Oil companies plan $2.6 billion North Slope investment

ANCHORAGE (AP) — Two oil and gas companies have announced plans to invest $2.6 billion into developing a major oil field on Alaska’s North Slope.

Australia-based Santos and Spain-based Repsol made the announcement, which was lauded by Alaska political leaders as positive news for state revenues and jobs.

Santos, which has a 51% stake in the Pikka project, said Aug. 16 that its investment will be $1.3 billion. Santos last year acquired Oil Search of Papua New Guinea, which had been working for several years to advance the project.

Santos, in a statement, said the funds will cover the initial phase of development at the Pikka field, with 80,000 barrels of oil a day expected to begin flowing in 2026.

If developed, the field on state land east of the National Petroleum Reserve-Alaska could significantly boost the flow of oil through the trans-Alaska pipeline system. Development could also generate billions of dollars of the years in state and municipal revenue, primarily through royalties and production taxes.

Fully developing the first phase will involve drilling 45 wells from a single well pad. Related infrastructure would include a production facility and pipelines, Repsol said in a statement.

The companies said they would make efforts to offset and reduce fossil-fuel emissions, including through use of natural gas instead of diesel fuel during operations.

The field would significantly boost oil flow through the trans-Alaska pipeline, which has fallen about 75% from its peak in the late 1980s to less than 460,000 barrels a day this month.

Pikka’s prospects to obtain financing have been challenged by a slew of financial institutions announcing they would not back oil developments in the Arctic, due to concerns about climate change. Santos plans to pay for its share of the development out of cash flow.

Another major North Slope oil prospect, ConocoPhillips’ Willow project, has been delayed by litigation and a new environmental review.