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North Slope update
ConocoPhillips, Hilcorp, Santos discuss developments, drilling, production gains
Kristen Nelson
The Alaska Legislature's House Resources Committee heard Feb. 10 from major North Slope players ConocoPhillips Alaska, Hilcorp and Santos on activities and plans across the North Slope.
The ConocoPhillips Alaska presentation was by Barry Romberg, vice president, commercial and midstream, and Ben Carlson, vice president, finance and IT.
Romberg surveyed ConocoPhillips' interests across the Slope, from its 36.5% non-operated ownership in Greater Prudhoe Bay, to its 99% ownership at Greater Kuparuk, which it operates and its 100% ownership and operation on the western North Slope -- the Colville River, Greater Mooses Tooth and Bear Tooth units.
Along with the development of Willow, in the Bear Tooth unit on the National Petroleum Reserve-Alaska, and continued investment in Prudhoe, ConocoPhillips is expanding development at Kuparuk, which came online in 1981, with Nuna and Coyote.
The North Slope is in the midst of a renaissance of oil production, Romberg said, attributing that to two major factors: a stable fiscal system in the state since Senate Bill 21 was passed in 2013 and horizontal drilling technology.
On the subject of the $8 billion Willow project, Romberg noted that this is 100% ConocoPhillips and said you won't find another company around the world -- except perhaps national oil companies -- willing to invest its own capital at 100%, citing this as evidence of the company's commitment to Alaska.
ConocoPhillips projects Ben Carlson talked about projects other than Willow and said the company has on average been investing more than $1 billion a year in capital on its legacy assets.
He noted four Alaska projects on production or coming into production soon: Nuna in Kuparuk which had first oil in December and will peak at 20,000 barrels per day; West Sak viscous oil in Kuparuk, being produced in a four-pad development; Coyote in Kuparuk where reservoir evaluation began in 2021 and a drilling program begins this year; and Greater Mooses Tooth in NPR-A which began production in 2021 and averaged 14,000 bpd from GMT-2 last year, with 25 wells completed in the reservoir so far.
In a Willow update, Carlson said there are some 2,400 workers currently working at Willow on the Slope, double the number in 2024, with 2025 construction including: 350 miles of ice road, up from 210 last year; 30 miles of pipeline up from 16 miles in 2024; 1,101,000 cubic yards of gravel, up from 887,000 cubic yards; and installation of two bridges, up from one in 2024.
Also this year the 12 Willow Operations Center modules will be transported to the 30-acre pad, Carlson said.
Kuparuk road access Asked about the Kuparuk road use issue between ConocoPhillips and Santos, ConocoPhillips' Romberg noted that a judge ruled against the state in December over a permit it issued Santos for road use, and said that parallel to the court case, ConocoPhillips and Santos have been negotiating a commercial road use agreement. Those negotiations have been progressing, he said, with the companies "working really well together and progressing negotiations."
He said access to Pikka, the Santos project, has never been blocked with the companies working under a temporary agreement that has been in place.
Santos' Peter Laliberte was asked about the agreement on road use with ConocoPhillips and said he hoped they were closer to an agreement, but said paying ConocoPhillips will be an unexpected cost that affects the overall economics, along with a cost overrun which the company has had on the project.
The business is risky, he said, and additional costs do affect investment decisions going forward.
Santos Laliberte, vice president business development for Santos in Alaska, noted that Santos, an Australian company, merged with Oil Search in 2021 which previously held the company's Alaska positions, making Alaska part of the Santos portfolio.
Santos operates and owns 51% of Pikka; the other 49% is owned by Repsol.
Laliberte said he worked for BP for about 17 years and was employee number 47 when he joined what was then Oil Search in 2018 to work on Pikka, in what he and his colleagues felt was a revitalization of the oil industry in Alaska and a resurgence of investment on the North Slope.
Santos currently has some 370 employees in Alaska and expects that number to grow to 400 by the end of the year. Some 80% of its employees have been hired from within Alaska, and some 95% of the workforce lives in Alaska.
Pikka, considered a giant oil field, was discovered by Repsol in 2013, with the discovery confirmed by Armstrong Oil and Gas in 2017.
