Santos Investing $2.6Bn In Pikka Oil Project In Alaska
Australian oil and gas major Santos has made a final investment decision (FID) to proceed with the $2.6 billion Pikka Phase 1 oil project on the Alaskan North Slope.
Pikka Phase 1 is expected to produce 80,000 barrels a day of oil gross with first oil anticipated in 2026. The project has strong fundamentals and is in a world-class oil-producing province with significant existing infrastructure, has low unabated emissions intensity, and is supported by key stakeholders, including the State of Alaska, the North Slope Borough, the landowner company Kuukpik Corporation and the Arctic Slope Regional Corporation.
Taking FID on Pikka Phase 1 is consistent with Santos’ goal of achieving net-zero by 2040. Santos said that it was committed to delivering a net-zero project and has entered into a Memorandums of Understanding with Alaska Native Corporations to deliver carbon offset projects.
As such, Pikka Phase 1 represents one of the lowest-cost and lowest unabated emissions intensity new oil projects in the region. It is worth noting that Santos has a 51 percent interest and is the operator of Pikka while Repsol holds the remaining interest.
Santos is focused on local procurement and local employment as part of the project, with 98 percent of current employees living in Alaska. Phase 1 of the project is expected to create more than 500 jobs and the construction of the project will deliver approximately 2,600 jobs.
The Pikka Phase 1 project represents compelling value for Santos’ shareholders given its robust economics and strong local stakeholder support.
Santos Managing Director and Chief Executive Officer Kevin Gallagher said Pikka Phase 1 is the right project at the right time in the right location.
“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 percent of the world’s gas and 12 percent of its oil.”
“Low-carbon oil projects like Pikka Phase 1 respond to new demand for OECD supply and are critical for global and United States 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. Pikka Phase 1 will execute a responsible development plan with a small surface footprint and utilize existing infrastructure, including the Kuparuk transportation pipeline and the Trans-Alaska pipeline system.”
“We have a world-class team with a rich history of successfully carrying out work on the North Slope. With approximately 90 percent of project spend within North America minimizing supply chain risk and civils work already completed, the project is well positioned for execution,” Gallagher said.
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