OIL & G A S SPECIAL SEC TION
Oil Searching COVID-19 pushes Pikka development to pivot By Amy Newman
F
ormed nearly a century ago, Papua New Guinea-based Oil Search entered Alaska’s oil and gas scene in 2018 with a $400 million purchase of North Slope oil leases from Armstrong Energy and GMT Exploration. The purchase included interests in the Nanushuk oil field in the Pikka Unit, one of the largest conventional US oil discoveries in thirty years, and the Horseshoe block. “We entered into Alaska for new growth and to diversify our operations, both geographically and for a mix of oil and gas production,” Executive Vice President of Alaska Bruce Dingeman told attendees at the Alaska Support Industry Alliance’s Meet Alaska conference in March. Since then, the three-person Alaska operation has grown to more than 150 year-round employees and a peak of 1,000 seasonal workers spread across eighteen camps during the 2019/2020 exploration and appraisal season.
48 | May 2021
“By the end of the decade, Alaska will represent about two-thirds of our production growth over that 10-year period,” Dingeman says. “It’s a very important part of that production portfolio.” Central to that growth is the development of the Pikka unit. Initially, Oil Search planned a $5 billion to $6 billion investment at the unit with first oil anticipated in 2024 and a return of 120,000 barrels of oil per day; however, two key events led the company to pivot its plans for the area to a somewhat smaller, phased approach, Dingeman said during a November meeting with investors. “First, the obvious one, the drop in price,” he said, referring to the low price of crude oil in 2020, which briefly dipped below $10 per barrel due to minimal demand during the early part of the COVID-19 pandemic. “Second, the running room that was introduced by our successful exploration efforts”
at Mitquq and Stirrup during the 2019/2020 season. Though ostensibly a setback, the revised development plan ultimately allows Oil Search to increase its overall production at a reduced cost.
Largest North Slope Civil Program Oil Search completed its second Alaska drilling season in 2020 with two rigs at the Mitquq and Stirrup exploration wells, part of the Quokka and Horseshoe trends, respectively, according to Dingeman. Discoveries from a mother bore and sidetrack drilled at the Mitquq wells and drilling at the Stirrup well showed excellent flow test results. It also showed the potential of Mitquq to become a low-cost tieback to the Pikka Unit Development, and Stirrup as either a tie-back or standalone development opportunity. Exploration and appraisal over the last two seasons have grown Oil
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