Oil Search restarting Alaskan Pikka project
Oil Search has rekindled its $US3bn Alaskan oil project with a final investment decision due in late 2021.
Oil Search has rekindled its $US3bn ($4.1bn) Alaskan oil project with a final investment decision due in late 2021 and a plan to sell down 15 per cent of the project restarted after the oil price rout saw the project put on hold earlier this year.
The Sydney-based company, best known for its Papua New Guinea LNG export plant, plans to produce 80,000 barrels of oil from Pikka by 2025 in a first phase development with a break-even target of less than $US40 a barrel.
Oil Search said it had boosted its proven and probable resources in Alaska’s North Slope by 33 per cent to 968m barrels of oil, with 494m barrels net to Oil Search, from an overall 728m barrel figure previously.
The planned sale of 15 per cent of its 51 per cent stake in its Alaskan assets was suspended in April after an oil rout forced the producer to launch an emergency $US700m capital raising and slash jobs. All work on developing an early production system for its Pikka oil unit in Alaska has also been placed on hold.
However, Oil Search said on Thursday it was now focused on moving ahead with the project.
“We are excited about the opportunities for Oil Search in Alaska and are preparing to move forward into the FEED phase for the world class Pikka Unit Development,” Oil Search managing director Kieran Wulff said.
“The 2019/20 construction program in Alaska has well positioned us to progress this development quickly and efficiently as market conditions improve. Along with the strong Joint Venture alignment we will launch the proposed divestment that is planned to be completed prior to a final investment decision.”
Still, a grander expansion of its PNG gas projects remains more complicated with a Papua LNG final investment decision still several years away.
Oil Search said in August the expansion will be delayed by two years, reflecting stalled talks with the PNG government and its expectation that new supplies will not being required from buyers until later this decade.
The Sydney-based company has for several years been focused on pushing ahead with the expansion which will double its LNG output in order to meet an expected demand spike around 2024. However, the producer said that scenario has now changed due to this year’s oil market ructions which had damaged demand and seen major LNG investment curtailed by others in the industry.
In March, Oil Search slashed its spending by 40 per cent in a bid to conserve cash after warning of “unprecedented times” in markets.