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Alaska Governor Urges Salazar to End Point Thomson Delays

In an effort to get exploration and production in the Point Thomson Field on the North Slope in Alaska off and running after years of permitting delays, Alaska Gov. Sean Parnell earlier this month reached out to Secretary of the Interior Ken Salazar to exercise his authority to expedite the Record of Decision (ROD) on the project, citing the risk to Alaskan and American jobs if delays continue.

The letter from Parnell came on the heels of the U.S. Army Corps of Engineers recently informing state officials that it is delaying a major decision on the plan until late November -- one in a series of federal delays regarding the project. As the lead federal agency, the Corps of Engineers had committed to issue the Point Thomson ROD by Sept. 21.

Point Thomson -- the largest undeveloped oil and gas field in Alaska -- comprises 38 state leases on about 93,000 acres that are 60 miles east of Prudhoe Bay. The field holds about 25% of the known North Slope natural gas reserves, contains an estimated 8 Tcf of natural gas and hundreds of millions of barrels of oil.

Parnell informed Salazar that the timely completion of the ROD is important to keep Point Thomson on schedule for development -- in particular, to enable construction to begin this winter. As part of its settlement of a seven-year dispute with the state, the field operator, ExxonMobil, has committed to first production of gas condensate from the field no later than the winter of 2015-2016. Under an agreement that was reached earlier this spring with the state, ExxonMobil, ConocoPhillips, BP plc and Leede Operating Co. must initially begin producing approximately 10 Mb/d of liquid gas condensates, cycle about 200 MMcf/d of gas, and build a common carrier pipeline connecting to the Trans-Alaska Pipeline System by the winter of 2015-2016 (see NGI, April 2).

The governor has said the project is expected to sustain 600 to 700 jobs and peak employment of 2,400 jobs. It will increase throughput in the Trans Alaska Pipeline System and provide impetus to large-scale commercialization of North Slope natural gas.

"I am writing to inform you of a developing situation that is of urgent concern to the State of Alaska: continued federal permitting delays involving the Point Thomson development project on the North Slope," Parnell wrote in the letter to Salazar. "These delays come in spite of repeated commitments made by federal officials to the state -- as recently as last week -- that target dates for a permitting decision were on track. Such delays would jeopardize critical energy production from the North Slope to boost the flow of oil through the Trans-Alaska Pipeline System and the creation of thousands of jobs that our country so desperately needs. The purpose of this letter is to ask you to exercise your authority to improve and coordinate permitting, particularly for energy projects in Alaska."

The governor's office noted that this is not the first delay in the federal review of the Point Thomson project. One construction season was lost due to the Corps of Engineers' delayed completion of the draft Environmental Impact Statement (EIS), which was originally anticipated to be issued in November 2010, but was delayed one year and instead issued in November 2011 (see NGI, Nov. 21, 2011). The final EIS for the project was issued on July 27, 2012.

Parnell, Natural Resources Commissioner Dan Sullivan and other state officials have emphasized the need for timely federal decision making on the Point Thomson project in letters to the Corps of Engineers and the Department of Interior, and in public testimony.

In a letter to the Corps of Engineers on July 6 Sullivan wrote, "Any additional EIS or permitting delays should be avoided to help mitigate the risk of extending the Point Thomson project schedule any further."

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