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13th Cosmo POD filed
BlueCrest, DNR working closely with confidential third-party investor
Kay Cashman Petroleum News
In 1967, Pennzoil first discovered oil in what is now the Cosmopolitan unit of the Cook Inlet basin. Subsequent operators ARCO, ConocoPhillips and later Pioneer Resources further explored the Cosmopolitan resources.
Over the decades none of these company operators have been able to solve the development challenges of the Cosmopolitan oil resources.
In 2012, BlueCrest acquired ADLs 384403 and 18790 from Pioneer and subsequently acquired the other two leases from Apache.
In 2013, BlueCrest drilled one of the first offshore Cook Inlet wells that not only confirmed the presence of a large oil deposit but also discovered the huge Tyonek gas field.
BlueCrest has created a new innovative drilling and development approach that allowed for economic development of the Cosmopolitan Unit's, or CU's, oil resources.
Prior to BlueCrest's operatorship, potential development plans included cost-prohibitive and record length horizontal wells drilled from onshore that would have resulted in ineffective oil recoveries using conventional completion techniques. However, BlueCrest envisioned and implemented a specialized completion technique (vertical open hole fishbone drilling) to the Hemlock and Starichkof oil zones that had never been employed in the industry.
To date, BlueCrest has spent more than $450 million to develop and bring the Cosmopolitan field into sustained production.
On May 23, John M. Martineck, president and chief operating officer of BlueCrest Alaska Operating, was sent a notice of default for the CU from the Alaska Department of Natural Resources.
The default was due to BlueCrest's failure to meet the commitments in the DNR Division of Oil and Gas' Dec. 9, 2024, decision approving with conditions the 11th POD for Jan. 1 through March 31, 2025.
Since that time BlueCrest has requested, and DNR has allowed suspensions of the POD period to provide maximum flexibility to facilitate fulfilling those conditions.
BlueCrest can cure the default through completion of commitments. The primary objective of the state remains that funding is secured to "expeditiously bring development" of the Cosmopolitan Unit forward "to meet the energy needs of Alaskans," with emphasis on natural gas.
Oil and associated gas
The Cosmopolitan Unit's oil zones were developed from an onshore pad located on the southern Kenai Peninsula. Production is primarily oil but there is an associated natural gas component.
Accessed from its onshore pad using directional drilling, the wells extend from the pad under Cook Inlet into state of Alaska submerged lands.
Production is processed onshore, and oil is trucked off location.
Recent filings Recently BlueCrest submitted its 13th POD to the division for leases ADL 018790, 384403, 391903 and 391904 (the Cosmopolitan unit).
BlueCrest proposed this POD be effective from Aug. 22, 2025, through Aug. 21, 2026.
During the CU 12th POD period, which runs through Aug. 21, BlueCrest's net gas sales to the local utility market have consistently been more than 100 mcf per day, not including the gas used onsite to power their onshore Hansen Production Facility.
Specifically, CU gas averaged 598 mcf per day in June, down 42.47% from a June 2024 average of 1,039 mcf per day. CU crude production in June averaged 518 bpd, down 20.32% from a June 2024 average of 650 bpd.
12th POD review In its submission of the 13th POD BlueCrest included the following review of the 12th POD, which had been approved with the following conditions:
(1) Provide the division with evidence of fully committed, binding (i.e., contractual) private funding for both the H10 fishbone well and Tyonek gas project no later than 90 days from the date of the notice.
(2) Beginning no later than 30 days from the notice date, update the division bi-monthly on the status of any financing for progressing development of the Tyonek gas project that has been secured, along with updates on the status of operational/project-related progress.
(3) Provide a technical presentation to the division by June 30 to justify the current boundary of the SHPA, or combined Starichkof Sand and Hemlock formation participating area.
BlueCrest has met with the division and DNR Commissioner's Office on several recent occasions to discuss the status of BlueCrest's commercial negotiations with a confidential third-party ("Party A").
"BlueCrest and Party A are engaged daily to progress our commercial alignment to cure the default notice, and the State of Alaska has signaled its support for Party A's entrance into the Alaska oil and gas market," BlueCrest said.
As required, BlueCrest provided a technical presentation to the division on June 30. Finally, BlueCrest provided the division with the required bi-monthly updates.
13th Plan of Development In its 13th POD -- Aug. 22, 2025, through Aug. 21, 2026 -- BlueCrest said it has actively pursued the capital investment required to restart its onshore oil and gas drilling program and the offshore Tyonek gas drilling program.
BlueCrest said it has faced challenges for years finding suitable investors willing to invest in Cook Inlet.
BlueCrest has already completed a substantial amount of work and required permitting and invested significant capital to prepare for the oil drilling program and the development of the offshore Tyonek Gas Project.
BlueCrest's drilling plans are contingent upon finalizing planned investment for the necessary funds to move forward.
BlueCrest anticipates commencing drilling of the H10 well 10 months after finalizing the commercial structure with Party A; engineering work for the Tyonek gas development would begin within a short period after funding is secured.
Regarding well work/evaluation BlueCrest plans to work over the H14 well and put a velocity string in the well to prevent slugging. This workover will help stabilize the flow from the well.
Using its own equipment BlueCrest will perform hot oil treatments on the Hansen 1AL1, H4, H12 and H16a wells every three to four weeks to maintain production. Hot oil treatments will begin on the H14 well after completing the workover to insert the velocity string.
BlueCrest said long lead time permitting has been completed, which will facilitate final permitting for the 2025-2026 planned operations.
BlueCrest will finalize the remaining permits for the H10 well prior to drilling.
BlueCrest is continuing to work on permits for the offshore gas development to meet the production startup in the second half of 2027, assuming favorable market conditions.
AIDEA application BlueCrest submitted a loan application to AIDEA, the Alaska Industrial and Development Export Authority, on Feb. 14, to fund drilling up to three Tyonek gas wells from the existing onshore location in 2025.
These onshore extended-reach wells would penetrate the eastern portion of the deepest gas zone (Tyonek A sand) and would be drilled to accelerate new gas production for Railbelt consumers.
Although successful completion of drilling these extreme-extended-reach wells is technically possible, the horizontal reach required in drilling these wells through numerous coal beds adds high mechanical risk.
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