Eni formally announced its acquisition of Kerr-McGee’s 70 percent interest in the Nikaitchuq field this morning, giving the U.S. subsidiary of Italy’s biggest oil and natural gas company 100 percent working interest in the Alaska North Slope offshore oil field.
The news was first announced in the Feb. 25 issue of Petroleum News in the Oil Patch Insider news column.
Nikaitchuq would be the first development project operated by Eni in Alaska.
“Successful appraisal drilling has been completed, confirming the potential viability of the development project,” Eni said. “Plans for a phased development are currently being evaluated with the target of sanctioning the project by year end, and first oil to flow by the end of 2009.”
Eni said the completed project would have about 80 wells, 32 of which would be located onshore and the remaining would be drilled from an offshore artificial island.
“All wells will then be tied back to a production facility located at Oliktok Point to reach a production of 40,000 barrels per day,” which is 20,000 barrels less than the peak production Anadarko subsidiary Kerr-McGee had been talking.
Total investment will be about $900 million in U.S. dollars, Eni said.
The U.S. Army Corps of Engineers development permit, POA-2005, 1243, secured by Kerr-McGee, included a pad onshore at Oliktok Point, which would hold 20 wells, and then as many as three production islands, which would each have about 50 wells.
Under Kerr-McGee’s initial plan production from the Oliktok Point pad (phase one) would be processed at the nearby Kuparuk River unit facilities, not in an Oliktok Point processing facility, and the production from the three islands would be processed in standalone facilities on those islands.
Kerr-McGee did say it was most likely looking at two islands, not three.
A Petroleum News source says Eni is talking to ConocoPhillips about sending all produced crude from Nikaitchuq through Kuparuk, vs. building a standalone processing facility, but that information has not yet been confirmed by either company, although one company official, who asked not to be identified, said using the Kuparuk facilities would make the most sense.
If Nikaitchuq does end up with a standalone processing facility, it will be the first independent-operated production facility on the North Slope.
Production from Pioneer Natural Resources’ nearby Oooguruk field, also in the shallow waters of the Beaufort Sea, is expected to come online a year ahead of Nikaitchuq, but all its hydrocarbons will be processed at Kuparuk.
Eni has been present in Alaska since August 2005, following the acquisition of 103 North Slope leases from Armstrong Oil & Gas.
Since then, Eni’s portfolio in the region has grown to 151 leases.