ExxonMobil Begins Drilling at Point Thomson, Renews Settlement Talks

After starting drilling at the Point Thomson field on Alaska's North Slope last week, ExxonMobil is now in talks with state authorities to regain all of its licenses there, reports Reuters.

Speaking at the Alaska Oil and Gas Association forum, Craig Haymes, the Alaska production manager for ExxonMobil, told reporters that the company should be able to resolve the dispute with the year.

"We look forward to working with them to resolve all issues," Haymes said. "I'm optimistic we can resolve this. We need to, otherwise we risk impacting first production."

Disputes with the government have plagued the Point Thomson development for years. First, Alaskan authorities reclaimed the 31 leases covering the field, saying that the company had not developed the area in a timely enough fashion. In January 2009, the Alaska Department of Natural Resources reversed its ruling, giving ExxonMobil the right to drill two wells on two of its Point Thomson Permits. There remain another 29 permits on which the company does not currently hold rights.

ExxonMobil announced in April that it was moving the rig to the project via a newly constructed 30-mile-long ice road, where it would then be reassembled. The first Point Thomson well was spud on May 9.

The reinstatement of all of the Point Thomson leases is contingent on ExxonMobil commencing drilling in the winter of 2009, as well as completing the wells by 2010 and bringing the project on-stream by 2014. With the first obligation complete, ExxonMobil is pushing to reinstate all of its leases as quickly as possible to ensure a timely production start-up throughout Point Thomson.

Expected to be developed in a phased approach, Point Thomson is still scheduled to achieve first production by 2014. Costing an estimated $1.3 billion, the first development phase at Point Thomson is expected to produce some 200 MMcf/d of gas and 10,000 bpd of condensate. Production will be transported via the Trans Alaska Pipeline system, and some gas will be utilized to increase production.

Located on the North Slope area of Alaska, Point Thomson is 60 miles east of Prudhoe Bay. Field development at Point Thomson is made difficult by the harsh environment, remote location and high-pressure wells.

ExxonMobil serves as the operator of the Point Thomson project, and partners include super-majors BP and ConocoPhillips, among 21 others.

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