Australian independent Santos has approved the development of the 80,000 b/d Pikka oil field in the North Slope region of Alaska in the US, with first output expected in 2026.
Santos has a 51pc interest in Pikka, where it is the operator, and the remaining 49pc is owned by Spanish energy firm Repsol. The total cost of field construction is $2.6bn and Santos' share of Pikka development costs is $1.3bn. Santos estimates Pikka's operating costs to be $150mn/yr, it said on 17 August.
The project is based on the assumption of a breakeven oil price of $40/bl over the life of the Pikka project, Santos said.
The project has strong fundamentals and is supported by key stakeholders, including the state government of Alaska, the North Slope Borough, landowner company Kuukpik and the Arctic Slope Regional Corporation (ASRC).
On taking a final investment decision on Pikka, Santos said it is committed to achieving net zero greenhouse gas emissions based on scope one and two emissions. Scope one relates to emissions from the production process and scope two reflects emissions from the energy used in the operations of the Pikka field.
Santos has signed an initial agreement with Alaska Native corporations to deliver carbon-offset projects, including a strategic alliance with ASRC Energy Services, a wholly-owned subsidiary of ASRC, it said.
The sanctioning of Pikka comes eight months after Santos acquired its interest in the field through a A$22bn ($15.7bn) merger with then fellow Australian independent Oil Search, which first bought into Pikka in November 2017.
The go-ahead for Pikka also marks a geographical diversification for Santos, which has most of its assets in Australia and in neighbouring Papua New Guinea.
