Oil Search Limited (ASX: OSH), the most significant oil player in Papua New Guinea (PNG), announced on 23rd May 2019 that the company received the United States Army Corps of Engineers permit along with Record of Decision for the Pikka Development Project on Alaska’s North Slope. The approval of the permit and Record of Decision received by the company was in accordance with Section 404 of the United States Clean Water Act and marked a critical next step to advance towards the proposed development.
The company recently signed a Letter of Intent with Santos Limited.
The proposed development includes the company’s recommended changes, that reflect the feedback from permitting agencies and key stakeholders.
The development, which is planned by Oil Search, is approx. 84km from Deadhorse, Alaska and at its closest point is 11km northeast of the Nuiqsut community. The approval consists of a development scope as mentioned below:
The United States Army Corps of Engineers (USACE) and Record of Decision (ROD) marks the conclusion of a four-year analysis of the potential effects of the proposed development at the Pikka project on the surroundings, which includes, environmental considerations, economic impact, land usage, floodplain values along with needs and welfare of the local people.
The development process included public comment periods and solicitation of feedback from other Federal as well as State agencies along with the local agencies; the process also included the development and issuance of the Environmental Impact Statement.
Oil Search undertook the inputs from the public, Federal, State and local agencies to ensure the well planning of the project along with its environmental responsibility and to address the issues and concerns of all the pivotal stakeholders.
As per the current Managing Director of the company, Peter Botten, the ROD signifies a key milestone for the Pikka Development Project, and coupled with the positive initial results of the recent drilling programme, it would allow the company to proceed with the front-end engineering and design phase of the development project, which is aimed by OSH for the third quarter of the financial year 2019.
Mr Botten also mentioned that the company is running analysis on the data collected by it from 2018/19 appraisal programme. As per the company the early results inches up its expectations of a material upgrade in contingent oil resource, that would take the company near to its development plan assumptions of delivering 120,000 barrels of oil a day.
The current President, Keiran Wulff, mentioned that the ROD is an exciting development for the company and the State of Alaska as it would bring new production to the state upon completion. Oil search adopted some changes amid the request from the nearby Nuiqsut community, to reduce the surface footprint of the Pikka Development Project and to preserve the community’s areas of fishing and hunting.
Stock Price Actions:
The shares of the company moved in a downtrend from the level of A$8.300 (day’s high on 24th April 2019) to the level of A$7.280 (day’s low on 8th May), from where the price rebounded to the level of A$7.830 (day’s high on 20th May); however, the prices plunged again in the market till the present level of A$7.370 (day’s close on 24th May), 2.7% down as compared to its previous close.
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