Pikka’s Promise Becoming Reality

Cascade of Benefits

Dingeman supervises a team of about 350 full-time employees in Alaska. That’s grown from just 3 in 2018 when Pikka changed hands from its original developer, Armstrong Oil & Gas, to Papua New Guinea-based Oil Search. That workforce swelled to 150 by the time Santos acquired Oil Search in 2021. Dingeman expects to have about 400 on staff when Pikka begins Phase I production.

Santos workers who commute to Downtown can hardly avoid walking by the neighborhood’s homeless population. Dingeman recognizes that the company now has a greater stake in the community than ever.

“It was a conscious decision for us to move downtown and be part of the solution and see what we could do to help the community,” he says. Dingeman figures that the company’s employment, which includes a couple thousand contractors, plus revenue flowing to state and local governments, will improve the economic situation for everyone.

“There’s benefits that cascade through the entire community as part of that,” he says.

Neighborly overtures toward Nuiqsut, the village nearest to the Pikka unit, include a new boat launch, a bridge replacement, and a new wastewater treatment plant. Together with Repsol, the Spanish energy company that owns a 49 percent interest in Pikka, Santos pumped roughly $60 million into Nuiqsut.

Through the development phase, Pikka plans were amended to account for local concerns, everything from moving a drill site farther from the Colville River to using light fixtures that minimize skyward glare. Santos also pledged that operations would have net-zero carbon emissions by 2040.

Dingeman says, “I think it gives our team here a further sense of purpose having those goals. It helps us with alignment of and respecting the lands of the landowners and areas we operate, so it is something that’s really important to us.”

End of the Rainbow

All that money is flowing into Nuiqsut, Pikka site construction, and Downtown office renovation before Santos has seen a single cent (US, of course; Australia discontinued small change in the ‘90s) from selling a drop of Alaska oil.

“You have to invest before you get to that end of the rainbow where you’re receiving the revenues that go with it,” Dingeman says.

When Oil Search bought into Pikka, the company expected first oil in 2023, based on a plan to invest $6 billion and produce 120,000 barrels per day. After crude oil prices dropped in 2020, the investment was halved, and Phase I was scaled down to 80,000 barrels per day by 2026.

That schedule is still holding. Gallagher reported, “We’re drilling a twelfth well; six of those wells have been stimulating, and five flowed back. Our results to date are consistent with pre-drill expectations and meet the average per-well rates required to reach full facility capacity.”

Although the middle of 2026 remains the target, “We are looking at opportunities to try to accelerate that,” Dingeman says. “We’ll have a really good view of that by this time next year.”

Whether first oil from Pikka might arrive in 2025 depends on progress during this winter construction season.

60 Percent Constructed

Not to be confused with the rock-dwelling, round-eared rabbit kin called a pika, “Pikka” is an Iñupiaq word that means “up there.” Situated northwest of ConocoPhillips Alaska’s Kuparuk River Unit, Pikka has 20 acres of gravel pads capable of reaching as much as 20,000 acres of subsurface.

Before last winter, surface construction consisted of access roads and one pad with nothing on it. Heading into a second winter, Gallagher declares the project about 60 percent complete. That includes modules for hydrocarbon processing, the well site, and connecting infrastructure.

Dingeman adds, “We’ve already got the pipe racks in place, and we’re putting the heaters in for the crude heaters on that pad.”

There’s also the Nanushuk Processing Facility. “That’s a separate pad where all of our incoming produced fluids from the reservoir come in. We separate water, oil, and gas; the gas goes back to reinjection, the water goes into reinjection, and the oil goes to the sales line,” Dingeman explains.

The Nanushuk Operations Pad holds the physical operating control room and the personnel camp. “NANA [Regional Corporation] has done a brilliant job fabricating all of our crew quarters and operation center, and that’s over 170 modules alone,” Dingeman says, mindful of sharing praise with other team members such as Parker Wellbore.

