Repsol’s board of directors has approved the final investment decision (FID) for Phase 1 of the Pikka development project in Alaska for $2.6 billion (gross) until plateau capacity is reached, while full development contemplates an investment volume of over $3 billion (gross). The company, thus, takes an important step forward in one of the company’s key upstream projects.
The project, located in the Pikka Unit on the North Slope, will deliver the first production from Repsol’s assets in Alaska in 2026. In the first phase, it is expected to reach gross production of 80,000 barrels of oil a day, which will bring additional supply to markets under strain due to lower investments in exploration and development on a global level in recent years.
With a phased development approach, Pikka has been designed to provide capital flexibility while also delivering top-quartile emissions performance. The project has a carbon intensity index that is among the lowest in the company’s global upstream portfolio, reinforcing Repsol’s commitment to focus on lower- emissions projects. To further reduce the emissions, it will implement reduction schemes included in the World Bank’s Zero Routine Flaring Initiative, such as the replacement of diesel with cleaner-burning natural gas to fuel the operations or the installation of heat recovery technologies in the power generation turbines. Repsol was the first company in its sector to set the goal of achieving zero net emissions by 2050, and it has set an objective of reducing the carbon intensity of all its upstream activities by 75% by 2025.
The Pikka Unit has an advantaged position as an onshore development in an established basin such as the North Slope, minimizing its footprint by utilizing extensive existing infrastructure in an area with decades of hydrocarbon exploration and production activity. Full development of Phase 1 will consist of 45 wells to be drilled from a single well pad, using industry-leading technology to reduce the environmental footprint, with associated midstream facilities including a production facility, operating center, seawater treatment plant, and pipelines. The project is supported by local communities on the North Slope and continues to deliver shared value from community development projects, social investment programs, economic activity, and local jobs.
This milestone materializes more than a decade of activity by Repsol in Alaska. With its renowned exploration expertise and the use of state-of-the-art technology, the company has led the drilling of 16 exploration and appraisal wells since 2011, resulting in the discovery of more than one billion barrels (gross) of oil resources. The Horseshoe-1 and 1A wells drilled during the 2016-2017 winter campaign, confirmed the Nanushuk play as one of the largest onshore conventional hydrocarbon discoveries in the US in 30 years. The assets now include the Qugruk discovery wells that anchor the Pikka Unit, the neighboring Horseshoe Unit (Horseshoe and Stirrup wells), and the Quokka Unit (Mitquq well), as well as several additional exploratory blocks, with a total of 467,761 acres (gross). Repsol currently holds a 49% working interest in the assets, while Santos (operator) holds 51%.