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Nanushuk P.A. in Santos's North Slope Pikka unit approved by DO&G
Kay Cashman Petroleum News
Under a delegation of authority from the commissioner of the Alaska Department of Natural Resources to the Division of Oil and Gas enabled division Director Derek Nottingham to approve the Nanushuk participating area on Oct. 23 for the Pikka unit on the North Slope.
On Aug. 12 the application to form the Nanushuk PA was submitted by Santos subsidiary Oil Search (Alaska) LLC , operator of the Pikka unit, or PKU.
The State of Alaska and Arctic Slope Regional Corporation, or ASRC, jointly manage the PKU.
Per Alaska statute, a participating area "may include only the land reasonably known to be underlain by hydrocarbons and known or reasonably estimated through use of geological, geophysical, or engineering data to be capable
of producing or contributing to the production of hydrocarbons in paying quantities."
The Santos subsidiary submitted both confidential and public information in the application. The confidential geological, geophysical, and engineering data supports the application as approved by the division, and indicates that the acreage proposed for inclusion in the Nanushuk PA is capable of producing, or contributing to production of hydrocarbons in paying quantities, or is reasonably estimated to be capable of producing or contributing to production of hydrocarbons in paying quantities, the division said in its decision.
Development history The PKU was originally approved on June 18, 2018, encompassing approximately 63,304 acres of State and joint leases located in the central North Slope region near the Colville River Delta.
The first unit expansion was approved on Nov. 29, 2016, adding approximately 14,440 acres to both the eastern and western flanks of the original unit boundary.
A second expansion was approved on Sept. 10, 2024, incorporating approximately 19,641 additional acres to the east. As a result, the current PKU covers a total of approximately 97,385 acres.
The unit shares most of its western boundary with the Colville River unit and much of its eastern boundary with the Quokka unit.
The proposed Nanushuk PA includes approximately 17,035.50 acres located in the central-western portion of the unit.
A comprehensive review of historical exploration activities, regional structure, stratigraphic framework, depositional environments, and other potential hydrocarbon accumulations within the PKU area is provided in Section III.A.2 of the original unit formation and first unit expansion decisions.
At the time of unit formation, several prospective hydrocarbon-bearing intervals were identified, including
(from shallower to deeper): the Cretaceous Nanushuk Group, the Cretaceous Torok formation, the Lower
Cretaceous Kuparuk C sand, and the Alpine A, Alpine C, Nuiqsut, and Nechelik sandstones within the Jurassic Kingak formation.
Over the past decade, exploration, appraisal, and development efforts within the PKU have primarily focused on the Nanushuk formation. Since the second expansion, two additional
appraisal wells, each with a sidetrack and production test, along with the more than 21 development wells have been drilled.
The Oct. 23 decision focuses on the results of these more recent appraisal and development activities as they pertain to the proposed Nanushuk PA.
Current activity and production As of Aug. 27, Santos reported that first oil production is expected in the first quarter of 2026, with the potential for acceleration into late 2025. At that time, the 21 development wells had been drilled, most of which have approximately 5,000-foot horizontal laterals.
Santos also reported the completion of
six flowback tests in 2025, which led to an upward revision of expected initial production rates to 7,000 barrels of oil per day per well.
Santos anticipates initial production rates of 80,000 barrels of oil per day
from the Nanushuk Development Base, or NDB, facility in Phase 1 of the Pikka project.
Outside of the PKU, the Nanushuk formation remains a key focus for exploration and development on
the North Slope, with several operators actively pursuing opportunities across its fairways. At the Colville River unit, or CRU), ConocoPhillips continues to produce from the Nanushuk at both the Qannik and Narwhal PAs.
ConocoPhillips also plans to expand production within CRU through the newly approved Minke PA, which received approval in 2024. At the Kuparuk River unit, or KRU, Nanushuk production is ongoing in the Coyote PA. Further west, in the National Petroleum Reserve-Alaska, ConocoPhillips is
progressing development of the Willow prospect, another project targeting the Nanushuk formation.
Characteristics of reservoir The Nanushuk reservoir in the PKU is situated on a broad, eastward-plunging anticlinal structure.
