DNR commissioner issues proposed decision on Pikka pipeline ROW lease
On Sept. 2 the State Pipeline Coordinator’s Section of the Alaska Department of Natural Resources’ Division of Oil and Gas issued a public notice for the Commissioner’s Analysis and Proposed Decision on right-of-way lease ADL 421843 for the Pikka Sales Oil Pipeline. The DNR commissioner’s preliminary conclusion was that the applicant, Oil Search (USA), or OSU, is fit, willing and able to construct, operate, maintain and terminate the proposed Pikka Sales Oil Pipeline under an AS 38.35 ROW lease as described in their application and supplemental information. This is a major step forward for Pikka development because it could lead to one of the project’s final required major authorizations. Akis Gialopsos, acting DNR commissioner, signed the analysis and proposed decision, a 44-page document. Editor’s note: See map for this story in the online issue PDF. On Feb. I, OSU submitted the application for a non-exclusive Alaska Statute 38.35 right-of-way, or ROW, lease to construct and operate a 16-inch diameter Pikka Sales Oil Pipeline on state of Alaska lands for the purpose of transporting sales-quality oil from the Nanushuk Processing Facility, or NPF, within the Pikka Unit to a Tie-in Point, or TIP, near the Kuparuk Pipeline Extension, or KPE, and a 12-inch diameter pipeline from the TIP to KPE, all on the North Slope of Alaska. The approximately 22-mile oil pipeline will be placed on pipeline supports shared with pipelines authorized by ADL 421723 under AS 38.05.850 for an 8-inch gas pipeline, and a 16-inch seawater pipeline, and associated power and fiberoptic cables. The above-ground sales oil line will be approximately 7 feet above the tundra surface. OSU requested a 300-foot-wide construction ROW, decreasing to a 60-foot ROW for operations. The pipeline will begin within the Pikka Unit, crossing un-unitized state lands, the newly formed Quokka Unit, the Southern Miluveach and Kuparuk River units. Built in accordance with North Slope industry standards, the pipeline will operate at a maximum operating pressure of 1,480 pounds per square inch gauge, transporting 80,000 barrels of oil per day during Pikka Phase I, which Santos, the owner of OSU and Pikka operator Oil Search (Alaska) (51%), recently sanctioned in conjunction with its 49% partner Repsol. The pipeline throughput rate may be increased in the future should the working interest owners move forward with additional phases of the Pikka project. Project schedule, constructionAccording to DNR, applicant OSU proposes to start construction of the Pikka Sales Oil Pipeline during the fourth quarter of 2023 with initial ice pad and ice road construction to support pipeline construction. Pipeline construction is proposed to start the first quarter of 2024 and startup oil delivery is proposed for 2025, although Santos and Repsol recently said startup will likely be in 2026. The pipeline will be supported by shared horizontal and vertical support members (“HSMs” and “VSMs”) set approximately 55 to 60 feet apart in accordance with North Slope industry standards. Along the designated route, the pipeline will cross other pipelines, pipeline supports and roads. At road crossings the pipeline will be installed inside steel pipe casing designed for minimal settling and water accumulation and to allow visual inspections. During construction temporary ice roads and pads will be accessed through existing gravel pads, roads, and temporary ice roads The unheated pipeline will transport sales oil between 130 and 150 degrees Fahrenheit. The steel pipe will be coated with fusion-bonded epoxy, a 3-inch polyurethane foam insulation and covered by a 24-gauge sheet metal jacket per North Slope industry standards. The 24-gauge sheet-metal jacket will have a non-reflective finish to reduce potential impacts to wildlife associated with reflection. All powers are commissionersThe Right-of-Way Leasing Act (Alaska Statute 38.35) sets forth the procedures governing an application for an oil or gas pipeline right-of-way across State lands. Under this Act, DNR’s commissioner is granted all powers necessary to lease State land for pipeline right-of-way purposes. In leasing the land the commissioner must make a written finding that the applicant is fit, willing, and able to perform the transportation or other acts proposed in a manner that will be required by the present or future public interest. Additionally, prior to granting a right-of-way lease, the commissioner is required to prepare an analysis of the application. No public comments receivedPublic notice of the Feb. 1 application began Feb. 17 and ended on April 18. Notice of the application was published in two newspapers, on the state of Alaska’s Public Notice website and the division website; and sent to post offices in Nuiqsut, Utqiaġvik and Prudhoe Bay. Notices were also sent to coordinating agencies (as defined by AS 38.35.230), private property owners, third party interest holders, government agencies/entities, and Alaska Native Claims Settlement Act (ANCSA) regional and village corporations within the vicinity of the proposed pipeline. Complete copies of the