Papua New Guinea (PNG)-focused oil and gas firm Oil Search has commenced the front-end engineering and design (FEED) stage for Phase 1 of its Pikka oil development on the North Slope of Alaska.
The Pikka Phase 1 project, which is estimated to cost approximately $3bn, involves a single drill site and the development of 80,000 barrels of oil per day (bopd) capacity production facility.
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
In a statement, Oil Search said: “This is an exciting and critical step toward delivering production and revenue from Oil Search’s Alaska assets.”
The Phase 1 FEED for the Pikka field involves finalising the design scope, execution plan, budget, and schedule.
It will also seek ways to reduce project risk to ensure the design supports optimal expansion to deliver full value from the Nanushuk reservoirs.
The first oil from the Pikka field is planned for 2025.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe company is also planning to commence detailed engineering and procurement for the Seawater Treatment Plant (STP), which will provide water to support the Pikka project reservoir waterflood.
The Pikka project’s Phase 1 is expected to produce oil at a break-even supply cost of less than $40 per barrel Brent, which would include a 10% return, the company said.
Oil Search managing director Keiran Wulff said: “Through FEED we expect to deliver a more detailed and robust project that further reduces risk and improves the project’s value.
“With an 80,000 bopd capacity, Phase 1 of the Pikka project will provide a revenue stream to help support further Alaskan development.
“With confirmed 2C resources in Alaska of nearly a billion barrels of oil (gross) and further opportunity, we are exceedingly optimistic about Oil Search’s future in Alaska.”
Oil Search is also looking to divest 15% interest in the Pikka development area. It also seeks to secure project-level financing to fund at least 50% of the cost required for the Pikka Phase 1 project.
Wulff added: “These two activities are a critical part of our capital management strategy, which, combined with a strengthening energy demand outlook for projects with low breakevens and low emissions intensity, will provide confidence in our ability to make a final investment decision later this year.”
Last year, Oil Search announced plans to write off approximately $380m from some exploration assets and a gas-to-power project in PNG.
