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Santos Advances Pikka Project on the North Slope

Aug 18, 2022 | Featured, News, Oil & Gas

Pikka Project Phase 2

A rendering of Phase 1 of the Pikka development.

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The final investment decision is “yes” for Australian oil company Santos to proceed with developing the Pikka Project on the North Slope.

$2.6 Billion Investment

The decision had been expected this month after Spanish oil company Repsol, the 49 percent partner in Pikka, alerted investors in a second-quarter earnings call. At the same time, Repsol anticipated first oil from Pikka in 2026, a delay from the 2025 forecast a year earlier when the majority partner was Papua New Guinea-based Oil Search.

In between the two forecasts, Santos acquired Oil Search, including its Alaska headquarters in the former BP building in Midtown Anchorage.

“The project will add further diversification to our portfolio and reduces geographic concentration risk,” says Santos Managing Director and CEO Kevin Gallagher.

Phase 1 of Pikka is an estimated US$2.6 billion investment, with 2,600 jobs during construction and 500 during production of 80,000 barrels per day.

A 2019 Clean Water Act permit allows for three drill sites for production and injection wells, a central processing facility, an operations center with a 200-bed camp, approximately 25 miles of roads, two bridges, and approximately 35 miles of pipelines.

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October 2022

Santos has previously stated that Pikka Phase 1 has received all major environmental and regulatory approvals and has sufficiently advanced its front-end engineering design work. 

The project area is located west of ConocoPhillips’ Kuparuk unit, near the Colville River village of Nuiqsut.

Gallagher adds, “Pikka Phase 1 will execute a responsible development plan with a small surface footprint and utilize existing infrastructure, including the Kuparuk transportation pipeline and the TransAlaska Pipeline System.”

This spring, ConocoPhillips appealed a state permit for Pikka concerning the use of access roads across Kuparuk. Oil Search had rejected ConocoPhillips’ demand for $95 million in fees and instead sought a state permit that treats the roads as public right-of-way instead of private property, at least until the companies agree on a fee structure.

Slope Renaissance

Scope of the pikka project map

The scope of the Pikka project, between NPRA and the Kuparuk oil field.

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Santos is counting on low carbon emissions from Pikka production, a part of the company’s goal of net zero by 2040. To that end, Santos made agreements with Native corporations to deliver carbon offset projects.

Governor Mike Dunleavy calls Pikka part of a “renaissance on Alaska’s North Slope.”

Senator Lisa Murkowski thanked Santos for the go-ahead decision. “The Pikka project will help refill the Trans Alaska Pipeline System while creating good jobs for Alaskans and bolstering our nation’s energy security,” she says.

Senator Dan Sullivan recalls his previous role in the Pikka development. “It’s exciting to see this project, which has been in the works since I was serving as Alaska’s Department of Natural Resources Commissioner, finally come to fruition,” he says.

Oil Search acquired the Pikka acreage from Repsol’s previous partner, Armstrong Energy, in 2018. The prospect holds an estimated 768 million barrels of recoverable oil as part of the Nanushuk formation.

Alaska Business Magazine October 2022 cover
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