application were sent to the Tuzzy Consortium Library in Utqiaġvik, the Nuiqsut Community Library, and the Z.J. Loussac Library in Anchorage. No public comments on the notice of application were received. Latest public comment periodThe latest public comment period for the notice of the Commissioner’s Analysis and Proposed Decision on ROW lease ADL 421843 for the Pikka Sales Oil Pipeline begins Sept. 2 and extends through 5 p.m. Oct. 7. Written comments may be emailed to: [email protected] or faxed to 907-269-6578 or submitted by U.S. mail or delivered in person to the Alaska Department of Natural Resources, Division of Oil and Gas, State Pipeline Coordinator’s Section, 550 W 7th Ave., Suite 1100, Anchorage, AK 99501-3563. DNR will hold three public hearings; the first on Oct. 5, either as an in person hearing in the community of Nuiqsut, or online, whichever the city determines is best for the community. Details on this hearing will be available at: https://dog.dnr.alaska.gov/Services/Pipeline/Pikka_Sales_Oil_Pipeline. The other two hearings will be online on Oct. 7 at 12 p.m. and 6 p.m. Information on how to connect to these online public hearings will be available at: https://dog.dnr.alaska.gov/Services/Pipeline/Pikka_Sales_Oil_Pipeline. For questions on how to participate in the public hearings, contact Tammas Brown at 907-269-6468, or at [email protected] This DNR commissioner’s preliminary conclusion is subject to further consideration of all comments submitted during the public comment period for this decision. Thea applicantAccording to the commissioner’s analysis, Oil Search Limited, or OS, acquired and assumed operatorship of oil leases for the Nanushuk Oil Field in the Pikka Unit in 2018 through their Alaska subsidiary Oil Search (Alaska) LLC. OSA was established as a corporation doing business in Alaska on Nov. 15, 2017. Since 2018, OSA has continued to invest in the Pikka project through exploratory activities such as 3D seismic mapping and drilling. As a result of these activities, OSA has gained confidence in the reserves and as a result has increased their ownership interests in the area. OSA is a wholly owned subsidiary of Oil Search (USA) Inc., or OSU, the Pikka oil pipeline ROW lease applicant, which is a wholly owned subsidiary of Santos Limited, as a result of a merger of its previous parent company, OS, in 2021, which made OS a subsidiary of Santos. OS underwent a merger when Santos acquired 100% of the issued capital in OS from the shareholders. New shares under Santos were issued Dec. 14, 2021, with the merger taking effect on Dec. 17, 2021. OS was retained as a non-publicly traded subsidiary to Santos Proposed Mineral OrderMineral Order 1264 is being noticed concurrently with the Sept. 2 Commissioner’s Analysis and Proposed Decision on the Pikka oil line’s ROW lease. Pursuant to AS 38.05.185(a) and AS 38.05.300(a), DNR’s commissioner may close lands to mineral entry in excess of 640 acres if the closure is related to infrastructure or transportation corridors, in which mineral entry is an incompatible use that would adversely affect the proposed surface use. Although there has been minimal interest and little exploration for minerals on the North Slope, and no major mining or placer mine operations have taken place, activities associated with mineral location are not compatible with the safe operation of or stability of hydrocarbon transportation pipelines, the commissioner wrote. Oil and gas exploration and production are highly developed in the area and providing transportation to market, such as transportation by the Pikka Sales Oil Pipeline, is crucial, he wrote. Proposed Mineral Order 1264 would close a 300-footwide corridor to mineral entry and development, measured 150 feet each side of the ROW control line, the commissioner wrote. 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The DNR commissioner’s preliminary conclusion was that the applicant, Oil Search (USA), or OSU, is fit, willing and able to construct, operate, maintain and terminate the proposed Pikka Sales Oil Pipeline under an AS 38.35 ROW lease as described in their application and supplemental information. This is a major step forward for Pikka development because it could lead to one of the project’s final required major authorizations.
Akis Gialopsos, acting DNR commissioner, signed the analysis and proposed decision, a 44-page document.
Editor’s note: See map for this story in the online issue PDF.
On Feb. I, OSU submitted the application for a non-exclusive Alaska Statute 38.35 right-of-way, or ROW, lease to construct and operate a 16-inch diameter Pikka Sales Oil Pipeline on state of Alaska lands for the purpose of transporting sales-quality oil from the Nanushuk Processing Facility, or NPF, within the Pikka Unit to a Tie-in Point, or TIP, near the Kuparuk Pipeline Extension, or KPE, and a 12-inch diameter pipeline from the TIP to KPE, all on the North Slope of Alaska.
The approximately 22-mile oil pipeline will be placed on pipeline supports shared with pipelines authorized by ADL 421723 under AS 38.05.850 for an 8-inch gas pipeline, and a 16-inch seawater pipeline, and associated power and fiberoptic cables.
