Vol. 27, No.34 Week of August 21, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Repsol sanctions Pikka; touts low emissions, capital flexibility

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Kay Cashman

Petroleum News

On Aug. 16 Repsol said its board of directors has approved the final investment decision for Phase 1 of the Pikka development on Alaska’s North Slope, advancing one of the company’s “key upstream projects.” (See related Pikka story about Santos in this issue.)

Repsol said Phase 1’s gross investment is $2.6 billion “until plateau capacity is reached, while full development contemplates an investment volume of over $3 billion gross.”

Pikka production is expected to start in 2026, reaching gross production of 80,000 barrels of oil a day, “which will bring additional supply to markets under strain due to lower investments in exploration and development on a global level in recent years,” Repsol said.

Repsol has a 49% working interest in the Pikka unit; its partner and project operator Santos/Oil Search has a 51% interest.

With a phased development approach, Pikka has been designed to provide capital flexibility while also delivering top-quartile emissions performance.

“The project has a carbon intensity index that is among the lowest in the company’s global upstream portfolio, reinforcing Repsol’s commitment to focus on lower-emissions projects,” the company said.

To further reduce emissions, Pikka “will implement reduction schemes included in the World Bank’s Zero Routine Flaring Initiative, such as the replacement of diesel with cleaner-burning natural gas to fuel the operations or the installation of heat recovery technologies in the power generation turbines.”

Repsol said it was the first company in its sector to set the goal of achieving zero net emissions by 2050, and it has set an objective of reducing the carbon intensity of all its upstream activities by 75% by 2025.

The Pikka unit has an “advantaged position” as an onshore development in an established basin such as the North Slope, minimizing its footprint by utilizing extensive existing infrastructure in an area with decades of hydrocarbon exploration and production activity.

Forty-five wells

Full development of Phase 1 “will consist of 45 wells to be drilled from a single well pad, using industry-leading technology to reduce the environmental footprint, with associated midstream facilities including a production facility, operating center, seawater treatment plant, and pipelines,” Repsol said.

The company noted that the project is supported by local communities on the North Slope and “continues to deliver shared value from community development projects, social investment programs, economic activity, and local jobs.”

This milestone, Repsol said, “materializes more than a decade of activity by Repsol in Alaska. With its renowned exploration expertise and the use of state-of-the-art technology, the company has led the drilling of 16 exploration and appraisal wells since 2011, resulting in the discovery of more than one billion barrels (gross) of oil resources.” (See art with this story in the pdf or print versions of this issue of Petroleum News.)

The Horseshoe-1 and 1A wells drilled during the 2016-2017 winter campaign confirmed the Nanushuk play as one of the largest onshore conventional hydrocarbon discoveries in the United States in 30 years.

Repsol (and Santos’) North Slope “assets now include the Qugruk discovery wells that anchor the Pikka unit, the neighboring Horseshoe unit (Horseshoe and Stirrup wells) and the Quokka unit (Mitquq well), as well as several additional exploratory blocks, with a total of 467,761 gross acres.”

Repsol first entered Alaska in 2007 when it joined Shell and Eni in a block of 64 federal leases in the Beaufort Sea, followed in 2008 by successful bidding in the federal waters of the Chukchi Sea.

The Spanish energy company lost interest in the federal offshore and didn’t become active again until 2011 when it acquired a 70% interest in, and operatorship of, 494,211 acres from Bill Armstrong’s 70 & 148 LLC, which included Pikka-area state of Alaska leases.

Antonio Brufau Niubó has been Repsol’s chairman since 2004, leading its venture into Alaska.


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