Progress in gas development at the long-dormant Point Thomson fields is heartening to see. For decades, the resource-rich area hung in limbo as producers opted not to develop their leases. But recent years saw a thawing in the prospects for Point Thomson, as the state and producers settled a lawsuit over the undeveloped leases and work began in earnest to move toward production. It’s a win for the state and oil companies both.
The plan for Point Thomson will see the field producing 10,000 barrels per day of natural gas condensate, which will be a welcome addition to the oil that flows through the trans-Alaska oil pipeline. More portentous in terms of the state’s energy future, the site will also process 200,000 cubic feet of natural gas per day — an amount producers say can be easily ramped up if plans for a liquefied natural gas pipeline continue to go forward.
Point Thomson is what oil and gas regulars sometimes refer to as an “elephant” field, and the descriptor is apt. Such fields have giant conventional deposits of relatively easy-to-harvest oil and gas, and not surprisingly, few are left untapped. Point Thomson is the last such field in Alaska, and it represents both the past of Alaska oil and gas development and its future.
The field is representative of the state’s past development because of its status as a huge conventional deposit. Prudhoe Bay was another such field, and oil and gas deposits of its nature are generally less expensive to develop and have long production lives in which they provide profits to developers and tax revenue to the state. The state’s resource development is in the process of transitioning from this model to one where producers chase smaller pools of oil where extraction can be more difficult due to geological factors or the nature of the oil being sought.
Point Thomson, though, is also representative of the state’s resource future due to its abundant natural gas. Producers say the field will be the cornerstone of the Alaska LNG pipeline currently under study by the state and a group including ExxonMobil, BP, Conoco Phillips, and TransCanada. Such a line is unlikely to fully replace the revenue slowly bleeding from the trans-Alaska oil pipeline as Prudhoe Bay matures, but ExxonMobil officials estimate state revenues from the line would be in the vicinity of $3 billion to $4 billion for the state — money sorely needed as oil production starts to dwindle.
The development at Point Thomson comes at a momentous time for the state, and one at which our transition from one oil and gas economic paradigm to another is coming into sharper focus. We hope that efforts to smooth that transition go forward as planned, and that the development of areas like Point Thomson allow the state to continue on solid economic footing for decades to come.
Fairbanks Daily News-Miner,