CORRECTED - Point Thomson oil needed first, not gas: Alaska

(In 10th paragraph, corrects to 4 billion and 4.5 billion cubic feet from 4 trillion and 4.5 trillion cubic feet)

By Yereth Rosen

ANCHORAGE, Alaska, May 30 (Reuters) - The Point Thomson field, languishing undeveloped on the North Slope as a dispute rages over lease control, should not ship natural gas into a proposed Alaska gas pipeline until its vast oil reserves are drained, state officials and their consultants said Friday.

New studies into the field's geology show that immediate shipments of the natural gas would waste what could be a huge oil field, officials said.

"This might be the third largest oil field in the state of Alaska," said Anil Chopra of PetroTel, a state-hired geologic consultant who presented the findings at a public meeting on the gas pipeline.

Geologic modeling recently completed by the state Division of Oil and Gas and its consultants estimates that Point Thomson holds in-place reserves of 490 million to 600 million barrels of natural gas liquids and 580 million to 950 million barrels of oil, Chopra said.

That is in addition to the 8.5 trillion to 10.4 trillion cubic feet of in-place natural gas, a significant portion of the 35 trillion cubic feet of proven reserves on the North Slope, he said.

The best use of Point Thomson's hydrocarbons would be to produce the liquids for about 20 years before starting to send the natural gas into a yet-to-be-built pipeline, he said.

At peak oil production, Point Thomson's output would be 160,000 barrels per day, assuming natural gas is cycled back into the reservoir to increase pressure and enhance recovery, Chopra said. But extraction of the natural gas first would severely limit any oil production, he said.

Even with a decades-long lag in tapping Point Thomson's natural gas, the proposed pipeline to send product to Lower 48 markets remains highly profitable for all parties, including the major North Slope oil producers who would shift to natural gas production, officials said.

"This is a very viable economic project, both for the state and the producers, even in the absence of Point Thomson gas," said Deepa Poduval of Black and Veatch, an economic consulting firm hired by the state.

Without Point Thomson gas, the proposed pipeline would likely carry 4 billion cubic feet a day at start-up rather than the previously expected 4.5 billion cubic feet a day, Poduval said.

State officials and the consultants are currently assuming that Point Thomson gas will not be used at start-up to feed a natural gas pipeline, she said.

The geological and economic studies are part of the state's analysis of a gas pipeline proposed by TransCanada Corp TRP.T. That company is seeking a state license for the mega-project, which has been envisioned since the 1970s but to date has been hindered by poor economics.

Alaska legislators are scheduled to meet in a special session starting next week to consider Gov. Sarah Palin's recommendation that TransCanada's be awarded the license and be eligible for up to $500 million in state funds to help design the project.

Palin and her administration, at the same time, are tangling with Exxon Mobil Corp. (XOM.N), the operator of the Point Thomson unit, and its partners over those companies' delays in developing the field.