Oil Search files belt and suspenders Pikka amendment
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On June 17 Alaska’s Division of Oil and Gas posted the first amendment to the Pikka unit agreement from operator Oil Search (Alaska) LLC. The amendment, dated June 1, appears to be a “belt and suspenders” move, which is a colloquialism used to describe conservative lending practices and is based on the idea that wearing a belt and suspenders gives the user two redundant methods for holding up their pants.
A working interest owner in the North Slope unit, Oil Search filed the amendment on behalf of itself and the other unit working interest owner, Repsol E&P USA Inc. Although the initial agreement declares Oil Search the operator, mentions of Repsol being the operator still appears in random documents.
The June 1 amendment, which was signed by both Oil Search (Alaska) President Bruce Dingeman and Repsol (signature illegible), removes all doubt about which company is the operator. It also updates relevant addresses and reflects the current working interest ownership of the Pikka unit.
The amendment was mailed to both Alaska Department of Natural Resources Commissioner Corri Feige and to Rex Rock Sr., president of Arctic Slope Regional Corp.
The North Slope Pikka unit was formed effective June 1, 2016, by then-working interest owner and operator Repsol, along with working interest owners Armstrong subsidiary 70&148 LLC, which brought Repsol into the play, and GMT Exploration Co. LLC.
DNR’s Division of Oil and Gas approved the first expansion of the Pikka unit on Nov. 29, 2016, and ASRC approved it on Feb. 28, 2017.
In a March 7, 2018, letter to DNR and ASRC, Oil Search was designated as successor unit operator in accordance with an article in the agreement.
DNR and ASRC approved the change in operatorship on March 20 and 21, respectively.
A revised Pikka unit operating agreement between the working interest owners was filed with DNR and ASRC on Oct. 9, 2019. Then, a revised Exhibit A was provided as an attachment to that revised operating agreement.
Pikka is expected to produce as much as 150,000 barrels of oil per day at its peak, with production starting in 2024, and that is excluding output from what is anticipated to be Oil Search’s next North Slope development from the nearby Horseshoe discovery.
- KAY CASHMAN