Alaska’s Department of Natural Resources (DNR) has approved an expansion of the North Slope’s Point Thomson discovery area, which includes a firm commitment to drill in the prospect estimated to hold more than 8 Tcf of natural gas.

The expansion and commitment should result in production from the unit by 2008, Commissioner Pat Pourchot of DNR’s Division of Oil and Gas said Wednesday. Besides the dry gas reserves, operator ExxonMobil Corp., estimates the high-pressure Thomson Reservoir contains over 200 million barrels of recoverable condensate.

“We are very pleased that the owners are advancing this exciting oil and gas project at this time,” said Alaska Gov. Tony Knowles. “In addition to producing oil and liquids, the gas resources of this field could play an instrumental role in the development of a gasline from the North Slope.” Current plans are to strip the liquids and send them south through the Alaskan oil pipeline. The dry gas will be re-injected, as is the gas produced from the main North Slope Fields, until there is a transportation system in place for dry gas.

The Point Thomson Unit (PTU) is a group of oil and gas leases that overlie a common petroleum reservoir or petroleum prospect. The proposed expansion leases were due to expire, and their inclusion in the unit extends the lease terms for so long as they are committed to the unit. DNR required firm commitments to explore the expansion area and proceed with development of the underlying oil and gas reservoirs as conditions for approval of the expansion application.

The lessees agreed to drill an exploration well by 2004, begin drilling development wells by June 2006, and complete seven development wells by June 2008. Failure to fulfill the drilling or development commitments would result in the surrender of the expansion acreage and payment of compensation to the state. The royalty rate was increased from 16 2/3% to 20% on the most valuable leases included in the expansion.

Exxon discovered the reservoir in 1977, and 14 wells were drilled by 1983. Between 1983 and 2000 development scenarios were studied and additional seismic data was acquired. BP also drilled several other prospects in and near the unit and announced the Sourdough discovery. Advances in drilling technology for high-pressure gas injection have played an important role in making the development of Point Thomson feasible at this time.

The major owners of PTU, ExxonMobil, BP Exploration (Alaska), Chevron USA, and Phillips Alaska, plan to develop the field as a gas cycling project with the possibility of future gas sales and satellite oilfield development. Liquid hydrocarbons would be stripped from gas. ExxonMobil plans to ship the produced fluids west through the Badami sales pipeline and down the Trans-Alaska Pipeline System (TAPS). The remaining dry gas will be re-injected into the reservoir for pressure maintenance and future gas sales.

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