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Point Thomson Leaseholders Offer Development Commitment

Alaska's Point Thomson leaseholders have offered the state a series of steps they will take by 2013 to develop the long-dormant North Slope gas field, which the state has been trying to reclaim in court.

ExxonMobil Corp., the operator of the Point Thomson Unit, is leading the proposal, which includes BP Exploration (Alaska) Inc., Chevron U.S.A. Inc. and ConocoPhillips Alaska Inc. It commits the companies to developing the field, which was discovered 30 years ago, or lose potentially their leases.

The offer to resolve the litigation over Point Thomson would hold the companies to the unit's 23rd Plan of Development and Operations (POD 23) dated Feb. 19 (see Daily GPI, Feb. 21).

Exxon's latest development plan for Point Thomson, which was submitted to the Alaska Department of Natural Resources (DNR) in February, calls for producing 200 MMcf/d by late 2014. In addition, about 10,000 b/d of liquid condensate would be separated from the gas and shipped through new and existing oil pipelines, and the remainder would be pumped back into the reservoir to maintain pressure. The proposal indicates that Exxon already has secured a drilling rig and wants to drill five exploratory wells. The project also would allow for expansion if the state's gas pipeline ultimately is built.

"Appellants agree and commit to undertake the work programs set forth in POD 23 so as to accomplish the POD 23 objectives of fully delineating the Point Thomson Unit and starting up the IPS [initial production system] facility," the proposed settlement reads.

If the companies fail to meet their commitment to the $1.3 billion plan to develop the field, a judge could break up the state's Point Thomson Unit, which could mean the dissolution of the leases.

Alaska state officials refused to comment for a Tuesday report in the Anchorage Daily News, the paper said.

Point Thomson is adjacent to the Arctic National Wildlife Refuge, about 60 miles east of Prudhoe Bay. Estimates say it could hold about 25% of the North Slope's 35 Tcf of natural gas as well as 300 million bbl of oil.

The Point Thomson leaseholders have argued in the past that the Point Thomson leases could not be economically developed, and the state threatened to nullify the leases. In December 2006 Exxon asked the court to overturn Alaska's decision to revoke its Point Thomson leases (see Daily GPI, Jan. 2, 2007).

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