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SOA approves ongoing use of Doyon camps for Santos' Pikka project
Kay Cashman Petroleum News
On May 8 the Alaska Department of Natural Resources' Division of Oil and Gas approved Doyon Drilling Inc.'s Mustang Pad Camps Land Use Permit application, dated March 10. Permit LAS 34467 authorizes Doyon to continue to operate two camps on State of Alaska lands on the North Slope to support Santos' operations in the Pikka unit.
(See map in the online issue PDF)
The two camps are on the eastern portion of the Mustang Pad in the Southern Miluveach unit, or SMU, which is adjacent to the Pikka unit. The Pikka unit and its development project are operated by Santos Ltd. subsidiary Oil Search (Alaska), or OSA.
The two camps, supporting infrastructure, and operational area will occupy 3.5 acres of space on the existing Mustang Pad and have been in place under prior permit LAS 31767. The camps will provide up to 142 beds for workers. Three fuel tanks of varying sizes in secondary containment will hold up to 15,500 gallons of diesel for the camp generator.
Other third party interests identified in the approval:
ADL - 421218 Nanushuk Project Access Road (Pikka)
ADL - 419880 Mustang Road
ADL - 390680 Mustang Holding LLC Mineral Estate Lease
LONS - 11-010 SMU Mustang Pad
Brooks Range Petroleum In its decision the Division of Oil and Gas found that "Doyon seeks reasonable concurrent use of state land on which Mustang Holding, LLC (MHLLC), holds subsurface leases and is the current SMU operator."
"On lands subject to a mineral estate property interest, entry by a person other than the holder of the property interest must be made in a manner that prevents unnecessary or unreasonable interference with the rights of the holder of the property interest. The oil and gas leases in SMU are the dominant interest and accordingly this permit does not grant Doyon any preference or right over MHLLC's reasonable use of the surface for operation of its oil and gas activities," Graham Smith, petroleum land manager for the Division of Oil and Gas, wrote in the May 8 approval.
Doyon, as the party seeking reasonable concurrent use, Smith said, "must prevent and avoid unreasonable interference with MHLLC's operations." (The Mustang field in the SMU is currently in cold shutdown.)
In its permit application Doyon included a copy of a use agreement between it and Brooks Range Petroleum Corp., the former SMU operator, dated Oct. 1, 2020. Doyon, the division's approval said, "will exercise good faith to maintain a commercial use agreement with MHLCC while the camps are located within SMU, and immediately notify the State if there are any changes in this or any related use agreement."
Public review Although there was no public review of the permit application because public notice of a miscellaneous land use application is discretionary under 11 AAC 96.030, the division asked the following government entities March 13 for comment on the plan: U.S. Army Corp of Engineers, Alaska Department of Environmental Conservation, Alaska Department of Fish and Game, DNR's Division of Mining, Land & Water, and the North Slope Borough. The comment deadline was March 27. No comments were received.
First well in June The two Doyon camps aren't the only camps supporting the Pikka development.
In April a 185-person rig camp was moved to drill site ND-B at the Pikka unit. The camp was followed by Parker Rig 272, in preparation of spudding of the company's first well in June.
OSA will be excavating well cellars at its ND-B drill site.
In an April 18 pool rules hearing with the Alaska Oil and Gas Conservation Commission OSA said its initial target at Pikka is the Nanushuk 3 reservoir, with 43 development wells planned at the ND-B pad, 41 into the Nanushuk oil pool and two into Alpine C. The company said the Alpine C wells were planned for later, and that they would apply then for pool rules for Alpine C.
Although all Pikka wells will be extended reach drilling, ERD, or ultra-ERD, earlier wells will be the shorter ones, which are less challenging to drill.
Initial wells drilled will be suspended as Pikka production facilities are projected to come online later with first oil production projected in May 2026.
Phase 1 of the Pikka development, with the 41 Nanushuk wells, will have waterflood with water initially from the seawater treatment plant OSA is building, and later use produced water when the rate is high enough to avoid freezing issues in the line between the Nanushuk Processing Facility and ND-B.
The company plans reservoir gas injection for the miscible water alternating gas, WAG, enhanced oil recovery project.
Phase 1 reserves Official reserves for Pikka Phase 1 are booked at 397 million barrels, including the two Alpine C wells, with an expected recovery factor, combined waterflood and WAG EOR, at about 37% and expected peak annual rate of 80,000 barrels of oil per day.
OSA said it is progressing two additional drill sites to develop remaining resources in the unit.
Planned development with modular facilities will reduce initial capital requirements, the company said, with Phase 1 development including building out the initial processing facility, drill site, seawater treatment plant and operations pad.
The Nanushuk Processing Facility is a modular design with two 40,000 barrel per day processing trains and is expandable in 40,000 bpd increments.
The seawater treatment plant has a 100,000 bpd capacity and is expandable up to 165,000 to 200,000 bpd.
- KAY CASHMAN
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