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Vol. 26, No.31 Week of August 01, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil patch insider: Pikka project on track; Gardes leases transferred; Eni on move?

Click here to go to the full PDF version of this issue, with any maps, photos or other artwork that appears in some of the articles.

Kay Cashman

Petroleum News

Oil and gas activity in Alaska is picking up. Among other projects, Oil Search’s North Slope Pikka development is still progressing; CIE/Gardes Holdings/Vision lease transfers in the Cook Inlet basin have been approved; and Eni is rumored to be pursuing as many as four new projects, including eastern North Slope exploration.

In Oil Search Ltd.’s second quarter results, released on July 27, acting CEO Peter Fredricson said the company’s Alaska subsidiary’s work on the “Pikka Phase 1 project is tracking in line with original expectations from a technical and permitting perspective.” (Oil Search Alaska is in the FEED, or front-end engineering and design phase.)

Fredricson, who came onboard as the parent company’s chief financial officer three and a half months ago, also said that “it is in everyone’s interest - Oil Search, shareholders, JV partners - that we commit to FID (final investment decision) on this high quality asset only when appropriate funding and ownership levels - across upstream and infrastructure - are in place.”

But during second quarter, Fredricson added, “considerable progress was made on several funding opportunities which are expected to strengthen Oil Search’s balance sheet ahead of the upcoming investment programs for Pikka and Papua LNG.”

This is in line with what an Oil Search Alaska executive told Tom Stokes, director of Alaska’s Division of Oil and Gas on July 19, hours after Oil Search Ltd. announced the resignation of its CEO, Keiran Wulff. Some analysts interpreted Wulff’s resignation as managing director as a setback for the company’s plans to develop Pikka, given Wulff had previously been president of Oil Search Alaska, leaving in February 2020 to take over leadership of Oil Search Ltd, where he said he would continue to be a strong proponent for the company’s North Slope assets, including Pikka. Shortly thereafter Bruce Dingeman took Wulff’s place as president of Oil Search Alaska.

The Oil Search Alaska executive who called Stokes assured him that “nothing has changed” on the development timeline of the Pikka project. The goals, including the financing package needed for FID, or final investment decision, remained the same.

But goals are just that, Fredricson said July 19.

“We’ve always said that we wanted to ensure that both ourselves and Repsol … have taken some of the risk of this project off our own balance sheets. That …process has begun in the context of the sell-down of an equity holding, an equity interest, of between 14% and 15% for each of us. … But we’re not going to put ourselves in a position where we say that it has to be completed by 1 November to go to FID, just so that we go to FID on that date … these sorts of projects don’t always run to a timetable like a bus.”

Fredricson said the company and its people are as passionate about Alaska as Wulff had been.

Gardes gets its leases

The transfers of the North Fork leases requested by new Cook Inlet basin natural gas player Gardes and the former leaseholder Cook Inlet Energy were recently approved by Alaska’s Division of Oil and Gas, effective Jan. 1, 2021. That’s the same date the division used when it approved a change in operatorship in May.

The working interest and royalty interests requested were transferred first to Gardes Holdings and then from Gardes to Vision Resources, which is owned by a Gardes concern and based in Alaska.

Eni picking up pace?

Rumors - a few from credible Petroleum News sources - say that Eni is taking on as many as three new projects on Alaska’s North Slope.

One might very well be connected to the Italian major’s most recent plan of development for its Nikaitchuq unit, in which the company told Alaska’s Division of Oil and Gas it would likely be doing facility upgrades to support the planned Nikaitchuq North exploration well (NN-02), the two remaining Spy Island Drillsite injection wells and the “potential” of six new wells discovered from the SP03-NE2 pilot-hole analysis from an earlier development plan.

While Eni’s Nikaitchuq and Oooguruk producing units are west of the Hilcorp-operated Prudhoe Bay unit, the company also holds approximately 350,000 undeveloped acres it purchased from Caelus in August 2018 on the eastern North Slope between Prudhoe and ExxonMobil’s Point Thomson unit. The word on the street is that Eni is considering exploring it.

