Vol. 27, No.40 Week of October 02, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Pikka first oil mid-26

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.

Part 2 of 2: Parker Drilling Rig NOV ADS-10SD 272 being modified for Pikka

Kay Cashman

Petroleum News

This is part 2 of the information that was discussed in the Sept. 16 public hearing held by the Regulatory Commission of Alaska in regard to Oil Search (USA)’s application for a certificate of public convenience and necessity to construct and operate a common carrier pipeline - the Pikka Sales Oil Pipeline - and connect it to the Nanushuk Processing Facility, as well as OSU’s request for approval of a connection agreement and for the authority to operate the Interconnect Facilities.

One of the more interesting comments were remarks by Kollin Fencil, senior vice president of Oil Search (Alaska) and president of the Pikka pipeline project, as he was going through slides that covered the entire Pikka project, was the fact the Pikka Project’s drilling rig was “being modified to meet our needs.”

In checking Petroleum News’ monthly rig report that rig is Parker Drilling Arctic Operating LLC’ NOV ADS-10SD 272, which is in the Deadhorse Yard.

“We anticipate moving that drill rig out to the ND-B pad around April or May of this coming year in 2023 and we’ll spud that first well in mid-2023,” Fencil said.

Following are some of Fencil’s remarks that were also not included in part 1 of this story.

First oil from Pikka, Phase 1, is in mid-2026: “Pipelines … by our timeline, should be ready by mid-2026 and that’s when we would anticipate first oil. Drilling is an ongoing process. We’ll have enough wells at first oil to fill the facility. We’ll continue to drill the remainder of the ·wells through 2028,” he said.

In the next slide, “that 80,000 barrels a day of production will generate direct income to the state of roughly $7 billion over the life of the project … $3 billion in property and production, business taxes inclusive of the North Slope Borough and $4 billion in state royalties inclusive of the Alaska Native landowners companies, ASRC and landowner Kuukpik,” Fencil said.

Future project phases

“And then with … the success of our Phase I, we see continued opportunity for development. We have already … permitted access to our ND-A and ND-C, we don’t have gravel down for that,” Fencil said. “(On this slide - see map in part 1 of the Pikka story in the Sept. 25 issue of Petroleum News.) You can see ND-A and ND-C kind of very lightly colored in the left-hand side. Those are permitted, those would be subsequent phases after successful completion of Phase 1. They have the potential of doubling the production from the Pikka Unit (80,000 barrels of oil per day from Phase 1 to 160,000 barrels per day), he said.

“We would obviously need to put in additional gravel roads and pads, additional bridge to support those subsequent phases,” Fencil said.

He also notes from another slide that the company is constructing more Pikka gravel infrastructure “this winter, which is going to be a boat ramp for the community of Nuiqsut.”

Hiring for Phase 1

Fencil also said Santos is now the 20th largest oil and gas company in the world.

“Globally, we have about 3,500 employees, and here in Alaska, we have roughly 150 batched employees and contractors and we are continuing to grow as we ramp up in the project,” he said.

“What have we done so far? So we have the majority of our gravel infrastructure in place. That was during the 2019/2020 winter season.

“We have installed over 11-1/2 miles of gravel road, four pads totaling around 56 acres.

“We upgraded the Mustang Road, about 5 miles of it,” Fencil said.

He also said that they had installed the Miluveach River Bridge.

“And then during that season, all of the ice roads and ice pads that were required to have a successful season.

“The ND-B pad, that is the drill site, and then (looking at the map in part 1 of this story) at the bottom right-hand corner … will be our operations center pad where the camp and the maintenance facilities will be housed,” Fencil said.

Commissioner: investment certainty?

In the Q&A segment, where the RCA commissioners were able to ask questions and members of the public were encouraged to call in with questions (none did), RCA Chairman Keith Kurber II asked about the certainty of funding from Santos and Repsol for the Pikka Project, Phase 1, which includes things such as the Pikka Sales Oil Pipelines, etc. in OSU’s various applications to RCA.

“Did that investment decision, can we consider that … it’s been formalized, actually not just as an announcement from Santos to support that as well as Repsol, but also within your company, has Santos formalized a decision with as Oil Search (USA) that they are going to fund this project?”

“The short answer to that is yes,” Fencil replied. “Both Santos board of directors voted to approve the funding of this project as did the Repsol board of directors in mid-August.”

Issue with ConocoPhillips

Commissioner Daniel A. Sullivan asked: “Finally, I know there was reporting about challenges with your neighbors regarding an access road with ConocoPhillips, has that all been worked out?”

“We currently have all of the needed permits and agreements in place to proceed with road access,” Fencil replied.

Re 160,000 bpd

Commissioner Janis W. Wilson asked for clarification on “an answer that you gave earlier and that is with respect to the possible increase to 160,000 barrels per day. I was not quite sure whether the answer was that the possibility of raising the throughput in the pipeline would come from the Pikka Unit or whether it would be coming from the Quokka or Horseshoe unit.”

“The … potential for the increase to 160,000 barrels a day would come from development within the Pikka Unit,” Fencil replied. “Developments in Quokka or Horseshoe will continue to be evaluated in terms of …·the best place to process that oil, if you will. So currently though, that increase, for clarification, to 160,000 would come from such drill sites as … NDA, NDC. We have other developments in the north too that we would continue to explore to solidify the resource and that could be ·tied into the process and facility as well.”

Quality of the oil

Wilson also asked about the quality of the oil that OSU expects out of the Pikka Unit: “Mr. Anglen has testified that it’s 37 degrees API gravity and so, I’m just wondering if you can be more specific with respect to the quality as it will go through the quality banks in the Kuparuk Pipeline and TAPS?”

Ben Anglen, lead pipeline engineer for Pikka Unit operator Oil Search (Alaska) and acting secretary and technical manager of the Pikka Sales Oil Pipeline construction project for OSU, replied “I can’t be much more specific than that off the top of my head. It will meet the S&W requirements of TAPS and of the Kuparuk pipeline extension and the Kuparuk Pipeline, which I believe is less than a percent of sentiments and water “

Wilson: “Is it a sweet crude?”

Anglen: “Yes, it is. … We do not expect there to be H2S in the crude oil.”

Commissioners comment

At the end of his questions, Wilson said: “I would like to thank Mr. McLaughlin (Michael McLaughlin from Guess & Rudd P.C. in Anchorage, OSU’s attorney) and everyone at Oil Search for your complete application and your responsiveness to our inquiries, which Oil Search has answered thoroughly and promptly. It’s important for us to have a complete and comprehensive application and we appreciate your prompt supplementation of financial statements as they became available. And we - that just makes our job a lot easier and I would really to thank you for that.”

“Well, I will echo Chairman Kurber’s comments that this is very exciting for Alaska; obviously the most important piece of infrastructure in the state is the trans-Alaska pipeline and anything we can do to increase the throughput and do so in a responsible and safe manner is welcome news to Alaska,” Sullivan said.

Print this story | Email it to an associate.

Petroleum News - Phone: 1-907 522-9469
[email protected] --- ---

This story has 1613 words, takes 3 min. to speedread and it is 3536 pixels high.