On Dec. 7 some 95.1% of Oil Search shareholders voted in favor of the merger with the larger Santos. Now, the deal between the two firms only remains subject to approval from Papua New Guinea's National Court of Justice. If the court approves the deal, the merger will become legally effective on Friday, Dec. 10.

The big question has been whether Santos will use the group of knowledgeable, experienced people currently employed by Oil Search Alaska and bring Pikka online as planned or sell controlling interest and operatorship to another company.

Smart money appears to be on the first option, in large part because of the huge amount of light oil involved in the Pikka unit and Oil Search's other North Slope acreage and the fact the project has been designed to be low cost with low carbon emissions.

A further indication: Oil Search acting CEO Peter Fredricson was quoted in a Financial Review article Dec. 7 as saying Oil Search's activities would continue, only under different ownership, with the company's significant operations in PNG and Alaska becoming part of the merged entity.

CLARIFICATION OF DEC. 3 BULLETIN:

On Dec. 3 Oil Search Alaska got word from the Alaska Department of Natural Resources that Commissioner Corri Feige ruled in favor of its appeal to overturn the Division of Oil and Gas' decision regarding a notice to proceed to the construction phase of the Pikka seawater treatment plant and pipeline project. According to division Director Tom Stokes, the commissioner remanded it back to the division to issue the notice to proceed, which he said would happen in a few days.

Oil Search had told the division that the notice to proceed was key to allowing the Pikka project's working interest owners, Oil Search (51%) and Repsol (49%), to "make the significant project financial commitments necessary to maintain project schedule."

Not receiving the notice to proceed to the construction phase would jeopardize production startup from the North Slope Pikka unit, the company said.

Subject to project sanction, Pikka Phase 1, which involves a single drill site, is scheduled to come online in 2025 and quickly reach 80,000 barrels a day. Subsequent phases are expected to add two more drill sites and increase output.

- KAY CASHMAN

See full story in Dec. 12 issue of Petroleum News, available online Dec. 9 at www.PetroleumNews.com

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