The above-ground sales oil line will be approximately 7 feet above the tundra surface. OSU requested a 300-foot-wide construction ROW, decreasing to a 60-foot ROW for operations.
The pipeline will begin within the Pikka Unit, crossing un-unitized state lands, the newly formed Quokka Unit, the Southern Miluveach and Kuparuk River units.
Built in accordance with North Slope industry standards, the pipeline will operate at a maximum operating pressure of 1,480 pounds per square inch gauge, transporting 80,000 barrels of oil per day during Pikka Phase I, which Santos, the owner of OSU and Pikka operator Oil Search (Alaska) (51%), recently sanctioned in conjunction with its 49% partner Repsol. The pipeline throughput rate may be increased in the future should the working interest owners move forward with additional phases of the Pikka project.
The pipeline will be supported by shared horizontal and vertical support members (“HSMs” and “VSMs”) set approximately 55 to 60 feet apart in accordance with North Slope industry standards.
Along the designated route, the pipeline will cross other pipelines, pipeline supports and roads. At road crossings the pipeline will be installed inside steel pipe casing designed for minimal settling and water accumulation and to allow visual inspections.
During construction temporary ice roads and pads will be accessed through existing gravel pads, roads, and temporary ice roads
The unheated pipeline will transport sales oil between 130 and 150 degrees Fahrenheit. The steel pipe will be coated with fusion-bonded epoxy, a 3-inch polyurethane foam insulation and covered by a 24-gauge sheet metal jacket per North Slope industry standards.
The 24-gauge sheet-metal jacket will have a non-reflective finish to reduce potential impacts to wildlife associated with reflection.
Under this Act, DNR’s commissioner is granted all powers necessary to lease State land for pipeline right-of-way purposes.
In leasing the land the commissioner must make a written finding that the applicant is fit, willing, and able to perform the transportation or other acts proposed in a manner that will be required by the present or future public interest.
Additionally, prior to granting a right-of-way lease, the commissioner is required to prepare an analysis of the application.
No public comments on the notice of application were received.
Written comments may be emailed to: [email protected] or faxed to 907-269-6578 or submitted by U.S. mail or delivered in person to the Alaska Department of Natural Resources, Division of Oil and Gas, State Pipeline Coordinator’s Section, 550 W 7th Ave., Suite 1100, Anchorage, AK 99501-3563.
DNR will hold three public hearings; the first on Oct. 5, either as an in person hearing in the community of Nuiqsut, or online, whichever the city determines is best for the community. Details on this hearing will be available at:
https://dog.dnr.alaska.gov/Services/Pipeline/Pikka_Sales_Oil_Pipeline.
The other two hearings will be online on Oct. 7 at 12 p.m. and 6 p.m. Information on how to connect to these online public hearings will be available at:
https://dog.dnr.alaska.gov/Services/Pipeline/Pikka_Sales_Oil_Pipeline.
For questions on how to participate in the public hearings, contact Tammas Brown at 907-269-6468, or at [email protected]
This DNR commissioner’s preliminary conclusion is subject to further consideration of all comments submitted during the public comment period for this decision.
Since 2018, OSA has continued to invest in the Pikka project through exploratory activities such as 3D seismic mapping and drilling. As a result of these activities, OSA has gained confidence in the reserves and as a result has increased their ownership interests in the area.
OSA is a wholly owned subsidiary of Oil Search (USA) Inc., or OSU, the Pikka oil pipeline ROW lease applicant, which is a wholly owned subsidiary of Santos Limited, as a result of a merger of its previous parent company, OS, in 2021, which made OS a subsidiary of Santos.
OS underwent a merger when Santos acquired 100% of the issued capital in OS from the shareholders. New shares under Santos were issued Dec. 14, 2021, with the merger taking effect on Dec. 17, 2021.
OS was retained as a non-publicly traded subsidiary to Santos
Pursuant to AS 38.05.185(a) and AS 38.05.300(a), DNR’s commissioner may close lands to mineral entry in excess of 640 acres if the closure is related to infrastructure or transportation corridors, in which mineral entry is an incompatible use that would adversely affect the proposed surface use.
Although there has been minimal interest and little exploration for minerals on the North Slope, and no major mining or placer mine operations have taken place, activities associated with mineral location are not compatible with the safe operation of or stability of hydrocarbon transportation pipelines, the commissioner wrote.
Oil and gas exploration and production are highly developed in the area and providing transportation to market, such as transportation by the Pikka Sales Oil Pipeline, is crucial, he wrote.
Proposed Mineral Order 1264 would close a 300-footwide corridor to mineral entry and development, measured 150 feet each side of the ROW control line, the commissioner wrote.
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