A Santos Ltd. sign hangs from an office building on Tuesday, April 16, 2024 in downtown Anchorage. (Loren Holmes / ADN)

The Pikka oil project that has sparked industry interest in Alaska’s North Slope oil fields will begin production in a matter of months, a representative of the project said.

The first molecules of oil from Pikka’s first phase of development will flow sometime by March 31, said Peter Laliberte, vice president of business development for Santos in Alaska, on Wednesday.

He said that months afterward, the field will reach peak production of 80,000 barrels of oil daily. That will boost long-sagging production in the 800-mile trans-Alaska pipeline, an economic lifeline for Alaska.

The $3.1 billion Pikka project is located about 11 miles northeast of the village of Nuiqsut, near the Arctic Ocean.

The schedule is months ahead of the midsummer launch that was previously anticipated, Laliberte said, speaking in Anchorage at the Alaska Oil and Gas Association’s annual conference.

“We are very close,“ he told a crowd of business and industry representatives at the Dena’ina Civic and Convention Center.

“We hope to have production very soon,” he said.

‘It’s tremendous’

Oil production at the field is important in part because it will meaningfully boost state revenues, primarily from royalties, people familiar with Alaska’s oil industry said.

John Hendrix, who served as a cabinet-level oil and gas adviser to former Gov. Bill Walker, said Pikka is a stepping stone to other discoveries on the North Slope’s western frontier, including ConocoPhillips’ Willow discovery, made in response to the Pikka discovery in 2013 by geologist Bill Armstrong.

“It’s tremendous,” said Hendrix, who owns Cook Inlet gas producer, Furie. “It’s going to mean royalties and jobs for the state. And it creates momentum for future fields.”

Pikka and Willow, which is set to start flowing in 2029, will help boost oil production in Alaska by more than 40% over the next decade, to about 665,000 barrels daily, state forecasts estimate.

National Petroleum Reserve

Mark Myers, a former director of the U.S. Geological Survey, said the Pikka field represents a changing of the guard for an oil province that for years was dominated by a few companies, such as ExxonMobil.

Pikka is owned by companies that are relatively new to Alaska: Santos from Australia and Repsol from Spain, said Myers, a petroleum geologist experienced in North Slope exploration.

“It’s important for the North Slope to have competition,” Myers said. “To have major oil companies engaged that had not previously been significantly engaged on the Slope is a really good thing for diversifying the industry base.”

He said Pikka represents a new generation of oil opportunities on the North Slope, close to 60 years after the discovery of the behemoth Prudhoe Bay field that remains Alaska’s top oil producer.

Explorers could easily overlook Pikka’s geologic features in the past, which were hard to identify on older seismic data. But such features are visible on today’s more detailed seismic data, and explorers searching for other discoveries now know what to look for, he said.

“Pikka really opens up some significant conventional oil plays that are very subtle to find,” he said. “It’s another demonstration of the capacity of the North Slope oil-source system to have a tremendous amount of resource left, even in what’s considered a relatively mature basin.”

Analysis: $200 million for Alaska in Year 1

The Pikka field is more than 91% complete, Laliberte said.

A final piece of the project, the seawater treatment plant, was recently hauled across the Arctic Ocean on a heavy-lift ship and moved into position.

The plant, the size of 1 1/2 football fields, will process ocean water so it can be injected underground to replace oil that’s been removed. The plant was fabricated in Batam, Indonesia. It traveled more than 7,000 miles to the North Slope, Laliberte said.

“So now we’ve got all our kit up there, and now we have a small matter of putting it all together and starting it up,” he said.

About 1,000 workers on the Slope are involved in finishing the project, he said.

After first oil, the project will ramp up production in midyear to its estimated production peak, he said.

Phase 2 would push production at Pikka up to 120,000 barrels daily, according to figures from Santos.

At those levels, Pikka would be the largest producing field in Alaska since the Alpine field, which reached its peak production in 2007 at about 139,000 barrels of oil in single day. Alpine, owned by ConocoPhillips, began flowing in 2000.

Pikka, on state land, is estimated to bring in more than $200 million in revenues to Alaska in its first year, largely through royalties that in part will help seed the Alaska Permanent Fund, according to an analysis of Phase 1 by the state Department of Revenue.

The revenue would generally grow from there, to close to $300 million in 2034, before falling for several years as oil production wanes, the report shows.

Revenue from the state’s production tax would not kick in until 2034, due in part to expenses the developers can deduct from their taxes.

The trans-Alaska pipeline extends from Pump Station 1 in Prudhoe Bay on June 2, 2025. (Marc Lester / ADN)

Overall, the first phase could bring an estimated $4.6 billion in net cash flow to Alaska through 2053, the report shows. Other recipients of taxes and royalties will include the North Slope Borough, the federal government and the Arctic Slope Regional Corp., representing Alaska Natives from the North Slope.

Santos and Repsol are estimated to do well. The field’s oil producers will earn $7.5 billion in net cash flow through 2053, the report shows.

State Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, said the extra state revenue from Pikka will be important as Alaska lawmakers deal with budget challenges, including inflation and infrastructure maintenance.

“This $200 million makes things a little easier,” Stedman said. “It’s very positive from any angle you can look at it.”

Sen. Cathy Giessel, R-Anchorage and chair of the Senate Resources Committee, said the extra money will be helpful but there’s a lot of need, including more funding for educational programs.

“The $200 million will definitely help meet some of that demand, but it’s not going to mean we’re back in the money and we can spend like crazy,” she said. “We’ll still have a spending limit.”

Sen. Bill Wielechowski, D-Anchorage and vice chair of the Senate Resources Committee, also said the royalties from Pikka will be helpful for the budget, but he asserted the state is getting nowhere close to what it should in oil production taxes. On the one hand, while the state will benefit from extra royalty income at Pikka, it will lose income as ConocoPhillips reduces its production tax bill through its tax-deductible expenses at Willow, he said in a text message.

“Other oil-producing countries are drowning in oil money,” he said.

‘Huge logistical accomplishment’

Laliberte said getting the field ready for production has been a “huge logistical accomplishment.”

More than 350 prefabricated modules were shipped to the site to construct buildings at the processing facility, he said.

The modules were transported using more than 3,000 truckloads up the Dalton Highway, and on barges over the Arctic Ocean.

Some barges hauled modules more than 1,000 miles on the Mackenzie River through Canada to the Arctic Ocean, he said.

“We were pretty concerned at the beginning of the year that the water levels wouldn’t be high enough to take the barges up,” he said.

But the barges successfully made the trip up the Mackenzie this summer, he said.

More than 20 wells at Pikka have been drilled since June 2023, he said. The longest, about 5 miles long, is underway now.

About 120 miles of pipeline were installed above the tundra last winter, atop 4,800 vertical supports, he said.

The development team completed their work in two winter construction seasons, faster than the original estimate of three, he said.

“It’s really an incredible achievement,” he said.

Laliberte said Santos is eyeing other prospects on the Slope, including the Sockeye-2 discovery to the east made by Armstrong, the geologist who discovered Pikka.

Santos also has leased lots of land in the National Petroleum Reserve-Alaska to the west of Pikka, and home to Willow.

The state could one day see a substantial boost in royalty revenue from the reserve, after Congress in the One Big Beautiful Bill Act increased the state’s share of future royalties there.

“We don’t see this as the end,” Liberte said. “We’re trying to build a big business here. Pikka is the start of our future here in Alaska.”