miles away

Holley says the permit contains special conditions aimed at protecting sensitive areas, especially for wildlife needs.

 “We asked Exxon Mobil if they could move two of their pads, what’s known as the East pad and the West pad, further off the coast, because normally when polar bears are hunting, they are either out on the pack ice, or they are right on the shoreline. And so we wanted to know if they could put some type of wildlife corridor for them to easily access that coastline. And they were in fact able to move two of the pads, and reduce the amount of fill on the central pad which has to be right on the coast, because that’s were the barge landing will take place.”

Commissioner Sullivan says the permit has an added bonus – developing Point Thomson opens the door for further exploration

“It’s strategic for a number of reasons. First, it will open up the Eastern North Slope of Alaska. That’s a highly prospective area for oil and gas, but we’ve never had any development there oil or gas, despite it being an area that has high levels of hydrocarbons. ”  he said.

Last year, a long standing suit between the state and Exxon Mobil over the Point Thomson lease was settled, removing a roadblock for the development of large quantities of North Slope gas. ExxonMobil is a partner with TransCanada on a project to bring gas from Alaska to the Lower 48. Sullivan says settlement documents executed this year put the leaseholders on a timeline for gas production to begin by 2016

“The initial production project that was part of the settlement is a multi billion dollar project that will move liquid hydrocarbons from Point Thompson in a 70,000 barrel a day pipeline into TAPS.”  Sullivan said.

ExxonMobil’s production plan is expected to send 10,000 barrels a day of liquid condensated through TAPS.

Almost three years ago [In February of 2010 ] Exxon Mobil successfully drilled and cased its first development well at Point Thomson using directional drilling from a shore based rig to tap a gas reservoir more than a mile offshore.

Kim Jordan is a media advisor for ExxonMobil in Houston,  reached by phone on Friday.

“We appreciate all of the support we have gotten from the state of Alaska, and the North Slope Borough community, the contractors involved and the residents to realize the benefits of developing this project. And we see this as crucial to commercializing North Slope natural gas resources. ”

Jordan says the development is expected to provide 600 – 700 jobs between 2013 and 2016 and peak employment of up to 2400. Sulllivan says a strong state hire clause is written into the settlement with the leaseholders   Jordan says she cannot comment on when development will start.