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May 2019

Vol. 24, No.20 Week of May 19, 2019

Oil Search confirms plans for North Slope at annual meeting

Kay Cashman

Petroleum News

Oil Search’s annual meeting on May 10 didn’t yield any surprises for Alaska. As expected, the Australian oil and gas company remains enthusiastic about its development and exploration plans for the North Slope.

Its concept for its first oil production facility in the Pikka unit west of the central North Slope still shows 120,000 barrels per day of light oil from 15 producing wells, paired with 15 injectors, that utilize two drillsites, with a third site “in reserve.”

The oil is initially expected to come from the Nanushuk formation, but Oil Search is also looking at tapping the deeper Alpine reservoir. Partner Armstrong Energy’s founder Bill Armstrong said from the start that there were at least six intervals in Pikka wells that would eventually be tapped, the largest of which was the Nanushuk, followed by the deeper Alpine.

Subject to regulatory approvals, “we anticipate entering the FEED phase of this exciting new oil development in 2019,” Oil Search said; FEED meaning front-end engineering and design.

Construction of the “initial Pikka unit development is planned to commence in early 2020 and take place over three winter construction seasons, with first production expected in late 2023,” the company said.

28% women

One new tidbit revealed at the annual meeting was that 28% of Oil Search’s Alaska team at the end of 2018 - “more than 100 employees and several contractors” - headquartered in the Anchorage office were women and 75% were Alaska residents.

Earlier this year, Oil Search leased two floors at the BP building in midtown as it had outgrown its space in Peterson Towers in downtown Anchorage. Previously, company executives have said they expected the number of Oil Search employees to increase to approximately 200 once Pikka development got underway in early 2020.

The most interesting information released at the annual meeting was the updated map next to this story that includes the new acreage Oil Search acquired in the last seven months: more than 17,000 acres east of the Pikka unit through pre-existing commercial agreements with Repsol; state leases won at the November areawide oil and gas lease sale covering 3,575 acres immediately adjacent to the northern boundary of the Pikka unit (on the map those two leases are identified as Pikka North); and a 50% interest in a 195,200-acre block on the eastern North Slope purchased from Armstrong, exercising an option under an area of mutual interest agreement.

Alaska “exploration licenses,” meaning prospective leased areas, and Oil Search’s ownership percentages were identified in a shareholder document as the following: Antigua, 25.5%; Atlas A, 25.5%; Atlas B, 25.5%; Grizzly, 51%; Harrison Bay, 25.5%; Kachemach, 25.5%; Thetis, 25.5%; Horseshoe, 37.5%; Hue Shale, 37.5%; and the Pikka Unit, 25.5%.

Oil Search has an option through June 30 to acquire an even larger interest in Pikka, Horseshoe and nearby leases. For an additional $450 million, the company can buy Armstrong and GMT Exploration’s interests in the acreage, which varies from 25.5% to 37.5%, depending on the lease.






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