Kerr-McGee delays decision on ANS Nikaitchuq development

Kerr-McGee does not expect to make a decision on development of its Alaska North Slope Nikaitchuq discovery before the end of the year, as previously indicated.

Independent and major oil companies that do not own production facilities or pipelines on Alaska’s North Slope have been keeping a close eye on Kerr-McGee’s progress in getting affordable access to infrastructure for its proposed Nikaitchuq development. The latest news from the big Oklahoma independent will give credence to the naysayers who claim non-infrastructure owners can find oil in northern Alaska, but will never be able to get reasonable and affordable agreements with facility and pipeline owners to bring those discoveries online.

To date Kerr-McGee, which entered Alaska in January 2004 and announced its first discovery that same year, has set permitting records on the North Slope.

The company had initially hoped to both sanction Nikaitchuq development by the end of this year and begin construction of its first of four potential production pads.

If the company was able to remain on schedule it would produce oil from its first pad in March or April 2006, setting a record for the shortest time between the discovery of a field and when it went into production.

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

“I can tell you we are still evaluating Alaska, but do not expect a sanctioning decision this year,” Kerr-McGee spokesman John Christiansen told Petroleum News Nov. 22.

Christiansen declined to say more but he did provide an information sheet handed out by Kerr-McGee as part of a Nov. 15 Bank of America presentation indicating four issues the company was still trying to resolve in Alaska before deciding to proceed with Nikaitchuq development. Those issues are reservoir stimulation, royalty relief from the state of Alaska, and pipeline and processing agreements with North Slope infrastructure owners.

Permitting was also listed but Petroleum News could not find a permit in public records that had not been issued for the project.

Eni Petroleum is a minority partner in the Nikaitchuq leases.

Editor’s note: See follow-up story in next week’s Petroleum News.