Oil Search planning two new wells into southern Pikka Unit

  • Oil Search CEO Keiran Wulff talks about his company's $400 million purchase of a stake in the North Slope Pikka Unit from Armstrong Energy on Nov. 7, 2017, in Anchorage. Oil Search, which took over as operator of the project this summer, is planning two exploration wells this winter to deliniate the sourthern portion of the discovery. (Photo/Michael Dinneen/For the Journal)

A company new to Alaska developing one of the state’s largest oil prospects is planning to further delineate the field by drilling two more wells this coming winter into what has become the hottest play on the North Slope.

Australian-based Oil Search applied with the state Division of Oil and Gas Sept. 28 to drill two well and sidetrack combinations into the shallow, conventional Nanushuk formation from the southern portion of the Pikka Unit on the central North Slope in February, according to the company’s plan of exploration for the unit.

The wells will be the first drilled into the southern half of Pikka and “are critical to the delineation of this area and have the potential to have significant impact on the subsurface basis of design” for future field infrastructure according to the document signed by Oil Search Alaska President Keiran Wulff.

Oil Search took over as operator of Pikka and the associated Nanushuk project in March. The wells were originally scheduled to be drilled by Armstrong Energy last winter, but the change in control of the field brought logistical challenges that delayed the work.

A final environmental impact statement is expected later this year for the Nanushuk project at Pikka, which is expected to produce up to 120,000 barrels per day at peak production.

Oil Search agreed to buy a 25.5 percent stake and the operating role in the Pikka Unit from Armstrong Energy and Denver-based GMT Exploration Co., a silent partner in the unit, in October 2017 for $400 million. The deal also included a 37.5 percent share of Armstrong’s prospective “Horseshoe” leases to the south.

Oil Search can fully buy Armstrong and GMT out of Pikka for another $450 million by July 2019, an option Wulff has said the company is “highly likely” to exercise.

The Pikka B and C wells Oil Search intends to drill will reach depths of 6,513 feet and 4,923 feet, respectively. The company plans to drill the wells concurrently with two drilling rigs and will build ice roads and mobilize from the equipment from the Mustang development pad in the nearby Southern Miluveach Unit.

Oil Search is currently in the preliminary front-end engineering and design, or pre-FEED, stage of developing the Nanushuk project and the results from the B and C wells will inform the company’s work during the FEED phase of the project, according to the plan of exploration.

First oil is expected in the early 2020s and full development of the field will entail 146 wells and cost up to $5 billion to bring online.

Armstrong Energy drilled a well-sidetrack combination roughly 20 miles south of Pikka into the Nanushuk formation in early 2017. CEO Bill Armstrong said at the time that he believed the positive results from that work indicated a long, continuous play that could hold twice as much oil as originally estimated.

While official estimates are more conservative, Armstrong has consistently said he believes more than 1 billion barrels can be produced from the Pikka Unit.

ConocoPhillips also drilled two successful exploration wells into the Nanushuk south of Pikka last winter. A separate Nanushuk play is also the basis for the company’s large Willow prospect to the west in the National Petroleum Reserve-Alaska.

Further, a consortium of small exploration companies led by Australian-based 88 Energy is planning to drill a Nanushuk exploration well this winter just to the east of ConocoPhillips wells south of Pikka.

Elwood Brehmer can be reached at [email protected].

10/12/2018 - 9:33am