The Pikka Unit is expected to be the first development project to commence production in the Nanushuk oil play in the North Slope Basin of Alaska, US.
Located 83km west of Deadhorse and approximately 10km away from Nuiqsut, Nanushuk is considered to be the biggest conventional onshore oil discovery in the US in the last 33 years.
The Nanushuk oil field is estimated to hold more than 1.2 billion barrels of recoverable light oil, while the Pikka Unit being developed as part of the £3.9bn ($5bn) Nanushuk development project is estimated to contain more than 700 million barrels of recoverable oil resources.
Oil Search, an Australian-listed oil and gas company, holds 51% interest, and is the operator of Nanushuk development project, while the remaining 49% interest is held by the Spanish energy major Repsol.
Front-end engineering and design (FEED) activities were started in early 2020, while a final investment decision (FID) on the project is expected in the second half of 2020.
The Pikka development is expected to produce 30,000 barrels of oil per day (bopd) in its early production phase starting from 2022 and achieve its design output of 120,000bopd upon full development in 2025.
The Pikka field was discovered by the Armstrong Energy and Repsol with the drilling of Qugruk 3 discovery well in 2013.
The Qugruk 8 and Qugruk 301 wells, drilled in 2015, confirmed the reservoir productivity of Nanushuk.
Armstrong and Repsol reported the Horseshoe discovery 32km south of Pikka in March 2017, after drilling 13 exploration and appraisal wells within the Pikka area on the North Slope.
The Horseshoe-1 and Horseshoe-1A wells drilled between 2016 and 2017 confirmed Nanushuk as a promising oil play containing more than 1.2 billion barrels of recoverable oil.
The other major discovery in the Nanushuk play is the Willow discovery announced by ConocoPhillips in January 2017.
Nanushuk project background
Armstrong Energy and Repsol submitted permit application for the Nanushuk project to the US Army Corps of Engineers (USACE) in June 2015.
The USACE prepared the draft environmental impact study (EIS) for the project by September 2017.
Oil Search became the operator of the Nanushuk development, after completing the purchase of 25.5% interest in the Pikka Unit, 37.5% interest in the Horseshoe Block, and 37.5% interest in the Hue Shale on Alaska’s North Slope, from Armstrong Energy for £286m ($400m) in February 2018.
The USACE published the final EIS for the project in November 2018. Oil Search initiated a fresh appraisal drilling programme with the start of ice road construction in the same month.
Oil Search received the permit and record of decision (ROD) for the Pikka development project from the USACE in May 2019 and exercised an option to buy out the remaining ownership interests held by Armstrong Energy and its subsidiary GMT Exploration for £356m ($450m) in June 2019.
A Plan of Operations was submitted to the Division of Oil and Gas, Department of Natural Resources (DNR), the Government of Alaska, in July 2019, for authorising the project development.
Oil Search sought an amendment to the Plan of Operations to implement early production as well as modify the infrastructure footprint of the project, in September 2019.
The North Slope Borough approved the development re-zoning application for the project towards the end of 2019.
Nanushuk project development plan details
The Nanushuk project will target oil resources in the Alpine C and Nanushuk reservoirs in Alaska’s North Slope.
The onshore oil field is planned to be developed with three drill sites, namely ND-A, ND-B, and ND-C, up to 151 production and injection wells, a central processing facility (NPF), an operations centre, 48km of infield pipelines, the Nanushuk export pipeline, a tie-in pad (TIP) near the ConocoPhillips-operated Kuparuk Central Processing Facility 2 (CPF2), and approximately 40km of infield and access roads.
The Nanushuk central processing facility (NPF) to be developed on a 17-acre gravel pad will be capable of processing roughly 120,000 barrels of oil a day.
The water separated from the oil will be treated and transported back to the drill sites for re-injection, while the separated gas will be used for power generation at the NPF with the surplus gas piped back to the drill sites for gas lift and reinjection.
The oil processed at the NPF will be transported through the Nanushuk export pipeline to the TIP near Kuparuk CPF2 for tie-in with the Kuparuk Sales Pipeline that connects to Trans Alaska Pipeline System (TAPS).
Pikka development early production phase details
Oil Search plans to initiate the Pikka Unit’s early production at a rate of 30,000bopd from the ND-B drill site in late 2022.
The hydrocarbon fluids from the ND-B drilling pad will be transported via a 24in-diameter multi-phase pipeline to the NPF site and further via the 18in-diameter Nanushuk export pipeline to the Kuparuk CPF2. Separated water will be sent back via a 12in-diameter water injection pipeline from the Kuparuk CPF2 to the NPF, from where it will transported back to ND-B via a 12in-diameter infield water injection pipeline.
The Nanushuk export pipeline will start delivering sales-quality oil to the Kuparuk CPF2, after the NPF becomes operational in 2025.
Infrastructure to be developed to support the project includes approximately 20km of gravel infield roads, 2.2km of Nanushuk boat ramp access road, 300m of water source access road, and 15km of gravel Nanushuk access road.
The existing Oliktok Dock will be used for the transportation of sealift modules during the project construction.
The NPF will house processing and utilities modules, including a gas-fired power generation facility.
The Nanushuk operation centre to be developed on a 16.4-acre gravel pad will provide accommodation to approximately 200 operations and maintenance personnel, apart from housing the office, warehouse, and maintenance buildings, water treatment plants, a communication tower, as well as a stand-by diesel power generator.
Gravel laying operations to support the construction of roads and well pads for the Pikka Unit development were started in January 2020.