“This is a key milestone toward realizing material value from our Alaska assets and creating long term benefits for the North Slope community and jobs for Alaskans,” Oil Search Managing Director Keiran Wulff said. Oil Search proposed building up to three drill sites, about 25 miles of roads and about 35 miles of pipelines, a central processing facility, two bridges and an operations center with beds for 200 workers as part of the Pikka development, the Associated Press reported.
Engineering and design will progress for the production facility, pipelines, infrastructure for a single initial drill site and operations pad infrastructure with the goal of delivering 80,000 bopd in 2025, according to the company. It also has interests in a number of undeveloped gas fields in Papua New Guinea, including assets operated by France's Total SA (TOT).Phase 1 will cost about $3 billion and include a single drill site and a production facility with 80,000 barrels of oil per day (bopd) capacity, the company said. Oil Search operates all of Papua New Guinea's producing oil fields, though these are dwarfed by output from Exxon Mobil Corp.'s (XOM) big liquefied natural gas operation in the country, in which Oil Search has a 29% interest. The US$450 million to buy the additional stakes from Armstrong Energy and GMT Exploration will be funded from existing credit lines, and Oil Search said it expected to finalize additional one-year bank credit lines for US$300 million to cover the period when it aims to sell some of its Alaskan interests. Repsol and Oil Search's base plan would see the pair develop Nanushuk to initially produce 30,000 barrels a day from 2022, using the processing facilities of its neighbor, before building out dedicated facilities that could produce about 120,000 barrels daily as full-field output begins in 2024. Oil Search said it expects to soon increase its current resource estimate for the Pikka Nanushuk and adjacent fields, which currently stands at a gross 500 million barrels. That would see the Papua New Guinea company retain 51% of the Pikka unit and the Horseshoe block, while buying a 51% stake in the leases Repsol acquired in 2017, resulting in a US$64.3 million payment from Repsol to Oil Search. On Friday, Oil Search said it had agreed with Repsol to align ownership of their shared Alaskan assets. Earlier that year, Spain's Repsol and exploration firm Armstrong Energy estimated Nanushuk could hold 1.2 billion barrels of recoverable light oil, which would be one of the biggest onshore U.S. Oil Search, based in the Papua New Guinea capital of Port Moresby and listed in Australia, made a foray into Alaska in late 2017 with a US$400 million deal to buy into three exploration blocks that included the Nanushuk oil field sandwiched between two established fields controlled by ConocoPhillips (COP). The company said the timing of a sale would allow it to incorporate the latest drilling results, maximizing the value of the assets. Oil Search plans to sell part of its Alaskan portfolio ahead of making a final investment decision on the first phase of development on the North Slope's Pikka Nanushuk development, which is scheduled for mid-2020. The decision to push more deeply into Alaska as part of an effort to diversify away from dependence on liquefied natural gas production in Papua New Guinea comes after Oil Search reviewed drilling and other data on the Alaskan fields compiled over the past 18 months.
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