Nanuq, a heavy civil contractor owned by Kuukpik, the Alaska Native village corporation for Nuiqsut, has maintained the Pikka roads and pads, performed summer gravel reworking on the Colville River boat launch, and supported the movement and placement of modules.

Cruz Construction won its award for a dock that awaits a barge-borne module. “That barge facility will come into that horseshoe shaped graving dock, and then it’ll ballast down to the sea floor, and then it’ll be encased in gravel,” Dingeman says. “That will then draw seawater out of the Beaufort and process it using nanofiltration technology. And then that clean water will be piped and injected in the reservoir for improved recovery.”

The last site, he notes, is the “tie-in pad” where processed oil flows into the common carrier pipelines, and from there to the Trans Alaska Pipeline System.

A lot of movement since Santos greenlit the Pikka investment in August 2022. Dingeman says, “A few short years ago, it was just open gravel at all those locations. Now we’ve got facilities at each location.”

Different Extremes

Although relatively new to Alaska, Santos celebrated its 70th anniversary this year. “Our humble roots in the great Australian Outback keep us grounded,” Gallagher told AOGA. “We forged our business in remote deserts with extreme weather, and that pioneer mentality in a land of different extremes defines what we are setting out to achieve on Alaska’s North Slope today.”

Those different extremes dictate the rhythm of activity on the North Slope.

“Certain activities can only be done in the wintertime,” Dingeman says. “Cross-country pipelines for fuel gas, for instance, or fluids into the processing facility—altogether 120 linear miles—the support members were all installed last winter.” Because pipeline corridors are away from gravel access roads, heavy equipment moves on ice roads to avoid damaging the tundra.

Nanuq installed 1,500 vertical support members for Pikka pipelines and installed 3,300 piles on the production pads. About 40 miles of pipe is laid, leaving 80 miles yet to install.

“We have all of our vertical support members of the pipeline in, so this winter will be able to start right out,” Dingeman says. And during the summer, “Our drilling rig is running 24/7/365, and we’re trying to build well inventory.”

Laying pipelines is the main activity limited to winter construction. Other operations are on gravel and continue year-round.

Furthermore, “Our processing facility is all modular; it’s not one big sealift that has to come up during a very narrow window. We’re bringing this continuous stream of modules up, and then we’re setting them and installing them on the Slope, so we’re able to do that activity year-round,” Dingeman says. In contrast to other projects bottlenecked by single large sealifts, “Ours is more of a sustained construction because they’re continually bringing in modules and setting and hooking them up during our project execution.”

With facilities more than halfway built, he says, “The end of our Phase I construction period is within grasp.”

Rising Stars

In his message to AOGA, Gallagher took a moment to praise one of his Alaska employees, honored by the association with its Rising Star award. Julianne Lamb is a geologist, formerly working for predecessor Oil Search in New Guinea and Australia, credited with bringing GeoIsotopes analysis to Alaska.

In presenting the award, Santos Senior Vice President of External Affairs Joe Balash, a former commissioner of the Alaska Department of Natural Resources, credited Lamb’s work with spurring interest in the Nanushuk formation, discovered in 2013. “The delineation of the Nanushuk formation has allowed other operators on the North Slope to develop it and reignite the state’s natural resource and fiscal future,” Balash said.

Accepting the award, Lamb said, “Pikka is only the first in an immense portfolio of resources that will be absolutely transformative for Alaska oil production.”

Of that transformative portfolio, Dingeman says, “We’ve already got the major permits in place for Phase II, and we’ll hope to progress at pace as we start getting cash flow from Phase I to fund that activity,” he says.

Outside of Pikka are the nearby Quokka and Horseshoe units, still being explored. “Our aim is to level load the work so that we can seamlessly move from one to the other, and then we take a really disciplined approach where we’ll fund those subsequent increments out of cash flow while still returning the healthy dividend to the corporate center,” Dingeman says.

Gallagher told AOGA, “I’m very excited about our future in Alaska. There’s plenty of resource still to be developed.”