In for long haul
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Oil Search views Pikka as start of series of North Slope developments
Alan Bailey Petroleum News
With further oil potential in the Nanushuk formation to the north and south of its Pikka development, Oil Search Alaska sees Pikka as the first of a series of potential developments in a fairway between the Colville River and Kuparuk River units on the North Slope, Richard D’Ardenne, Oil Search Alaska senior vice president of development, told the Alaska Support Industry Alliance’s Meet Alaska conference on Jan. 18.
The Nanushuk reservoir for Pikka actually extends more than 100 kilometers north to south. And, while the company has not explored the more northerly end of that trend, there is much promising acreage to the south, in the area of the successful Horseshoe exploration wells, D’Ardenne said.
“We’ll be doing further drilling there next season, next ice season,” he said. “We have a lot of runway ahead.”
The expectation for the Pikka development is an initial processing facility with capacity to handle 120,000 barrels per day of oil. The idea is to repeat that many times over the next 10 years, with more projects coming down behind the one that is underway, D’Ardenne said.
“So it will be an interesting ride,” he said. “We’re going to be in this for the long haul.”
Horseshoe, for example, might turn out to be an expansion to the Pikka development. Or it could involve its own standalone production facility, D’Ardenne said.
Two rigs in operation During the current winter off-road drilling season, Oil Search has two drilling rigs operating off two ice pads in the Pikka unit, with a plan to complete four well penetrations. The operation has involved the construction of 25 miles of ice roads, two ice drilling pads, and two ice pads for camps. There is also a good-sized ice bridge crossing the Colville River to the more northerly of the drilling pads, D’Ardenne said. The idea behind the drilling is to prove up existing finds and conduct oil pool delineations, rather than find more oil, he said. Oil Search also wants to conduct some testing of concepts for drilling and well strategies - the company currently sees a recoverable volume of at least 500 million barrels of oil from the Pikka development, and is optimistic about the upside to this estimate, D’Ardenne said.
The first of this winter’s wells, the Pikka B well, is about 6 miles from the village of Nuiqsut, while the other well, Pikka C, is about 13 miles north of Pikka B. Drilling began at Pikka B on Dec. 31, while Oil Search expects drilling at Pikka C to start on Jan. 20. Doyon Drilling’s Arctic Fox rig is drilling Pikka B, while the Nabors rig 105 is drilling Pikka C.
“We’re a couple of days ahead on both programs,” D’Ardenne said.
First oil in 2023 Oil Search has indicated an expectation for first oil from its Pikka development in 2023. The U.S. Army Corps of Engineers published the final environmental impact statement for the project in 2018. The company does not know what the impact of the government shutdown will be on the issue of a record of decision for the final EIS, but expects that decision at some time in the first quarter of this year.
Oil Search, based in Australia and with major operations in Papua New Guinea, took over operatorship of Pikka from Armstrong Energy in 2018, having closed on the first component of the acquisition of Armstrong’s and GMT Exploration’s interests in the unit. Oil Search anticipates closing on the remainder of the deal, to end up with a 51 percent interest in the unit, during the first half of this year. Repsol has a 49 percent interest in the unit.
“So we’re on track with that and moving forward,” D’Ardenne said.
Currently, with Repsol on board as a partner, the company is conducting pre-front end engineering and design work, moving towards early FEED or transitional activities.
“We’ll be going through some pretty comprehensive reviews in the course of the first quarter and second quarter, as we prepare to make our long lead equipment orders here in the third quarter of this year,” D’Ardenne said. And Oil Search may have three drilling rigs in operation next winter, he said.
Increasing employment Having started out with nine people working in Armstrong’s Anchorage office on Feb. 1, 2018, Oil Search has been steadily ramping up its workforce numbers, as the Pikka project moves underway. The company now has 95 employees, with that number expected to increase to nearly 110 by the end of January. Most of those people will work in the company’s Anchorage office, although a few people will be carrying out engineering work in southern California.
“We’ve got over 2,000 years of combined global oil and gas experience in our office,” D’Ardenne said. “And of that we’ve got over 300 years of Alaska North Slope experience.”
Once the Pikka development is underway, Oil Search anticipates work for well over 200 people, including people working on laying gravel on the Slope and people working in Anchorage.
Safety is top priority And D’Ardenne emphasized that, both for its own staff and for the contractors that it uses, Oil Search places safety, with no injuries and no harm to the environment, at the top of its priority list.
“We want everybody to go home to their families or whatever they do after their work, safe and in the same condition that they came to work in the morning,” D’Ardenne said, commenting that this principle forms a key focus for the pre-qualification of vendors.
The company will also be compliant with government regulations and with agreements with Native corporations, local governments, and landowners he said.
In addition, Oil Search tries to maximize the use of local suppliers and contractors, either through direct contracting or through sub-contracts, D’Ardenne commented.
Another of Oil Search’s core values is reliability, with a commitment to that first oil from Pikka by 2023.
“There’s an expectation that we’re going to achieve that,” D’Ardenne said.
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