![]() Acting Commissioner Akis Gialopsos concluded that the state reserves the right to grant road access on state lands, though he expressed hope that the parties would reach an agreement. To avoid slowing Santos’ momentum, the Alaska Department of Natural Resources last year permitted its crews to use the roads, free of charge for the time being. The companies have been at loggerheads for more than a year. ConocoPhillips countered with a request for $95 million spread over twenty years, noting that annual maintenance costs $15 million. The roads were built in the ‘80s by Arco Alaska, which was divested by BP during a 2000 merger and became part of Philips Petroleum, which joined with Conoco in 2002.Īs Santos shifted from exploration toward production, the company offered ConocoPhillips $60 million for access to the Kuparuk roads, treating the payment as a courtesy for upkeep costs. “Pikka Phase 1 will execute a responsible development plan with a small surface footprint and utilize existing infrastructure, including the Kuparuk transportation pipeline and the Trans Alaska Pipeline System,” says Gallagher.Įxploration crews have been utilizing 75 miles of gravel roads across Kuparuk, with the permission of ConocoPhillips. Pikka is situated near the Colville River village of Nuiqsut and west of ConocoPhillips’ Kuparuk River Unit. Still, the road to Pikka has some obstacles. The Phase 1 scope, according to a 2019 Clean Water Act permit, encompasses three drill sites for production and injection wells, a central processing facility, an operations center and camp, approximately 35 miles of pipelines, two bridges, and approximately 25 miles of roads. Modifications to the contracted drilling rig continue on schedule.” That schedule was holding, as of Santos’ quarterly report in January, which contained this brief statement: “The Pikka Phase 1 project is progressing to plan with over US $800 million of contracts committed and fabrication of the processing facility modules underway. So we feel like we’ve really well positioned the project in spite of the inflationary environment that we’re in to maintain our promise on cost and schedule.” “So of our total spend, about 60 percent of that is fixed the remaining 40 percent represents contingency and some unit cost labor. “We’ve set up several large engineering, procure, fabricate contracts that are fixed price in nature,” Dingeman told investors. With the FID, the company enlisted an army of contractors. Three years later, the Oil Search workforce swelled to 150 by the time of the Santos merger. When Pikka changed hands from Armstrong to Oil Search, just three employees in Alaska were attached to the project. So hopefully, we can do a bit better than that.” “We’re looking for opportunities to accelerate that after Kevin said that we were sandbagging. “That’s our planning case,” Dingeman assured investors. ![]() Last summer, in advance of the final investment decision, Repsol CEO Josu Jon Imaz forecast first oil in 2026. After crude oil prices dropped in 2020, the investment was halved, and Phase 1 was scaled down to 80,000 barrels per day. When Oil Search bought into Pikka, the company expected first oil in 2023, based on a plan to invest $6 billion and produce 120,000 barrels per day. Santos hung its shingle outside within the building, Dingeman kept his role, becoming an executive vice president for Santos and its subsidiary, Oil Search Alaska. Oil Search had set up headquarters in BP’s recently vacated Anchorage high-rise. At least, not until Santos and Oil Search completed a merger in December 2021. Armstrong sold its majority stake in 2018 to Papua New Guinea’s largest energy company, Oil Search-no relation to Santos. Repsol maintains 49 percent ownership of Pikka. The layer just beneath, the Torok formation, extends offshore and may prove to be even richer. Further drilling in 2015 discovered economically viable flow rates, and more exploration to the south established Nanushuk as the largest onshore find in the United States since the ‘80s, with an estimated 768 million barrels of recoverable oil. The significance of the Nanushuk formation had been overlooked for decades until 2013, when the Pikka discovery well Qugruk 3 was drilled by Spanish energy company Repsol and Colorado-based Armstrong Oil & Gas. The river forms the eastern boundary of the National Petroleum Reserve-Alaska, just west of the Pikka leases. Pikka sits on top of the Nanushuk formation, a geologic layer from the early Cretaceous Period, about 100 million years ago, when Dromaeosaurus skulked beneath gingko trees near what is now the Colville River.
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