ConocoPhillips wraps up first winter season building Willow project; Santos has its Pikka project under construction

ConocoPhillips Alaska is off to a good start in building its Willow oil project on the North Slope.

“We are wrapping up a successful first major winter construction season,” said Erec Isaacson, the company’s president. “Significant achievements this winter include gravel road and pad construction, vertical support member installation, bridge construction, and progressing the fabrication of the Willow Operations Center. We are also advancing the Nuna project in the Kuparuk River Unit which is projected to see first oil in early 2025.”

Capital expenditures, much of it on Willow, totaled $720 million as of March 31, the end of the first quarter of 2024, according to a ConocoPhillips said in a statement on its first quarter Alaska performance.

In a call May 2 earnings call with analysts, Kirk L. Johnson, ConocoPhillips’ Senior Vice President of Global Operations, said the company was able to successfully build out seven miles of gravel road, 30 miles of gravel pads and 30 acres of gravel pads for future facilities.

“We've successfully constructed all of the pipelines that we planned for this winter season. Certainly, in addition, module fabrication has continued to progress really well this winter and spring,” Johnson said.

On expenditures, “We still expect to be in the range of $1.5 billion (on Willow) for 2024 and the progress we're making gives us confidence to keep our estimate on total capital to first production as being unchanged. We're still in that $7 billion to $7.5 billion range,” for the total capital investment for the project,” Johnson said.

When completed Willow will add 180,000 barrels per day of new North Slope production starting in 2029. ConocoPhillips had 1,200 employed on Willow construction this winter, he said.

Other new field projects are now in construction on the slope besides Willow. Pikka, a large project being developed by Santos, Ltd., an Australian company, with Madrid-based Repsol as a partner, will begin first-phase production at 80,000 barrels per day barrels per day 2026.

Santos had about 1,000 workers employed at Pikka this winter and expects a similar number next winter.

In other North Slope developments, Armstrong Oil and Gas, an Denver-based exploration company, said it discovered oil in one of three exploration wells drilled this winter east of Prudhoe Bay.

King Street No. 1 found oil in two zones, at 8,130 feet and 9,850 feet, Armstrong CEO Bill Armstrong told Petroleum News, an Alaska oil and gas publication.

Further tests at the well are expected next winter.

Two other test wells, Sockeye No. 1 and Voodoo No. 1 were unable to be completed because of poor weather and operational problems, Armstrong said.

The wells will be completed and tested in the next winter season, he said. Armstrong is leading the exploration initiative with Apache Corp. as a partner. The two companies have 275,000 acres of state lands under lease in the area.

The exploration is being closely watched because the regional geology is similar to the discoveries at Pikka and Willow, which are 70 to 90 miles to the west.

Armstrong led the exploration that discovered Pikka with Repsol as a partner. Oil Search, later acquired by Santos, subsequently took over Armstrong’s share of Pikka.

In production, Alaska North Slope crude oil output, from producing fields, dipped in April in a largely seasonal decline, according to Alaska Department of Revenue available earlier this month. Total production averaged 475,165 barrels per day during the month, down from 479,462 barrels per day in March and from an average of 480,462 barrels per day in April, 2023.

Prudhoe Bay, the largest producing field on the North Slope, averaged 303,351 barrels per day in April, down from a 310,129 barrels per day average in March and a 307,023 barrels per day average in April, 2023, according to the revenue department data.

The Kuparuk River field, second largest on the slope, averaged 99,312 b/d in April, up slightly from 97,276 barrels per day in March but down year-over-year from 100,615 in April, 2023.

Alpine, third largest, gained slightly in April with an average of 54,028 barrels per day compared with 53,179 b/d in March and 51,913 b/d in April 2023.

Lisburne, the smallest North Slope field, declined slightly in April with 18,444 barrels per day on average against a 19,238 b/d average in March and 20,920 barrels per day in April, 2023.

The seasonal declines in spring are typical for the North Slope as winter temperatures gradually ease. Oil and gas processing plants are more efficient in the coldest months of winter and become less productive as temperatures rise in the spring and summer.

Overall, the North Slope is continuing to decline as production facilities age.

The Prudhoe Bay field began production in 1977 and is now 47 years old. The Kuparuk field went into operation in 1981 and has been producing for 43 years.

In April, 2018, North Slope production averaged 533,149 barrels per day, almost 60,000 b/d below the April, 2023 average.