ExxonMobil Receives Approval for Point Thomson Expansion: State's approval will increase oil production; drive Alaska LNG Project forward.

• Author: Mackenzie, Kathryn
• Position: OIL & GAS

ExxonMobil moved one step closer toward boosting production at its Point Thomson facilities after an approval from the Department of Natural Resources Division of Oil & Cjas in December ended months of negotiations. State and company officials say the approval is "a positive step" toward the company's goal of increasing condensate production and transporting gas to Prudhoe Bay to produce additional crude oil.

"Our approval of the Point Thomson to Prudhoe Bay pipeline plan adds to the momentum of the Alaska LNG Project and demonstrates the commitment of the Point Thomson working interest owners to move gas from Point Thomson into Alaska Gasline Development Corp.'s 800-mile pipeline," said Governor Bill Walker in a press release. Walker went on to say the expansion project will increase oil production out of Point Thomson to 50,000 barrels per day (bpd).

The Division of Oil and Gas previously approved ExxonMobil's plan for continued liquid condensate production from Point Thomson but did not approve the expansion-related portion of the Plans of Development (POD) due to "the conditional nature of the expansion planning work," according to Chantal Walsh, director of the Division of Oil and Gas. In her letter to ExxonMobil, Walsh said there were too many conditions and too much that was dependent upon the economy and the company's partners' decisions. There were additional factors behind the division's denial of the expansion POD including the state's belief that ExxonMobil was not meeting its Point Thomson development commitments, as per the Point Thomson Settlement Agreement reached between the state and ExxonMobil in March 2012. Walsh also said the settlement did not clearly lay out ExxonMobil's infrastructure plans for the North Slope and potentially allowed ExxonMobil to reverse course on the 2012 Point Thomson settlement with the state that guaranteed ExxonMobil's involvement in developing the project.

In October 2017 the company addressed the state's issues and shortly thereafter the Revised Expansion Project POD was approved by the state, allowing the project to move forward.

Still, Walsh also stated in the approval letter that the expansion project is expected to move forward, regardless of potential speed bumps. "If the Point Thomson Unit working interest owners do not fund the planning work or enter a commercial agreement with the Prudhoe Bay working interest owners, those events will not in any way absolve Exxon from fulfilling its...