Pikka, major new oil project, is approved for construction on North Slope

Australia-based Santos has approved development of the Pikka oil project on Alaska’s North Slope. The $2.6 billion initial phase of the project, being developed with minority owner Repsol, is expected to produce 80,000 barrels per day by 2026, Santos said in a statement.

Santos is 51 percent owner and operator, with Repsol holding 49 percent.

Pikka is on state of Alaska lands near the Colville River and ConocoPhillips’ producing Alpine field.

For Alaska, Pikka represents a significant stimulus for the state’s oil contractor community, which has suffered due to cutbacks during the pandemic and, prior to that, an extended period of oil price uncertainty.

The project will employ 2,600 jobs during construction and create 500 new long-term operating jobs once production begins, Santos said in its announcement.

Pikka’s phase one production will be followed by an expansion in a second phase, with ultimate production estimated earlier at 160,000 b/d.

Pikka is adjacent to existing road and pipeline infrastructure mainly in the Alpine field but agreements have to be worked out to use roads and other facilities with ConocoPhillips, which owns the infrastructure.

Santos and Repsol are guaranteed access to the Kuparuk pipeline, which is a common carrier pipeline, to deliver crude oil to Pump Station One of the Trans Alaska Pipeline System, which is in the Prudhoe Bay field further east.

Preliminary construction of roads and pads for the Pikka field have already also been constructed. Resource estimates are pegged at 397 million barrels including the state of Alaska’s royalty share.

“The project has strong fundamentals, is located in a world-class producing province with significant producing infrastructure, has low unabated emissions intensity and is supported by key stakeholders,” including the state of Alaska and indigenous Alaska Native regional governments and villages, Santos said in its announcement.

“Alaska has a rich and proud oil and gas history, welcoming the jobs, investment and community development the industry provides,” said Santos Managing Director and CEO Kevin Gallagher.

Pikka has significant potential for expansion due to new oil discoveries made nearby in recent years.

Pikka is one of two significant new oil projects pending in Alaska. The second is ConocoPhillips’ Willow, also on the North Slope, which is now being reconfigured in response to lawsuits by conservation groups. The U.S. Department of the Interior is now taking public comments on a new Willow project plan and environmental review.

ConocoPhillips hopes to see the review completed late this year and in time for a construction start this winter. Willow capital costs are estimated at $3 billion with an expected 180,000 barrels per day peak production possible in 2026 if the project is given final approval.

Pikka and Willow are the first significant new oil projects in years for Alaska. They will also provide a major boost in oil moving through the TAPS system, which has experienced a gradual decline over the years and is now moving less than 500,000 barrels per day. In the heyday of flush oil production on the slope over 2 million barrels per day were moved through TAPS.