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Oil Search Alaska lets more people go
Kay Cashman Petroleum News
In response to market conditions, Oil Search recently decided to release additional people from its Alaska operations, which entered the year with 287 employees and contractors and expects to reduce staffing to about 150 people. While seasonal contractors associated with its winter drilling and exploration programs represent most of this reduction, the company has reduced full time employees by about 15% through a combination of recent and previous reductions.
Bruce Dingeman, president of Oil Search Alaska, updated the House Resources Committee May 8 on the company’s activities and plans in Alaska.
While Oil Search has moved its final investment decision on its big North Slope Pikka project from 2020 to 2021, the company is still on track for first oil in 2025, Dingeman said. Pikka is expected to produce 135,000 barrels of oil per day at its peak, excluding output from the Horseshoe discovery area.
Bump TAPS to 600,000 bpd A slide accompanying his presentation indicates Pikka is expected to bump oil flow through the trans-Alaska pipeline to 600,000 barrels a day by the end of the decade and could potentially be extended for up to a decade.
The development, Dingeman said, has received all the key stakeholder and regulatory approvals, but the “current price drop makes the project untenable - we need a price recovery to move ahead.”
Oil Search is “looking for ways to squeeze costs out of our project,” he said. “We’re talking with suppliers, making the project more efficient and focusing on the most promising components of it.”
Oil Search has been in the oil and gas business for 90 years. Its primary focus before getting involved in Alaska was Papua New Guinea.
“Alaska is a key platform of growth for the firm. Our commitment is very deep,” Dingeman said.
When asked, “what price point do you see being able to advance your fall drilling” by a committee member who was referring to a winter exploration program, which Oil Search canceled for next year, he replied: “We’re hoping to lower the breakeven cost of the project. Currently our project has a mid-$40 level economic return and … a few months ago it was $53. To answer your question, back up to the high $40s, $50 would give us the confidence to advance the project.”
- KAY CASHMAN
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