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Forty-nine years to production Independent close to bringing Cosmopolitan offshore Cook Inlet oil field online six operators and 49 years after discovery KAY CASHMAN Petroleum News
Forty-nine years after it was discovered, the Cosmopolitan oil prospect offshore Alaska’s lower Kenai Peninsula will likely be brought online in April by BlueCrest Energy Inc.
The Texas independent is the sixth operator of the field and the first to bring it to commercial oil production; with shallower natural gas development likely to follow once the company secures a jack-up rig and sets platforms.
“At this point, we are fairly certain that we will start up the first oil production in April,” although no official ceremonies are planned until “later in the summer,” J. Benjamin Johnson, president and chief executive officer of BlueCrest, told Petroleum News in a March 22 email.
“So far, everything has tested out, and we are progressing very well toward a start-up mid-month,” he said.
Johnson was raised in Kenai and worked in Cook Inlet and on the North Slope in his youth. Later, with ARCO Alaska, he created the first Kuparuk full-field development model and coordinated the first waterflood surveillance plans for Prudhoe Bay.
BlueCrest is bringing in a large land-based drilling rig to develop the Cook Inlet accumulation, using extended reach wells drilled from an onshore pad (see photo).
The company has already started shipping parts of the huge rig to Alaska, Johnson said, providing a March 18 photo of BlueCrest Rig No. 1 at the factory in Liberty.
“We are just now finishing construction of the new rig in Texas. We have already begun shipping some of the components (the entire rig will require approximately 115 large truckloads), and we will be running the final tests of the rig over the next two weeks. The entire rig will not arrive in Alaska until probably late May and will begin drilling in early July,” Johnson said in an email.
“The wind-walls for winterization have been removed and are already en-route. You can see the massive size of the rig and all the associated equipment. The entire system moves on large rails from well to well on the drill site and can complete a move in a few hours, compared to days or weeks required for moving traditional rigs,” he said, noting the 3,000 horsepower rig is “capable of lifting 1.5 million pounds of pipe in the well and can simultaneously stack over 24,000 feet of drill pipe in the derrick. It was designed specifically for the extended-reach Cosmopolitan wells but could also be used for almost any other large field in Alaska in the future.”
BlueCrest has been working on its 38-acre Cosmopolitan drill site and production facility just north of Anchor Point for the last two years.
Cosmo well history The 12,112-foot Starichkof State No. 1 discovery well was drilled by Pennzoil in 1967.
ARCO Alaska began a second Cosmopolitan exploration effort in the 1990s.
In 2001, after acquiring the Alaska assets of ARCO, Phillips Inc. drilled the Hansen No. 1 well directionally to an offshore target. Following a merger, ConocoPhillips Alaska assumed operatorship and in 2003, drilled Hansen No. 1A, a sidetrack of the earlier Phillips well.
ConocoPhillips subsequently brought in Pioneer Natural Resources, which acquired the remaining working interest at Cosmopolitan and became operator.
In 2007, Pioneer plugged the original Starichkof and Hemlock completions on the Hansen No. 1A sidetrack and drilled Hansen No. 1A-L1, another sidetrack off the original Hansen well.
In 2010, Pioneer fracture stimulated the interval from Hansen No. 1A-L1. An extended flow-test produced 250 barrels of oil per day and more than 33,000 barrels, cumulatively, which the company trucked to the Tesoro refinery under a pilot program.
In 2011, Pioneer relinquished three Cosmopolitan leases to the state of Alaska and sold two leases held by oil wells to operator Buccaneer and its minority partner, BlueCrest.
The state offered the three relinquished leases under special terms. They were picked up by Apache Corp. but regulatory delays over its basin-wide seismic program prompted Apache to sell the three leases to Buccaneer and BlueCrest.
BlueCrest took a 75 percent working interest in the field and helped fund the 7,599-foot Cosmopolitan No. 1 delineation well in May 2013.
When Buccaneer began selling properties, BlueCrest acquired the remaining 25 percent interest and became operator of Cosmopolitan. As of mid-August, BlueCrest held 22,535.69 acres of Cosmopolitan leases, 14,423 of which were unitized.
Walker bill endangers development Further development of Cosmopolitan’s oil and natural gas, however, partially hinges on stopping the passage of House Bill 247 and its companion bill in the Senate, Johnson told legislators in testimony March 1.
Gov. Bill Walker’s proposed legislation would harm the investment climate in Southcentral Alaska by eliminating tax credits for development of previously discovered proven reserves - tax credits that made development of Cosmopolitan possible after 49 years.
Johnson said the credits benefit the state because it breaks even on credits at $35 oil and at $65 oil gets twice what it invested. He compared that to the state’s investment in the Permanent Fund, telling legislators the credits are a better investment for the state than the Permanent Fund as long as oil averages $44 per barrel over the next 40 years.
Privately held BlueCrest is based in Fort Worth and has regional offices in Houston and Anchorage.
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