ExxonMobil pledges Port Thomson action

By Upstream staff 

ExxonMobil’s Alaska production manager Craig Haymes has promised that the company will soon produce oil and natural gas liquids at the long-languishing Point Thomson oil and gas field, whose leases are on the verge of being revoked by Juneau.

Haymes said his company and its Point Thomson partners have submitted a serious plan to produce hydrocarbons soon at the field, which holds about a quarter of the North Slope's known natural gas, plus hundreds of millions of barrels of oil and natural gas liquids.

"We're fully committed to this plan of development and we plan to take it all the way through," Haymes said yesterday at the opening of a week-long hearing held by the Alaska Department of Natural Resources on the fate of the Point Thomson leases.

The hearing was ordered by a state Superior Court judge who ruled in December that ExxonMobil and its partners deserved one administrative hearing to try to hold onto the property, even though the department had the right to dissolve the Point Thomson unit for lack of performance. Dissolving the unit would effectively revoke most of its leases.

ExxonMobil is the operator of the Point Thomson unit, which holds 8 trillion to 9 trillion cubic feet of natural gas in addition to the liquids.

The company and its partners last month submitted a new development plan - the 23rd proposal for a field that has yet to produce a single barrel - and is sincere about moving toward production, Haymes said.

Exxon Mobil's partners are fellow supermajors Chevron, BP and ConocoPhillips.

The new development plan calls for $1.3 billion in spending to start producing 10,000 barrels a day by 2014, he said. "This plan of development lays out a clear timeline to production," he said. "The only way we can produce is if we drill wells."

There will be no immediate decision about the leases' fate at the end of the hearing, said Tom Irwin, commissioner of the Department of Natural Resources, one of the state officials hearing ExxonMobil's plea.

"We're going to listen to everything to make sure we understand," Reuters reported Irwin said during a break in the hearing. "It won't be an overnight decision.

Irwin, together with Nan Thompson, manager of the department’s petroleum unit, posed questions to Haymes that suggested scepticism about ExxonMobil's commitment.

"Wouldn't the jobs and revenue have been available to the state if this development had commenced earlier?" Thompson asked Haymes in response to a claim that the new plan would be a boon to Alaska.

No well has been drilled at Point Thomson since 1983, and the field - whose leases date back to the 1960s - has become a source of frustration for Alaska state officials since the 1990s.

In 2001, the state won a promise from ExxonMobil to drill several development wells to kick-start production of the liquids. But none of the wells were drilled and ExxonMobil announced in 2005 that there would be no further development until a massive natural gas pipeline was constructed on the North Slope.

That 2005 announcement led to a decision by the state Department of Natural Resources that ExxonMobil and its partners had defaulted on lease terms.

For breaching the 2001 agreement, ExxonMobil and its partners paid a $20 million fine and were forced to relinquish some of the outlying unit leases.

04 March 2008 02:55 GMT  | last updated: 26 March 2008 23:54 GMT