At the time of the purchase, Eni said it planned to “apply its business model and experience,” involving “fast-track exploration” and “a short time to market” for the “potential new discoveries.”

Containing 124 state leases in two blocks, the acreage is relatively unexplored and close to existing infrastructure and to the trans-Alaska oil pipeline. It is approximately 20 miles southeast of Deadhorse, which is an unincorporated community consisting mainly of facilities for oilfield workers and firms that have contracts with the nearby oil fields, including Prudhoe. Deadhorse is accessible via the Dalton Highway and the Deadhorse Airport.

Shortly after acquiring the eastern North Slope leases in 2015, Caelus acquired 175 square miles of new 3-D seismic data and reprocessed another 275 square miles of existing 3-D to image prospects in the acreage.

“Adjacent infrastructure with available capacity reduces threshold volumes required for developing discoveries in the sub-100 MMBO recoverable range,” Caelus said. “Multiple play types within proven stratigraphic horizons provide significant upside potential in previously poorly-imaged structural trends and/or subtle stratigraphic traps.”

Surrounding legacy wells “confirm deeper petroleum system elements and de-risked shallower Brookian reservoirs and hydrocarbon charge and phase within the area,” Caelus said, much of which was mostly ignored in drilling until Armstrong and Repsol discovered big light oil finds in the shallow Brookian Nanushuk at Pikka and Horseshoe west of the central North Slope.

Armstrong and Oil Search also have a huge block of undeveloped acreage near Eni’s 350,000 acres.

SPE announces 2021 regional awards

On July 25 the Society of Petroleum Engineers announced the recipients of its regional awards, which are designed to recognize members who have contributed exceptional service and leadership to the society, as well as those who have made major professional contributions to their technical disciplines at the regional level.

Alaska is part of SPE’s Western North America Region, with the following individuals receiving awards for work in the state:

* Andrew Bond, Oil Search Alaska, the Regional Completions Optimization and Technology Award.

* Arthur Moritz, Oil Search Alaska, the Regional Data Science and Engineering Analytics Award.

* Yin Zhang, University of Alaska–Fairbanks, the Regional Distinguished Achievement Award for Petroleum Engineering Faculty.

* Mohabbat Ahmadi, University of Alaska–Fairbanks, the Regional Production and Operations Award.

* Timothy Nagy, the Regional Management Award.

* Rada Khadjinova, Fugro, the Regional Projects, Facilities and Construction Award.

* Thomas Walsh, Petrotechnical Resources–Alaska, the Regional Public Service Award.

* Christopher May, Golder Associates, the Regional Service Award.

* Ian Johnecheck, ConocoPhillips Alaska and Sydney Deering, ConocoPhillips Alaska, both received the Regional Young Professional Member Outstanding Service Award.

Chugach Electric CEO retiring

Chugach Electric Association CEO Lee Thibert has decided to retire in April 2022. Thibert, 66, has been with Chugach for more than 30 years and has served as CEO for five years.

“Working for Chugach and our members has been an incredible opportunity,” Thibert said. “I am very proud of the work we have done together, continuing to build a strong, vital utility, providing power to thousands of Alaska homes and businesses.”

Thibert’s career at Chugach began in 1987 and he held a variety of senior management positions before being named CEO in July 2016. As CEO, he has led Chugach through several significant events including the acquisition of Municipal Light & Power, the purchase of an ownership interest in the Beluga River gas field and interest in Cook Inlet’s first commercial gas storage facility, and successfully navigating the utility through the recent COVID-19 pandemic.

“Lee has been a steady and accomplished CEO, leading Chugach through many significant changes over the years,” Rachel Morse, Chugach board chair, said. “We will miss him, but his retirement is well-deserved, and he leaves Chugach a strong and resilient utility.”

Morse said the board’s goal is to have a smooth transition next year and is immediately beginning a search for Thibert’s replacement.

- INSIDER IS COMPILED BY KAY CASHMAN



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