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No large sealifts in Santos' plans
Pikka modules trucked to Alaska; standardized module, equipment design reduces cost, Phase 1 savings $200-300M for Santos, State Kay Cashman Petroleum News
Increasing the Alaska North Slope seasonal transport window from one month to 10 months in order to level out their workforce needs for Pikka Phase 1 and future developments, Santos is "not using the very large sealift modules that you've seen in the past. Most of our facilities are being constructed in western Canada or other places and are able to be trucked," Joe Balash, Santos senior vice president of external affairs, told members of the Alaska Senate's Resources Committee in early February.
(See slide in the online issue PDF)
This makes the Dalton Highway "a very important component of our logistics approach," he said.
"We are working very closely with DOT to make sure they understand what our needs are in terms of maintenance conditions - on the Dalton so that the modules reach destination intact," he said.
Sen. Click Bishop asked: "Is that intact with no damage from the roads?"
Balash replied: "We understand the Dalton Highway is not four lanes of pavement, so there are going to be things that happen, but we have certain - production modules that have very sensitive electronic components that need to remain intact. They're going over a washboard at 40 miles per hour, so they are going to get shook loose and if we have to put them back together in Deadhorse or at Pikka it'll cost a lot more. And one of the reasons we're taking this approach is we estimate the savings to in the neighborhood of $200-$300 million. That's good for us certainly, but under the production tax system it's also good for the state because that's $200-$300 million less in lease expenditures."
Pikka Phase 1 will produce 80,000 barrels per day starting in the first half of 2026.
Standardization of design Cost reductions are driven by standardization of equipment design and module design for the 14-foot by 130-foot by 16-foot 90-ton modules.
"The facilities that we're constructing are actually two 40,000 barrel per day modules, units," Balash said.
Another question that was asked: The truckable area Santos will be taking is the Alcan to Fairbanks and then next up to Deadhorse, is that correct?
Balash replied: "That's correct for many of the loads. Some of them are actually going to tidewater and barging around to Valdez and then taking the Richardson Highway. That's not depicted on this map (in the slide with this story), but just last month we had some equipment show up in Valdez, so we're getting work spread around all over."
Furthermore, Balash said, "once we achieve first oil in Phase 1, we'll have revenue and be in a position to take final investment decision on Phase 2. In essence it's just going to mirror the facilities on the other side of the pad. And so what that means, of course, in 2026 we could conceivably be taking FID on the next Pikka phase."
In essence, project execution risk, including leveling workforce needs and reducing peak activity levels, will be reduced through the following:
* Contracting: Engineer Procure Fabricate (EPF lump sum).
* Utilizing proven and standard equipment/designs.
* Truckable modules.
* Installing modules that are trial fit in fabrication yard.
In addition, Santos is building a new seawater treatment plant, or STP, versus de-bottlenecking the existing 40-year-old Kuparuk River unit STP.
Santos Santos is an Australian company founded in 1954, primarily engaged in the production of natural gas. One of the largest domestic suppliers in Australia. But Santos also exports a significant amount of its gas as LNG to Asia-Pacific markets.
Santos has a presence in multiple jurisdictions outside of Australia, including Timor-Leste, Papua New Guinea and, of course, in Alaska.
Globally the company has approximately 4,000 employees and hopes to increase that number via the Alaska business unit.
Santos' workforce as of year-end 2023 was 259 in its organizational chart. There's a difference between its org chart and its contractor workforce. That number 259 is growing and it will continue growing throughout this year as Santos brings on the operators for the facility.
"We need them to be part of the commissioning of the facilities, in part so they understand how everything fits together and help us have a safe start-up," Balash said.
Currently Santos camps on the North Slope for Pikka Phase 1 hold 1,200 beds, but many of those are for contractor employees.
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