Pikka Alaska Oil Project Starts Continuous Production

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

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Summary

First oil at the Pikka development was reached in May. Developer Santos said the project in the North Slope is now delivering oil at a steady rate, helping to revitalize the Alaskan energy sector.

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Steady as She Goes

On Tuesday, Australian energy company Santos announced it started continuous production of 20,000 barrels per day (bpd) from the first phase of the Pikka development. The Industrial Info Resources Global Market Intelligence (GMI) Oil & Gas Production Project Database offers detailed project reports on the development.

"The first production wells are now online and delivering continuous production," said Santos Managing Director and Chief Executive Officer Kevin Gallagher. "We will commence pressure support through seawater injection and bring more wells online progressively, building production toward our plateau target of approximately 80,000 barrels per day in the third quarter of this year."

First oil was reached May 20. Santos is working on Pikka alongside Spanish energy company Repsol. Work started with 28 developmental wells in the North Slope, although that will be expanded to 45 as the project ramps up.

Proved oil reserves in Alaska amount to more than 3.1 billion barrels, the fourth-largest in the United States. But crude oil production is expected to average around 450,000 bpd this year, barely 4% of the nation's total.

Production peaked in Alaska at 2 million bpd in 1988, but has declined steadily ever since due to field maturation. The Pikka development is among a small handful of projects that's expected to lift production in the state. According to the U.S. Energy Information Administration, Alaskan oil production is on pace to increase annually by just over 10% next year to reach its highest level since 2018.

Alaskan Energy on the Ascent

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.

U.S. President Donald Trump has singled out Alaska as part of a strategy of energy dominance.

"It is the policy of the United States to fully avail itself of Alaska's vast lands and resources for the benefit of the Nation and the American citizens who call Alaska home," part of an executive order from January 2025 reads.

Included in Trump's strategy is exporting liquefied natural gas (LNG) from Alaska, possibly catering to the demands in Asia. Lawmakers in Alaska are behind legislation that replaces the existing tax regime for energy projects with an alternative based on the volume of gas that moves through the proposed pipeline for the Alaska LNG project rather than the value of the project itself.

The first phase of the project would include a 739-mile, 42-inch pipeline to be constructed in four sections, with potential tie-backs to existing midstream infrastructure. It will be difficult to build a pipeline, however, given the construction window in Alaska is narrowed by a warming climate, as special infrastructure is needed when the ground thaws.

Phase II would add on coastal infrastructure that would be able to produce 20 million tons per annum (MTPA) of natural gas for potential exports to Asia.

Japanese energy companies JERA and Tokyo Gas are among the major companies so far securing offtake from Alaska LNG. Australian services company Worley will offer engineering, procurement and construction management (EPCM) services for Phase I development. Readers can learn more from detailed project reports.

Key Takeaways

• Alaskan energy production is on the rise.
• Oil production is expected surpass recent highs by next year.

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