However, the trapping mechanism for the Nanushuk reservoirs is stratigraphic, with hydrocarbon entrapment not reliant on structural closure.
The Nanushuk formation represents the topset and upper foreset segments of a series of Lower Cretaceous prograding clinothems deposited in a foreland basin
setting.
The proposed Nanushuk PA targets oil reservoirs within a single clinothem, informally designated as the Nanushuk 3. This interval was deposited in a subaqueous shelf and shelf-edge deltaic environment.
The lack of evidence for distributary channels suggests that sediment was transported in sheet flows across the shelf. This depositional model supports a laterally extensive reservoir system, measured at approximately 3 miles wide and more than 30 miles long.
Reservoir thickness across the Nanushuk 3 interval varies significantly. Reported net pay thickness ranges from less than 50 feet (15 meters) on the shelf to more than 250 feet (76 meters) in the more distal, seaward- expanded zone. Porosity values reach up to 29 percent, with an average of approximately 20 percent.
Permeability values range as high as 690 millidarcies, with an average of approximately 47 millidarcies.
Published estimates suggest that the original oil in place, or OOIP, for the entire field ranges between 9.7 and 14.8 billion barrels, with recoverable volumes estimated between 1.9 and 4.4 billion barrels of oil.
Downhole fluid samples indicate oil gravities ranging from 23 to 32.5 degrees API, with gravity decreasing with depth. Gas-to-oil ratios range from 262 to 442 standard cubic feet per barrel.
Current geological and geophysical interpretations do not indicate the presence of a gas cap within the Pikka
reservoirs.
Geochemical analyses indicate that the oils in the Nanushuk reservoirs are primarily sourced from calcareous shales of the Shublik formation, with minor contributions from the Kingak formation.
The HRZ-Hue-Pebble shale interval is thermally immature in the Pikka area and is not believed to have contributed to hydrocarbon generation.
Recent activity Following the 2013 discovery of more than 250 feet of oil-saturated Nanushuk 3 sandstone in the Qugruk 3 well, several delineation and appraisal wells were drilled within the proposed Nanushuk PA.
In 2014, the Qugruk 7 well was drilled to a total depth of 7,176 feet measured depth (6,808 feet true vertical depth) in
the southeast quarter of Section 17, Township 12 North, Range 6 East, Umiat Meridian. It encountered 200 feet of oil-saturated Nanushuk 3 sandstone.
In 2015, Armstrong drilled the Qugruk 8, Qugruk 302, Qugruk 9, and Qugruk 9A wells within the PKU.
Qugruk 8, a vertical well located in the northwest quarter of Section 18, Township 11 North, Range 6 East, Umiat Meridian, was drilled to a total depth of
4,700 feet. It confirmed the Nanushuk discovery and flowed 30-degree API crude oil at rates up to 2,160 barrels of oil per day. Whole core and sidewall core data from this well have been interpreted as representing shelf-edge facies within the Nanushuk 3 interval.
The Qugruk 301 well, a 2,000-foot lateral horizontal well, was drilled to a bottomhole location in the southeast quarter of Section 31, Township 12 North, Range 6 East, Umiat Meridian, approximately two miles north of Qugruk 8. This well produced more than 30,000 barrels of oil at rates up to 4,600 barrels per day over an 18-day test period.
The Qugruk 9 well was drilled to a bottomhole location in the northwest corner of Section 8, Township 12 North, Range 6 East, Umiat Meridian, reaching a total depth of 7,140 feet measured depth (6,645 feet true vertical depth). It was subsequently sidetracked to Qugruk 9A, which reached a bottomhole location in the northwest quarter of Section 7, Township 12 North,
Range 6 East, Umiat Meridian, approximately 3,500 feet west of the original Qugruk 9 bottomhole location.
Qugruk 9A was drilled to a total depth of 7,075 feet measured depth (6,650 feet true vertical depth). This well lies just outside the proposed Nanushuk PA to the north and has been interpreted as
containing proximal shelf facies within the Nanushuk 3 interval.
