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The oil and gas industry supports an estimated 16% of Alaska’s jobs, and the Pikka Project on Alaska’s North Slope is fast becoming a major contributor to that number.
Along with other oil and gas ventures in the state, including the Willow Project, the Pikka Project is projected to create thousands of jobs during its construction phase. Each of these jobs further boosts the Alaska economy. In fact, research suggests that each dollar earned in Alaska oil and gas job wages supports $4 in other wages in the state.
In addition to its contributing to Alaska’s economy, the Pikka Project is also poised to buoy Alaska’s overall oil output, with production predicted at 80,000 barrels per day by 2026.
In this article, we’ll take a closer look at the Pikka Project, including its history, its future, and its anticipated impact on Alaska’s economy and transportation industry.
What Is the Pikka Project?
The Pikka Project is a joint venture, operated by the Australian energy company Santos, to extract oil from the Pikka field on Alaska’s North Slope. Ownership rights are split between Santos (51%) and the Spanish energy company Repsol (49%)
The project lies ~50 miles west of Deadhorse and ~6 miles from Nuiqsut, just west of ConocoPhillips’ Kuparuk River Unit oil field.
Pikka Project Timeline
Why Is the Pikka Project Significant?
Beyond the project’s economic impact on Alaska (more on that in a moment!), the Pikka discovery’s significance lies in the sheer potential it offers.
The Pikka field sits on top of the Nanushuk formation, a layer of the earth’s crust that dates to about 100 million years ago. Estimates suggest that the Nanushuk formation may hold as many as 1.2 billion barrels of recoverable light oil, which has been called “the largest onshore find in the United States since the ’80s.“
Ultimately, Santos believes that the Pikka Project will be access 400 million barrels of those resources—a significant number.
How Will the Pikka Project Impact Alaska Economically?
Santos has pledged to invest a total of $2.6 billion during Phase 1 of the Pikka Project. This investment will benefit Alaska’s economy in two key areas:
Increased State and Local Tax Revenue
Like the Willow Project, the Pikka Project is poised to deliver significant cash flow in state and local tax revenue, largely through royalties paid to the state. This revenue can be used to fund vital local services, including education, emergency response, and community and social support programs.
Job Creation for Alaska Residents
For the Pikka Project, Santos agreed to prioritize Alaskan businesses and workers. Approximately 75% of the total projected budget will be spent with companies operating in Alaska, and 98% of Santos employees live in Alaska. Phase 1 of the project is expected to create more than 2,600 jobs during the construction phase and 500 jobs during the operation phase.
The Alaska economy will see the biggest bump from 2022-2025, during the Pikka Project construction period, when the bulk of the $2.6 billion investment will be spent.
What About the Environmental Impact the Pikka Project Will Have on Alaska?
Santos has committed to delivering Pikka as a net-zero project by 2040. In order to achieve this milestone, Santos has entered into Memorandums of Understanding with Alaska Native Corporations to deliver carbon offset projects. Potential solutions include a forestry management project, carbon abatement solutions, and carbon capture systems.
While some critics aren’t convinced, Santos remains committed to its pledge.
What Kind of Infrastructure Will the Pikka Project Require?
During Phase 1 of the project, 45 wells will be drilled from a single well pad to keep the footprint as small as possible. Additionally, the project will use the current Kuparuk Oil Pipeline and the Trans-Alaskan Pipeline System (TAPS).
The majority of construction on the Pikka Project will occur through 2025, with oil production beginning in 2026. In addition to the drill sites, Santos will also build two processing facilities, an operations center, 35 miles of pipeline, 25 miles of roads, and a seawater treatment plant.
Rather than constructing an entirely new road system, Santos has also been negotiating with ConocoPhillips to use the roads they own as part of the nearby Kuparuk River Unit.
Construction, Infrastructure, and Transportation Impact on Alaska
To support the construction phase of the Pikka Project, we expect to see an influx of freight arriving in Alaska, including heavy equipment and construction materials.
What’s Next for the Pikka Project in Alaska?
To learn more about the Pikka Project, the Santos North America website is a good starting point.
At Royal Alaskan Movers, our operations will continue as usual. If you have any concerns about disruptions or timing for future projects of your own, don’t hesitate to reach out to our team.
Finally, if you need help moving heavy equipment, construction materials, or other items to Alaska, we’d be happy to help. No project is too difficult or too complex for our experienced team, and we’ve got the capability to move freight anywhere in the state. Just get in touch to start a conversation.
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