Rumors about Armstrong and Repsol’s plans for the Pikka unit development being slowed down are unsubstantiated. In fact, operator Armstrong is getting ready to file a permit for the Pikka 2 well, which will be drilled this winter in the southern tip of the Pikka unit a couple of miles from where the Putu 1 well should have been drilled last winter.
Armstrong is drilling the $30 million well because ConocoPhillips wasn’t able to fulfill its part of the well data swap arranged between Armstrong head Bill Armstrong and ConocoPhillips’ top executive Ryan Lance after ConocoPhillips failed to secure a permit to drill Putu 1, which sits between the Pikka unit discovery well Qugruk 3 and Armstrong’s $30 million Horseshoe 1 wildcat, 21 miles to the south. Together, Putu and Horseshoe would have confirmed the extent of the discovery that includes the massive and previously ignored Nanushuk play. (Remember, the initial 120,000 barrel-a-day Pikka development does not involve oil from the southern part of the unit or beyond AND will boost throughput in the trans-Alaska oil pipeline by nearly 25 percent.)
Armstrong’s discovery of the Nanushuk horizon was followed by ConocoPhillips’ Willow find in the same play. Thus, both companies were interested in knowing the extent of their discoveries.
Armstrong and its partners are committed to what appears to be the largest conventional onshore U.S. oil discovery since Prudhoe Bay.
In February 2016, before Horseshow results were in, then-Alaska Department of Natural Resources Commissioner Mark Myers said “the proven contingent oil reserve number makes the discovery the largest since the Alpine field, the probable contingent reserve number the largest since the Kuparuk field, and the possible contingent number makes the discovery the largest since Prudhoe.”
In mid-April 2016, U.S. Geological Survey geologist Dave Houseknecht said the initial Armstrong/Repsol discovery in the Nanushuk had revealed the possibility of major undiscovered oil resources along a fairway extending perhaps 100 miles to the west.
In a mid-2016 interview with Petroleum News, Bill Armstrong said, “We believe we have proven an oil pool that covers more than 25,000 acres, at a shallow depth of only 4,100 feet, with an oil column of 650-plus feet, up to 225 feet of net pay and an average porosity of 22 percent. Individual wells should be in excess of 10 million barrels each. … Dream oil fields are still out there to be found, especially in Alaska.”
Basis for delay rumors?
One thing that has held up Pikka is the need for an environmental impact statement.
A draft EIS is being prepared by the U.S. Army Corps of Engineers; on schedule to be released in August. A final EIS is expected in September 2018.
Armstrong can’t move forward with development until it has that decision.
Bill Armstrong has said that he expects Pikka to be producing oil by 2021 if the EIS and related permitting proceed without a hitch.
PN’s solid sources say nothing about Armstrong and Repsol’s intentions has changed.
Alaska track record
Through joint ventures, since 2000 Armstrong is connected to nearly 50 North Slope exploration wells, making it the second-most prolific explorer after ConocoPhillips.
The Oooguruk and Nikaitchuq units, spearheaded by Armstrong, are responsible for expanding North Slope development beyond that of BP, ConocoPhillips and ExxonMobil.
Additionally, through a foray into the Cook Inlet region, Armstrong brought the North Fork unit into production. The unit expanded regional development into the southern Kenai Peninsula and finally connected the city of Homer to a natural gas supply.
Armstrong’s current North Slope plans date back to a 500,000-acre lease position it began acquiring in 2008.
The independent brought Spanish major Repsol to Alaska as a partner in March 2011, launching a major exploration program at that leasehold, which was mostly between the Kuparuk and Colville units,
The joint venture eventually increased its land position to some 750,000 acres, spending $1.2 billion on 16 wells and two 3-D seismic surveys.
In mid-2015 the JV announced two discoveries in the Nanushuk and East Alpine formations, just two of six notable horizons,
Drilling to date covers only 10 percent of the JV’s leasehold, suggesting more discoveries are possible and that Armstrong Vice President Ed Kerr might be right when he said in 2014 that one day people will talk about Repsol and Armstrong “the same way they talk about BP and ConocoPhillips today, in terms of … contributing to Alaska’s economy.”
