Corps issues permit for Alaska's Point Thomson

ANCHORAGE, Alaska -- Alaska officials on Friday hailed a U.S. Army Corps of Engineers permit decision that will open up drilling at the Point Thomson petroleum field, creating hundreds of jobs and providing key infrastructure that could advance prospects for a large-scale natural gas pipeline.

The Corps issued a permit, and its Record of Decision explaining it, to ExxonMobil Corp. and PTE Pipeline LLC allowing the companies to fill 267.1 acres of North Slope waters and tundra wetlands to construct the drilling project.

Alaska Department of Natural Resources Commissioner Dan Sullivan said a Corps decision was expected 18 months ago, which delayed construction for a year, but he welcomed the announcement.

"This is a multibillion dollar project on the North Slope and it's going to have a huge jobs impact," he said.

Point Thomson is 60 miles east of Prudhoe Bay and 22 miles east of the trans-Alaska oil pipeline. It's considered primarily a natural gas field. It's estimated to contain 8 trillion cubic feet of natural gas, about 300 million barrels of gas condensate liquids, and traditional crude oil. Its development is considered critical to development of a gas pipeline.

The state moved to terminate leases at Point Thomson after concluding that Exxon and other companies was not taking adequate steps to develop them. After litigation, the state in late March reached a settlement that called for development of the field. That was a key step to aligning Exxon Mobil, BP and ConocoPhillips with TransCanada Corp. to work on a large-scale natural gas pipeline that was capable of overseas exports, an alternative to a pipeline that would serve North America.

The Army Corps' Alaska District Commander, Col. Christopher D. Lestochi, said in the permit announcement that the agency chose a development alternative that was the least damaging practical choice. The infrastructure, the Corps said, includes three drill pads, 10 miles of roads, a gravel mine, an airstrip, a barge docking facility and gathering pipelines. It also includes a 23-mile export pipeline west to the Badami facility.

Sullivan said his agency has been working daily with other state and federal agencies to finalize permits but the Corps' was critical because so many others depend on it, including a pipeline right of way.

Point Thompson's importance, he said, transcends field development because it's the first project that will connect the trans-Alaska pipeline to eastern North Slope development.

"We know the eastern North Slope is very highly prospective in terms of oil and gas but we've never had one molecule of oil or gas flow from it because it's remote, there's no infrastructure," he said. "Having this development, and importantly, the common carrier pipeline, 70,000 barrel a day capacity connecting the eastern North Slope into TAPS, is hugely important because now smaller explorers that go out into that part of Alaska and look for oil _ if they find it, they'll have a place to plug into the infrastructure."

The infrastructure also would support a pipeline that could export Alaska gas.

"The vast majority of it can be used for the broader prize of a large-scale gas commercialization effort," Sullivan said.