Oil Search takes next step in Alaska oil push

Oil Search to move into engineering phase in Alaska oil project after identifying vastly greater potential resource.

Oil Search moved into Alaska to diversify away from Papua New Guinea.

Oil Search will move into the engineering phase on its oil development on Alaska’s North Slope after an independent assessment identified a vastly greater potential resource.

The energy company also has hired an investment bank to help it sell a portion of its existing stake in the Alaskan project, it said.

Oil Search made a $US400 million move into Alaska in 2017 in an effort to diversify away from dependence on liquefied natural gas production in Papua New Guinea, picking up assets that included stakes in the Pikka development and other assets on the North Slope. It exercised a $US450 million option earlier this year to roughly double its interests across the assets.

The company said its board has now approved the early-stage engineering and design phase for the Pikka development, subject to joint venture approval and the finalisation of agreements with third parties that are expected early next year. A final investment decision for the Pikka project is expected in the third quarter of 2020, setting it up for early production two years later.

Oil Search said an independent assessment of the proposed Pikka development estimated the contingent oil resource to be 728 million barrels, a 46 per cent increase on the 500 million barrels that was the base case for the company’s acquisition of the Alaskan asset. The resource estimate only includes oil that would be tapped in the current development plan, and doesn’t cover other nearby fields or other discoveries that may be developed.

The company said it has begun a process to sell up to 15 per cent of its existing 51 per cent stake in the Pikka unit and adjacent exploration leases, helped by investment bank Scotia Waterous, but would remain the operator of Pikka. It forecast it would complete the process around mid-2020.

As well, Oil Search said it had successfully bid for 39 lease tracts sold by the state of Alaska at a cost of $US5.7 million, consolidating its position in prospective areas targeted on the North Slope.

Dow Jones Newswires