October 26, 2012 / 9:08 PM / 5 years ago

Exxon gets key permit for Alaska's Point Thomson field

4 Min Read

ANCHORAGE, Alaska (Reuters) - Exxon Mobil Corp (XOM.N) on Friday received a major federal permit it needed to start construction on the Point Thomson oil and gas field on the eastern North Slope of Alaska, officials said, after an extended delay that threatened some leases there.

The U.S. Army Corps of Engineers granted Exxon a wetlands-fill permit for construction of drill pads, roads, an airstrip, pipeline, and docking and other facilities needed for production at the long-languishing field - production the state of Alaska has accused the company of dragging its heels on.

The Army Corps permit followed a detailed environmental impact study that began in 2009. While there remain a few outstanding state permits, the wetlands-fill authorization was the major approval needed for construction, said Mike Holley, northern branch team leader for the state's Army Corps district.

Holley said Exxon, backed by partners BP Plc (BP.L) and ConocoPhillips (COP.N), hopes to begin construction soon.

"They are planning on doing as much of the construction this winter as possible," he said, adding that ice roads, which are built by spraying water on the tundra, would accommodate that.

Production was expected to be about 10,000 barrels per day of liquids, starting in the winter of 2015-2016, Exxon spokeswoman Kim Jordan said in an email - timing that would be a year later than once expected. Jordan declined to comment on when construction would start.

Point Thomson has been the subject of long-running dispute between the state of Alaska and the oil companies. The state contended the companies were improperly delaying development at the field, where leases date back to the 1960s. The state began procedures to revoke the leases so they could be re-auctioned.

"I applaud both Exxon and the Army Corps for staying at the table and working out this permit," Senator Mark Begich, an Alaska Democrat, said in a statement.

The field holds an estimated 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of oil and natural-gas condensates, state officials say. Exxon and its partners argued development was challenged by extraordinary high-pressure conditions in the reservoir, among other factors.

In March, the state reached a comprehensive settlement with Exxon and its partners. Prior partial settlements resulted in new exploration drilling and plans for production of liquids.

The companies had targeted a 2014 start, but the environmental impact study process took longer than expected, Holley said. It took a long time for the Army Corps to select action alternatives, and once the draft EIS was issued, there was more reaction than expected, he said, citing about 1,600 requests for modifications.

The project is in an area important to polar bears and to local Inupiat Eskimo hunters. Holley said many commenters sought to avoid conflicts with subsistence food-gathering.

Writing by Braden Reddall in San Francisco; Editing by Gary Hill

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