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Cosmo 10th POD approved
Innovative C.I. producer seeks funds for oil drilling, gas development
Kay Cashman Petroleum News
On Dec. 5, BlueCrest Alaska Operating COO John Martineck was notified by certified mail that the Cosmopolitan unit's 2024 proposed plan of development was approved by Alaska's Division of Oil and Gas for the period of Jan. 1 through Dec. 31, 2024.
BlueCrest, the company with the largest proved undeveloped oil and gas reserves in Alaska's Cook Inlet basin, committed to drill one oil well in 2025, specifically the H-10 Trident Fishbone well.
Planning for gas production will continue during the 2024 POD, which is the 10th POD for the unit. BlueCrest committed to provide a fully defined plan for the Tyonek Gas Development to the division as part of its 2025 POD submission. Gas production is expected in second quarter of 2027.
BlueCrest will update the division via a formal letter submitted no later than June 30, 2024, regarding progress to advance Cosmopolitan oil and gas development.
Funding an issue BlueCrest planned to maintain production and drill one multilateral well during the 2023 POD. Securing funding proved to be challenging due to former Gov. Bill Walker's "reversal on paying tax credits that were earned. This resulted in the freezing of BlueCrest's drilling program," Martineck told Petroleum News.
However, planning for the offshore Tyonek Gas Development continued in 2023. Also, the plant was configured to allow BlueCrest to conduct its hot oil treatments on-site to maintain production.
A reliable Petroleum News source said that BlueCrest recently submitted a royalty modification to the division, requesting the current 12.5% royalty be reduced to 5% for a period of time.
Martineck confirmed this information.
"Approval could be a game-changer for companies like BlueCrest. It would show potential investors that the State is committed to bring these projects online - demonstrate the State's commitment. It's a perfect way the State can help until we refund our investment," he said.
Martineck said that a royalty reduction will entice investors to invest in Alaska because they know they will get their investment back. "It shows the State has some skin in the game."
Cosmopolitan production As of Aug. 31, the Cosmopolitan unit cumulatively produced 2.15 million barrels of oil and 8.90 billion cubic feet of gas. The average oil production rate for the 12-month period ending Aug. 31 was approximately 727 barrels of oil per day, a slight decrease from 808 barrels of oil per day one year prior.
Average natural gas production rate for the 12-month period ending Aug. 31 was approximately 1.42 million cubic feet per day, a decrease from 1.85 million cubic feet per day one year prior.
Unit description 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 gas component to it.
Accessed from its onshore pad using directional drilling, its wells extend from the pad under Cook Inlet into state of Alaska submerged lands, although no offshore facilities exist.
Production is processed on-site, and oil is trucked off location.
The H10 Trident well will be a multilateral well that will allow BlueCrest to drill the equivalent of 21-24 oil wells on 800-foot spacings.
The Cosmopolitan unit's Hansen field is 3 miles offshore and 5 miles north of the community of Anchor Point.
State leases ADL018790, ADL384403, ADL391903, and ADL391904 make up the unit.
Protecting public interest In approving the prior PODs for the Cosmopolitan unit, the division considered the 11 AAC 83.303(b) criteria and found that the PODs promoted the conservation of natural resources, promoted the prevention of waste, and protected the parties' interests.
The division incorporated by reference those findings.
The public has an interest in the diligent development of the state's resources. Division Director Dennis Nottingham said in his approval letter that the plans outlined in the 2024 POD protect both this public interest by preventing waste through continued production and protect all parties by committing to drilling an additional well and committing to Tyonek Gas Development production in 2027.
"The 2024 POD therefore is necessary and advisable to protect the public interest," Nottingham wrote.
Parent BlueCrest Energy is a privately held oil and gas development company based in Fort Worth, Texas. Subsidiary BlueCrest Alaska Operating has a local office in Anchorage.
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