First Oil Reached at Alaska's Pikka Project

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Repsol and Santos said more oil is coming out of the North Slope of Alaska. The state has seen moderate success with its energy sector over the last few years.

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A First for Repsol

Some 80,000 barrels of oil per day are expected by the third quarter now that first oil was achieved at the Pikka prospect in Alaska, international partners announced.

According to Industrial Info Resources data, the Pikka development on the North Slope has a total investment value of around US$1 billion, including more than $70 million in new pipe.

"The start of production at Pikka will contribute decisively to revitalizing Alaska's oil sector after decades of decline and will consolidate the project as an important production hub in the area," said Josu Jon Imaz, the chief executive officer of Repsol, in a statement Tuesday.

Repsol is involved in the project alongside Australian energy giant Santos.

Republican representatives in the state said Alaska marked its comeback following one of the best oil and gas lease sales ever in the National Petroleum Reserve-Alaska (NPR-A). High bids in March totaled $163 million for rights to drill across 1.3 million acres in the reserve.

The lease in the NPR-A was the first since 2019. Republican leaders criticized former President Joe Biden for throwing up roadblocks to Alaskan energy development. A February lease sale for the rights to drill off Alaska's Cook Inlet received no bids at all, prompting environmental groups to decry President Donald Trump's "fossil fuel fantasy."

Spanish energy company Repsol was awarded 42 exploration blocks in the March lease sale. For Pikka, work started with 28 developmental wells in the North Slope, though that will be expanded to 45 as the project ramps up.

This is the Spanish energy company's first-ever project in Alaska.

By the Numbers

• 80,000 bpd from Pikka
• 450,000 bpd from Alaska this year

Success Getting Easy for Alaska

Earlier this week, Alaska Governor Mike Dunleavy announced that South Korean energy firm POSCO signed memoranda of understanding to help steer six projects across the Alaskan energy sector, from rare earth developments to a geothermal energy project on the Cook Inlet.

"Alaska is open for business, and this agreement reflects the world-class investment opportunities our state offers," the governor said. "POSCO International is a global leader, and their interest in Alaska validates what we have long known -- our resources, our geography, and our people position us for extraordinary economic growth."

POSCO early this year committed to supplying the bulk of the steel necessary for a pipeline slated to feed the Alaska LNG facility. POSCO also secured 1 million metric tons of liquefied natural gas (LNG) per year from the project for a 20-year period.

Glenfarne Alaska, the lead developer of Alaska LNG, announced Monday that "all major North Slope producers" have agreed to feeding the initial pipeline phase of the project, which is slated to help meet Alaska's domestic needs.

The first phase would include a 739-mile, 42-inch pipeline, though working in the Alaskan tundra is complicated by a construction season shortened by a changing climate.

If the LNG export phase is completed, it would deliver 3 million tons per annum (MTPA) of gas in the liquid form. Federal data show Alaskan gas production is expected to average 1 billion cubic feet per day this year, less than 1% of the nation's total. Oil production is expected to average 450,000 barrels per day, accounting for 3% of the total.

Key Takeaways

• First oil reached at North Slope.
• This is Spanish energy company Repsol's first project in Alaska.

About Industrial Info Resources
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