Resource Development Update: What’s going on with Willow, Pikka and Winx

Editor’s note: This post had the wrong byline for about the first eight hours it was published. Its author is TJ Presley. Apologies for the error.

Many Alaskans don’t follow the minutiae of resource development for a variety of reasons. Resource development encompasses a wide variety of things and there isn’t a central place to get the information, and certainly nowhere that can make sense of it all. A production forecast in a powerpoint presentation fails to give detail about projects and robs people of context.

In this recurring column, I’ll try to shine some light on the various resource development projects happening, and planned to be happening, around the state. Feel free to shoot me any questions in the comments section. Today’s column will focus on the high-profile oil projects.

Oil and Gas Projects

Oil has been, and will continue to be, the lifeblood of the Alaska economy. Flowing down the Trans Alaska Pipeline System, oil is carried from the North Slope some 800 miles to the ice-free port of Valdez. From there, our oil is shipped, primarily, to refineries on the West Coast.

Over the past two to three years, we’ve heard a about a couple of big finds, a possible second boom has been hinted at in publications by international firms like IHS Markit and Wood Mackenzie, and we’re in the middle of the busiest winter exploration season in years. Let’s fill in some of the details.

First, a map. We’ll focus on these three areas today.

Pikka and Willow are the two most significant projects moving forward and, from public announcements, they have a similar cost and reservoir profile. The Winx project is also targeting Nanushuk but is much earlier in the process.


We started hearing about Willow in 2017, but it wasn’t until the end of the exploration season that details started to come into focus. Willow is the farthest west production has ever stepped in Alaska. It is west of current production at GMT1 and west of current development of GMT2. Willow is also very large.

Willow, GMT1 and GMT2 are in the NPR-A. We won’t get into the discussion about royalty splits in that area here but it has been addressed here. The 2017/2018 winter exploration season saw three Willow appraisal wells drilled in addition to three exploratory wells in other areas by Conoco. The appraisal upped the estimate for Willow from 300 million barrels to between 750 to 1.1 billion barrels of oil with development costs pegged between $4 billion and $6 billion.

For context, Prudhoe Bay was originally estimated to contain 9.6 billion barrels of oil and has produced, today, more than 14 billion. The Kuparuk River Unit, the next largest field, originally thought to contain 1.6 billion barrels and has produced more than 2.4 billion barrels of oil since it began producing in 1981.

So, Willow is big.

Not Prudhoe big, but a significant source of production in the realm of 120,000 barrels a day. Willow is so big, in fact, that it will require its own processing facilities. Some forget that production on the North Slope is constrained by a variety of factors, not the least among them facility access.

Making oil ready for transport down TAPS requires a fair amount of processing which means stripping the oil of water, gas, sand and various other parts. And with only so many central processing facilities across the North Slope, new production must contend with the need for commercial agreements between producers to access processing facilities (they own them, they aren’t public access), and the fact that some facilities may already be at or near capacity.

You might remember the term “debottlenecking” from the final days of the Senate Bipartisan Coalition.

Willow is not near to any central processing facilities. The closest, at the Colville River Unit to the east, is at or near capacity with new production coming in from GMT1. The state’s Division of Oil and Gas must approve of processing oil across unit boundaries as, in the case of GMT1, new oil could displace old oil at the facility.

Willow is estimated to come online between 2024 and 2025. This current winter exploration season should shed more light on the size of the reservoir, the total recoverable amount of oil, and development costs. Permitting has already begun for up to 250 wells and five pads.


Pikka is a lot like Willow. Pikka is estimated to contain about 750 million barrels of oil, though the company has said it’s hoping to up that to a billion barrels after this season’s two appraisal wells just east of the Colville River Unit, sandwiched between that Unit and the Oooguruk Unit.

Unlike Willow, Pikka is on state land. The state will be entitled to royalties and taxes, which makes this large find particularly good for the state budget. Pikka is operated by Oil Search, a relatively new player in Alaska.

Oil Search, established in 1929, operates primarily gas fields in Papua New Guinea. They came to Alaska by purchasing, at $400 million, 25.5 percent of Armstrong’s interest in the Pikka Unit (and others). Oil Search recently announced it would exercise an option to purchase Armstrong’s remaining 25.5 percent interest in the Pikka and Horseshoe blocks respectively. We’ll discuss Oil Search’s other exploration plans and acquisitions in a later column.

Like Willow, Pikka is constrained by facilities and will likely need to construct standalone processing facilities to accommodate the estimated 120,000 barrels a day from an estimated three drill sites. A January 17th update showed successful hydrocarbon contact at Pikka B and mobilization for Pikka C in anticipation of well spud there at the end of January.

Permitting was in process when Oil Search arrived in Alaska, and a Record of Decision is expected late first quarter 2019 allowing for front end engineering and design to begin on facilities and drill sites. If all goes well, Oil Search has said it could reach first oil in the early 2020s with development costs of 146 wells and associated pads at about $5 billion.


The last project we’ll discuss today is also targeting that hot Nanushuk play, exploring how far south the trend goes and how far east and west it might extend. The current thinking is that the Nanushuk is comma shaped and there’s still lots of exploration work to be done to define its limits.

The Winx prospect is being operated by Great Bear and ownership includes Australian companies Otto Energy, 88 Energy, and Red Emperor. Estimated to cost $15 million, the Winx-1 well, about 13 miles south of the village of Nuiqsut, is going after an estimated 400 million barrel find based on 3D seismic imaging of the area and buoyed by the results of the nearby Horseshoe and Putu wells. As of February 5th, the ice road and pad had been constructed and the rig was on its way to the drill site for a February 15th anticipated spud date.

With and exploration project like Winx, there’s less certainty about what might be found so there isn’t public discussion of first oil, facilities, or rates per day yet. The Winx-1 well will help to answer many of those questions and companies can then determine how much oil is recoverable, how many wells and what design would work best to drain the reservoir, and of course, how to transport and process the liquids once they’re produced. It’s great for Alaska to have projects at various stages, and great to see exploration happening again. It’s worth noting that the nearly $11 billion in capital projected to be spent over the next five to seven years is being done so without the benefit of traditional cash credits.

All of these fields intend to produce from the Nanushuk formation. It’s this rock formation, and the Torok, that have been driving much of the excitement over the past few years. In 2017, the USGS released an assessment of the Nanshuk and Torok formations and found that, at mean estimates, the Nanushuk and Torok formations could contain up to 8.7 billion barrels of recoverable oil.

The Nanushuk play is driving a ton of interest to Alaska which explains why you’ve heard words like superbasin and renaissance thrown around. There is cause for excitement with the discovery of possibly 2 billion barrel fields within the past two years or so and with exploration beginning again. In the next few columns I’ll hit on some of the non-Nanushuk projects being looked at like Moose Pad, ANWR, and some of the exploration happening at Kuparuk as well as the other resource development projects happening around the state (like Graphite One!).

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