Pikka Phase 1 is expected to produce 80,000 barrels of gross oil per day with production slated to begin in 2026
Australian oil and gas company Santos has decided to proceed with the $2.6bn oil project in Alaska in a bid to further diversify its production portfolio.
As the operator of the Pikka Unit joint venture (JV), the company announced a final investment decision (FID) to move ahead with the first phase of Pikka development.
Pikka Phase 1 is expected to produce 80,000 barrels of gross oil per day with first production slated for 2026. It is also expected to create more than 500 jobs and generate 2,600 employments during the construction period.
Santos holds 51% interest in the Pikka JV, while the remaining stake is with Repsol.
According to the Australian firm, the project is situated in an oil producing province with significant existing infrastructure and has ‘strong fundamentals’.
The company aims to deliver a net-zero project (scope 1 and 2, equity share) and has signed memorandums of understanding with Alaska Native Corporations to deliver carbon offset projects.
Santos managing director and CEO Kevin Gallagher said: “Global oil and gas markets are seeing increased volatility and countries are looking to diversify their supply sources away from Russia, which according to the International Energy Agency, currently produces 18% of the world’s gas and 12% of its oil.
“Low-carbon oil projects like Pikka Phase I respond to new demand for OECD supply and are critical for global and US energy security, that has been highlighted since the Russian invasion of Ukraine.
“Santos has emission reduction plans to achieve scope 1 and 2 net-zero emissions by 2040 and in-line with that commitment, Pikka will be a net-zero project. The project will add further diversification to our portfolio and reduces geographic concentration risk.”
Earlier this year, Santos made a significant oil discovery at the Pavo-1 exploration well offshore Western Australia.