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Alaska’s Division of Oil and Gas approves BlueCrest’s 2023 plan
Kay Cashman Petroleum News
On Nov. 23 the Alaska Department of Natural Resources’ Division of Oil and Gas sent a letter of approval to BlueCrest Alaska Operating for the independent’s proposed ninth plan of development for its Cosmopolitan unit.
(See map in the online issue PDF)
The approval letter was addressed to BlueCrest’s president and chief operating officer, John Martineck, who filed the ninth POD application on Sept. 27.
The ninth POD, also referred to as the 2023 POD because it runs from Jan. 1 to Dec. 31, 2023, calls for BlueCrest restarting its Cosmopolitan oil and gas drilling program after a three-year gap pending the receipt of new investment funds.
The first well the company plans to drill is the H10 Trident Fishbone.
The well has already been designed and would be ready to spud within several months of receipt of new funding, Martineck said in the Cosmopolitan unit POD application.
From onshore pad The Cosmopolitan unit has been developed from an onshore pad.
The Hansen field in the unit is 3 miles offshore the southern Kenai Peninsula and 5 miles north of the community of Anchor Point.
Accessed from an onshore pad using directional drilling, the accumulation’s production is “primarily oil but there is an associated gas component to it,” Martineck said.
Production is processed on site and oil is trucked off location for sale, while BlueCrest sells its natural gas to local utilities for use in the local market.
Production wells extend from the onshore pad under Cook Inlet into state of Alaska submerged lands.
Multiple offshore exploration wells have been drilled in the unit area, but no offshore facilities exist.
As of the end of September, Cosmopolitan had cumulatively produced 1.91 million barrels of oil and 8.42 billion cubic feet of natural gas.
The average natural gas production rate for a 12-month period ending in late September was approximately 1.76 million cubic feet per day; a decrease from 2.85 million cubic feet per day a year prior.
In BlueCrest’s 2022 POD, the company planned to maintain production and was successful doing so, the division said in its Nov. 23 approval letter.
No drilling was planned in 2022, and none was conducted, but planning for a future offshore gas development continued in 2022 and will continue into 2023.
Largest CI structure Southcentral Alaska utilities are going to start seeing gas shortages in the next few years, Martineck said.
“BlueCrest has the largest known underdeveloped structure in the inlet. … We have a large Tyonek gas reservoir that is untapped. We need to start working on it now to have gas in two or three years,” Martineck told Petroleum News in October, adding that development would involve putting in a new platform and pipeline.
He said BlueCrest will continue to evaluate and advance their offshore Tyonek Gas Development, but they can’t make it a reality without a major infusion of funds.
BlueCrest also plans to continue to develop the Starichkof/Hemlock oil reservoirs based on new information gained from each new well, beginning with the H10 Trident Fishbone, should it be able to secure new investment funds.
Funding tough But funding is a major challenge for Cook Inlet basin oil and gas companies.
“The challenge to get financing is largely because of the way the State handled the tax credits,” Martineck told PN.
Several Cook Inlet producers went bankrupt in the last few years as a result of a previous gubernatorial administration’s delay to pay exploration credits, he said.
“Companies, including BlueCrest, spent millions on exploration but then could not collect from the State. … Some sold tax credits at a drastically reduced price to other companies to get funds to stay afloat.”
More than promised During the eighth POD BlueCrest committed to maintaining production, conducting hot oil treatments to maintain rates and to continue planning for potential natural gas development. These operations were completed, Martineck said.
Additionally, BlueCrest upgraded and overhauled several major pieces of processing equipment in the onshore Hansen Production Facility.
“In 2022, we overhauled our two High Pressure gas compressors. These compressors are the lifeline of the facility,” Martineck said. They’re not only used for compressing natural gas for sale but are also used to gas lift all BlueCrest’s wells and provide fuel for all its plant operations.
Another large undertaking in 2022 was making “some important upgrades to our Mechanical Refrigeration Unit. This unit is used to remove unwanted liquids and impurities in our natural gas to bring the natural gas to pipeline sales specification,” Martineck said.
Martineck said BlueCrest will continue to make adjustments to its wells to maximize production levels and to extend their lives.
Nottingham’s approval In his Nov. 23 approval of BlueCrest’s POD for the Cosmopolitan unit, Division Director Derek Nottingham said “based upon the Division’s prior POD approvals and analysis of the 11 AAC 83.303(b) criteria, the Division finds the 2023 POD protects the public interest, promotes conservation, prevents waste, and protects the parties’ interests.”
Anyone with questions about the decision, Nottingham said, should contact Kevin Pike with the division at 907-269-8451 or via email at [email protected]
BlueCrest is a privately held oil and gas development company based in Fort Worth, Texas.
The company has a local office in Anchorage.
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