Additional appraisal wells include Pikka B and its sidetrack Pikka B ST1, which were drilled to 5,300 feet measured depth (5,192 feet true vertical depth) and 8,600 feet measured depth (4,921feet true vertical depth), respectively, in Sections 35 and 25 of Township 11 North, Range 5 East, Umiat Meridian. Whole core, sidewall core, pressure, and wireline data were collected. Pikka B ST1 flowed at a stabilized rate of 2,410 barrels of oil per day, restricted by testing parameters, following a single-stage fracture stimulation in a 71-degree wellbore.
The Pikka C and Pikka C ST1 wells were drilled in Section 16, Township 12
North, Range 6 East, Umiat Meridian, to measured depths of 5,000 feet (4,650 feet true vertical depth) and 9,093 feet (4,118 feet true vertical depth), respectively. Pikka C ST1 included a 3,800-foot horizontal section with a six-stage fracture stimulation. Mechanical issues prevented a full cleanout, the well
stabilized at more than 860 barrels of oil per day with higher peak rates observed during unloading. Sidewall cores were also collected from this well.
Conclusion Santos submitted data in support of its PA application which included publicly available and confidential data and interpretations. Santos interpreted the 3-D seismic data and integrated it with well data to construct a geomodel covering the proposed Nanushuk PA.
The geomodel was used to develop maps of reservoir characteristics including structure maps, interval isopachs, net pay maps, porosity maps, oil saturation maps, hydrocarbon pore volume maps, fluid property maps, and pressure maps.
The division reviewed the input seismic data and interpretation, the input well logs and interpretation, maps generated from the geomodel, and well correlations and geologic cross-sections provided by Santos.
All proprietary data and interpretations will be held confidential in accordance with AS 38.05.035(a)(8)(C).
The data provided and reviewed supports the existence of the Nanushuk 3 reservoir in the proposed Nanushuk PA.
Santos also submitted well paths for the existing and planned wells in the proposed Nanushuk PA. The extent of the proposed Nanushuk PA is limited to a three-quarter mile radius around
planned wells in Pikka Phase 1 development or the Pikka unit boundary, whichever is smaller. If additional wells are drilled in the future or planned wells are not drilled in a timely manner, the proposed Nanushuk PA will be expanded or contracted to reflect the area that actually has been developed.
Plans of development Santos submitted an amendment to the 2025 Plan of Development, or POD, as part of the application, and met with the division for a technical presentation on May 29 and June 17.
An amended POD is required per Section 9.3.1 of the Pikka unit agreement, which requires that concurrent with a PA
application containing any joint land, the operator shall submit a plan of development amendment that includes: (i) a well schedule listing all injection wells and production wells proposed to be drilled into the participating area prior to the expiration of two years after commencement of sustained unit
production; (ii) the proposed locations of injection points in injection wells and proposed locations of completions or perforations in the productive formation in production wells proposed to be drilled during such period around which it is planned that a circle forming any part of the outer boundary of the participating area is created; and (iii) a map depicting the proposed outer boundaries of the participating
area at the time of its creation based on the locations of the proposed injection and production wells described in such well schedule.
The division approved the amended POD.
Economic costs and benefits The formation of the Nanushuk PA will provide economic benefits to the State through royalty and tax payments on production. Allocating production according to the approved Nanushuk PA tract factors instead of on a well-by-well basis maximizes oil and gas recovery, promotes conservation, prevents waste,
and protects all parties of interest, the division said in its Oct. 23 approval decision.
A person affected by this decision may appeal it, in accordance with 11 AAC 02.
Any appeal must be received within 20 calendar days after the date of "issuance" of this decision and may be mailed or delivered to John C. Boyle III, commissioner, Department of
Natural Resources, 550 W. 7th Avenue, Suite 1400, Anchorage, Alaska 99501; faxed to (907) 269-8918, or sent by electronic mail to [email protected].
This decision takes effect immediately. An eligible person must first appeal this decision in accordance with 11 AAC 02 before appealing it to Alaska Superior Court.
A copy of 11 AAC 02 may be obtained from any regional information office of the Department of Natural Resources.
Any questions regarding this decision should be provided to Heather Beat with the division at (907) 269- 8792, or by email at [email protected].
-Kay Cashman
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