Final Nikaitchuq permits expected soon

In its Nov. 27 edition Petroleum News reported that Kerr-McGee did not expect to make a decision on development of its Alaska North Slope Nikaitchuq discovery before the end of the year, as company executives previously indicated would happen.

If the project was sanctioned in late 2005 the big independent would begin construction of the first of four Nikaitchuq production pads with the intention of producing first oil in March or April 2006, effectively setting a record on the North Slope for the shortest time between the discovery of a field and when it went into production.

Unlike the other three proposed production pads, oil production from wells at the first pad (Oliktok Point) would be processed through existing facilities at the nearby Kuparuk River unit, necessitating the need for a processing agreement with Kuparuk operator ConocoPhillips.

In November Kerr-McGee said there were four issues that had to be resolved before its board would consider sanctioning development of Nikaitchuq:

• reservoir stimulation

• royalty relief from the state of Alaska

• pipeline and processing agreements with ConocoPhillips

• permitting

Since the Nov. 27 report Petroleum News discovered the major permit not yet issued for the Nikaitchuq project was from the U.S. Corps of Engineers.

On Dec. 7 Kerr-McGee spokesman John Christiansen told Petroleum News that the company expects “to have all the necessary permits in hand over the next couple of months, maybe sooner.”

Currently the company is making good progress on “conducting reservoir stimulation studies, analyzing core data and conducting analog studies,” he said.

“At the same time we’re working with the State of Alaska on issues relating to royalty relief,” which state officials confirmed is moving forward.

Christiansen would not comment on negotiations with ConocoPhillips, but he did say that the “sooner we resolve those issues, the sooner we will be able to move forward.”

No vote to sanction will occur, he said, until Kerr-McGee has “royalty relief, permits and a third party processing agreement in hand.”

Christiansen offered no new timetable for project sanctioning.

At full capacity Nikaitchuq is expected to produce 60,000 barrels of oil per day and small amounts of natural gas through 2026.

—Kay Cashman

Editor’s note: In September Kerr-McGee established a full-time office in Anchorage (see Oct. 9 issue of Petroleum News), a step-up from the sporadically manned office the company initially had in the ASRC building, which housed ASRC Energy Services, a Kerr-McGee contractor.