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Pikka Phase 1 70% complete, first oil expected 1st half 2026
Kay Cashman Petroleum News
Speaking at Santos Ltd.'s Investor Day in Sydney, Australia, on Nov. 19, Managing Director and Chief Executive Officer Kevin Gallagher said the company's Alaska North Slope Pikka Phase 1 project is now 70% complete with first oil expected in the first half of 2026, as compared to 67% complete per a third quarter Santos report released in October.
On Nov. 19 Santos announced an updated capital allocation framework that will target returns to shareholders of at least 60% of all-in free cash flow from 2026, following a period of major capital investment to bring significant new production online from the Barossa and Pikka projects.
Gallagher said the Nov. 19 announcement confirms Santos' commitment to prioritize shareholder returns when new production comes online and to support the global energy transition while generating new revenue streams for the business.
"With Barossa and Pikka coming online, Santos' production is expected to increase by more than 30% by 2027 compared to 2024 ... which will support strong free cash flow generation throughout the commodity price cycle," Gallagher said.
"Santos has been unrelenting in sticking to its strategy and implementing its disciplined operating model," he said.
The successful startup of Santos' 1.7 million tons per annum Moomba Carbon Capture and Storage project in October, with the technology and reservoirs performing as expected, demonstrates the potential for future phases to provide safe, low-cost, permanent carbon storage for customers and hard-to-abate industries, the company said.
The goal is equivalent to around 50% of Santos' 2023 equity Scope 3 emissions from the combustion and use of its products.
From its website On its website Santos said the Nanushuk play in the Pikka unit, which is operated by its subsidiary Oil Search (Alaska) LLC, represents one of the largest conventional oil discoveries made in the United States in the last 30 years, and the Pikka Phase 1 project is the most significant development on Alaska's North Slope in more than 20 years.
Pikka has low emission intensity, placing it in the top quartile of oil and gas development projects globally for greenhouse gas emissions performance.
"Pikka is poised to play an important role in the energy transition and is aligned with our company goal of managing climate change risk," the website said.
Santos is committed to delivering a net-zero project (scope 1 and 2, equity share) from first oil and has entered into memorandums of understanding with Alaska Native corporations to deliver carbon offset projects, including a strategic alliance with ASRC Energy Services, a wholly owned subsidiary of Arctic Slope Regional Corp., on leading technology development for carbon solutions in the Arctic.
The project has strong fundamentals and is in a world-class oil producing province with significant existing infrastructure, has low unabated emissions intensity and is supported by key stakeholders, including the state of Alaska, the North Slope Borough, the landowner company Kuukpik Corp. and the Arctic Slope Regional Corp., the website said.
--KAY CASHMAN
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