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Vol. 26, No.45 Week of November 07, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Advancing Pikka

Oil Search Alaska files latest plan of development for North Slope project

Kay Cashman

Petroleum News

On Nov. 2 Oil Search Alaska, or OSA, filed the 2022 Pikka unit plan of development for the one year-period beginning Feb. 1, 2022, with the Alaska Department of Natural Resources and its Division of Oil and Gas.

Based upon work conducted under previous Pikka unit exploration and development plans, including appraisal drilling activities in 2018-19 and civil works construction in 2019 through 2021, OSA said the working interest owners continue to advance development in order to establish Pikka oil and gas production.

The Pikka unit working interest owners, or WIOs, are operator OSA with 51% and Repsol E&P USA with 49%.

In its proposed 2022 plan of development, or POD, OSA told the division that Phase 1 of the Pikka project involves a single drill site, ND-B, and associated pipelines and production infrastructure. (The company has previously said peak production from Phase 1 will quickly reach 80,000 barrels a day.)

“The WIOs will drill wells and construct and operate infrastructure and facilities to produce and transport crude oil from the Nanushuk and other reservoirs,” OSA said.

Pressure on division

The “key forward development activities” in the 2022 POD are “subject to timely receipt of satisfactory division and other regulatory approvals, commercial terms and economic conditions.” Those development activities include continuation of engineering and regulatory activities in connection with the WIOs decision on project sanction in 2022, OSA said in the proposed POD.

The company pointed out that “a final director’s determination and notice to proceed to the construction phase of the seawater treatment plant, or STP, facility and pipeline project has not yet been issued by the division.”

“This notice to proceed is a necessary pre-condition to STP facility and pipeline construction. Given the necessity for water of sufficient quality and quantity for Pikka development operations,” the notice to proceed from the division impacts the WIOs being able to “make the significant project financial commitments necessary to maintain project schedule,” OSA said.

Not receiving the notice to proceed to the construction phase of the STP facility and pipeline project will jeopardize Pikka production startup, the company said.

Work commitments

Existing project infrastructure maintenance work will continue in 2022, OSA said in its proposed POD, including minor gravel road and pad maintenance and snow removal from select culverts prior to spring breakup, as well as the bi-annual inspection of the Miluveach River Bridge.

In addition, the company said work in Nuiqsut for the U.S. Army Corps of Engineers compensatory mitigation projects is planned, either in the 2022 or 2023 winter season. This work includes construction of a new gravel pad and completion of a geotechnical program.

Subject to project sanction, development drilling initially targeting the Nanushuk reservoir is scheduled to begin in 2023 from the ND-B pad.

Construction activities for field infrastructure will continue in 2023 to support field production beginning in 2025.

Enviro studies continue

“The WIOs will continue to conduct environmental studies to protect biodiversity,” OSA said, which includes programs in hydrology, fish, water quality, waterfowl, Nuiqsut fall subsistence fishery, caribou and subsistence use in the area.

OSA said it will also continue to work with key North Slope stakeholders, including the North Slope Borough, Kuukpik Corp. and the community of Nuiqsut, noting it “routinely holds events in the community of Nuiqsut emphasizing the importance of healthy communities, education and training opportunities, and maintaining sustainable livelihoods.”

Components of the overall development infrastructure, including future phases, consist of the following:

* Nanushuk Processing Facility, or NPF, which will receive production from the ND-B development pad and future development drill sites, and process it to sales quality crude, and more.

* Nanushuk Operation Pad, or NOP, which includes the main camp, shops, storage, and a fuel station.

* ND-B development pad.

* Infield pipelines and cables.

* Import and export pipelines:

* Tie-in Pad, or TIP, which will facilitate connection of the Pikka sales oil pipeline to existing North Slope export pipelines.

* Other civil infrastructure, including gravel pads for all facilities with connecting gravel roads and bridges.

* Seawater Treatment Plant.

OSA said it will continue to refine subsurface modeling and advance development well design, in preparation for development drilling.

The company said it has completed appraisal drilling activities sufficient for defining the resource targets (and surface locations) for the proposed development.

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Repsol CEO lauds Pikka’s low carbon footprint

In a report on the previous year’s performance included in operator Oil Search Alaska’s Nov. 2 filing of the 2022 Pikka unit plan of development, OSA pointed to the Pikka project’s sustainability initiative and low carbon footprint.

Through the front end engineering and design, or FEED, process OSA has continued to identify greenhouse gas, or GHG, emissions reduction opportunities and implement them into Pikka’s design.

In fact, OSA, which holds a 51% working interest in the Pikka unit, has been designing the development project to be a global leader and model for efficient low emission intensity developments by incorporating GHG emissions targets agreed upon with Repsol, which holds a 49% working interest in the Pikka unit.

Repsol’s involvement in the development of Pikka, which is west of the central North Slope, appears to fit with its CEO Josu Jon Imaz’s quest for a low carbon future as well.

Since Imaz assumed the top executive position in the Spanish major in 2014, he has led the company’s transformation process, establishing Repsol as a global multi-energy company, a major player in the Spanish electricity and gas market, and a leader in the development of sustainable mobility solutions that boasts one of the most efficient refining systems in Europe.

Under Imaz’s leadership, Repsol has accelerated its assets’ decarbonization process, becoming one of the leaders in the energy transition in Spain and the first company to commit to reaching net zero emissions by 2050.

In a recent interview with Energy Intelligence, Imaz, who has a PhD in Chemical Sciences, was asked how the Pikka project in Alaska fit with Repsol’s strategy to be low cost, low carbon and shorter cycle.

“The North Slope,” Imaz explained, “is an area where infrastructure, facilities, pipelines are (already) there. … It’s light oil so there are fewer emissions in terms of carbon footprint than some other oils in the world. And the emissions footprint of our Alaska asset is going to be around 75% less than the current coverage for North Slope operations” (based on the Wood Mackenzie Emissions Benchmarking Tool).

Imaz said the Pikka project is “low cost and low greenhouse emission intensity, consistent with our commitment to align the company’s portfolio with the objectives of the Paris Agreement. And, as I said before, a part of the energy demand in 20 years is going to be covered by oil. And this oil has to be an oil of low break-even, light oil, with the lowest possible footprint in carbon emission terms and avoiding, in some way, the new frontier areas. … Alaska is fitting with this view.”