Four-month countdown: Pikka oil may flow by March, with revenue for Alaska

The Pikka oil project on Alaska’s North Slope is advancing steadily toward first production, with operator Santos confirming the development remains on schedule to begin flowing oil by March 2026.

The project, one of the largest new oil fields under active construction on the Slope, will start with an initial peak output of 80,000 barrels per day, delivering a new and reliable revenue stream to the State of Alaska at a time when fiscal stability remains a top concern.

Unlike many North Slope fields developed on federal land, Pikka sits entirely on state-owned acreage, giving Alaskans a larger-than-usual share of the proceeds. The state will collect a 16.67% royalty on every barrel produced, significantly higher than the standard 12.5% royalty rate applied to older legacy fields.

Already, the project is being hailed in Juneau as a critical addition to long-term fiscal planning:

• Over $200 million in state revenue is expected from Pikka’s first full year of production, driven primarily by the sale of the state’s royalty oil.

• By 2034, annual revenue is projected to approach $300 million, bolstering the general fund and strengthening deposits into the Alaska Permanent Fund.

• Increased throughput for the Trans-Alaska Pipeline System will lower per-barrel transport costs for all producers, increasing the value of every barrel shipped from the North Slope.

Because Pikka’s developers can deduct billions in initial project costs, significant production tax revenue is not expected until around 2034, but royalties and pipeline efficiencies will provide immediate benefits.

The Pikka development has already injected substantial momentum into Alaska’s economy. Thousands of construction jobs have been generated during the buildout phase and nearby communities have received property tax revenue and lease payments. Contractors and suppliers across the state, from Anchorage fabrication shops to North Slope service providers, have been engaged throughout construction.

Santos holds a 51% stake in the project, with Spain-based Repsol owning the remaining 49%.

In another sign of long-term optimism, Santos has filed to expand the Pikka unit by nearly 20,000 acres of adjacent state land to support additional drilling and development. If approved, this would further solidify Pikka as a major cornerstone of state oil production for decades.

At the same time, lawmakers in Juneau are turning their attention to Alaska’s long-running fight over royalty revenue from federal lands. The Alaska Legislature recently passed, with overwhelming bipartisan support, a resolution urging Congress to increase the state’s share of royalties from National Petroleum Reserve–Alaska (NPR-A) from 50% to 90%, a proposal first advanced by Congressman Nick Begich to increase future state revenues from federal oil developments, including those now in permitting.

With first oil now only four months away, Pikka stands as one of the most promising new projects to enter Alaska’s pipeline in years. From improved TAPS throughput to significant royalty revenue, its impacts will ripple across the state budget, Alaska’s Permanent Fund, and North Slope communities for years to come.