Phase 1 of Pikka is under development, with phase 2 permitted, and then the company would move on to Quokka and Horseshoe: the three combined are the company's core area, Laliberte said. There is also a large block of non-unitized acreage south of the core area where appraisal will continue.
He said Santos is also looking at similar reservoirs, one to the east, where it has brought in a major investor, APA Corp., and is 50-50 with Armstrong in a large block of acreage in the National Petroleum Reserve-Alaska, which the company refers to as Nanushuk West. There are some 490,000 acres in the core area, 270,000 areas in the eastern Lagniappe block and almost a million acres in NPR-A.
The investment in Pikka Phase 1 by Santos and Repsol is $3.2 billion, with peak production estimated at 80,000 bpd and first oil planned for the first half of 2026, but Laliberte said there is the opportunity to accelerate that, and Santos is trying to complete the pipelines by the end of the winter as the pipelines are "the critical path item in our project," and completion of those would provide the opportunity to start up by the end of the year
There are 2,200 contractors working on the Slope in 24/7 operations; work on Pikka is 74% done.
The target is to finish stalling 120 miles of pipelines this winter, Laliberte said, with 15 of 45 wells drilled.
Hilcorp Jill Fisk, senior asset team leader for Hilcorp's Milne Point unit, said Hilcorp's target goal is to be the best operator of late-life assets in the industry. As late-life assets are brought into Hilcorp, the company improves operating efficiency, develops the properties, maintains strong cash flow and increases oil and gas recovery. And when the asses reach end of life, Hilcorp is responsible for retiring them, she said.
The company has 1,700 employees in Alaska, which it entered in 2012 with Cook Inlet acquisitions, moving onto the North Slope in 2014 and continuing acquisitions, with the latest, Fisk said, the Eni assets on the North Slope.
Hilcorp has five rigs operating on the North Slope, with a sixth, Doyon 15, recently reactivated at Nikaitchuq where it is doing workovers; that rig will be moved to Deadhorse this winter where it will be staged to move to Point Thomson next winter to start to drill one well in that field. Point Thomson is currently producing some 4,300 bpd of oil from one producer, but after the second well is drilled in 2016, that more than double production, filling the current facility to full capacity again.
Hilcorp holds some 27.1% working interest at Prudhoe and is the field operator, with 830 employees and more than 1,500 contractors working the field, which includes 230 miles of roads, almost 1,000 miles of pipelines, 47 active pads and drill sites and a little over 1,000 producing and injecting wells online on any given day.
Prudhoe facilities Prudhoe Bay started life as an oil field and is now very much a gas field, Fisk said, with gas the constraint on oil production as 8 billion to 9 billion cubic feet are moved every day.
Hilcorp took over as Prudhoe operator in mid-2020, during the COVID-19 pandemic, and during the company's first 15 months of operating the field there were no rigs running. But Hilcorp was able to arrest decline by looking for ways to control costs across the field by improving operating efficiency, reducing costs and increasing rate. Since then, production has been increasing with well workovers and new wells.
On the west end of Prudhoe Hilcorp is focused on developing Schrader Bluff viscous oil and building a 30-inch production pipeline and 12-inch gas lift line to handle increased production.
The company is also revamping facilities at Gathering Center 2 to handle the heavier Schrader Bluff oil. Compared to Milne Point, Prudhoe Schrader Bluff oil is less viscous than at Milne Point, and Prudhoe also has miscible injectant available.
Milne Point At Milne Point, where Hilcorp is celebrating 10 years as operator, the company has increased production from 17,000 bpd to some 50,000 bpd with 161 new wells, all horizontal, polymer injection and investment in surface facilities including two new pads. Prior drilling at Milne Point was primarily vertical wells, Fisk said. Hilcorp began with two pilot skids for polymer injection in 2018 and now has 10 polymer skids working and has also increased power generation and added a third train at the central facility.
Fisk said Hilcorp will use knowledge gained at Milne in its recent acquisition of Eni properties at Nikaitchuq and Oooguruk, using horizontal drilling where vertical wells have been drilled and closer placement of wells based its success at Milne.
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