The Alaska Industrial Development and Export Authority has given approval for a $30-million financing package that will allow BlueCrest Energy to begin drilling and development at its Cosmopolitan offshore oil project in Cook Inlet.

BlueCrest will have construction of onshore facilities underway in late summer and drilling started near the first of next year, company President Benjamin Johnson said.

BlueCrest plans to drill 33 production and injection wells over seven years and to produce 8,000 barrels per day, according to information supplied by BlueCrest to the Alaska Industrial Development and Export Authority.

Crude oil will be trucked from the Cosmopolitan onshore oil processing facility near Anchor Point to the Tesoro Alaska refinery at Nikiski, north of Kenai. That will require about 20 to 25 trucks moving north on the Sterling Highway, or about one truck per hour, Johnson said.

“We’re very pleased,” by AIDEA’s approval,” Johnson said. “We’ve got a lot to look forward to.”

In a statement, AIDEA’s Executive Director John Springsteen said, “AIDEA’s financial participation in this rig will not only help secure long-term energy supplies for Alaskans, but it will help job growth and to secure the region’s economy.”

Analysis of the reservoir indicates that BlueCrest will be able to produce 8,000 barrels per day after the first three to four production wells have been completed, according to information supplied by the company to AIDEA.

Johnson said updated resource estimates for Cosmopolitan are still confidential. However, an estimate published in September 2013 by Buccaneer Energy, a former 25 percent partner in Cosmopolitan, indicated a proven oil reserve of 31 million barrels and proven and probable reserves of 44 million barrels, based on previous drilling by other companies.

“Since then we’ve drilled another well, so we have a lot more information,” Johnson said.

BlueCrest and Buccaneer did additional delineation drilling in 2013.

The Buccaneer estimate was derived mainly from previous drilling at the deposit by former owners ARCO Alaska and Pioneer Natural Resources.

BlueCrest’s total development cost is estimated at $40 million with the state authority providing $30 million in a seven-year loan, according to documents provides to AIDEA.

The company intends to purchase a 3,000-horsepower rig with a capability of drilling to 30,000 feet. Johnson said the rig is new but is in components that will be assembled and tested near Houston, Texas, then disassembled and moved to Anchor Point. Once there the rig will be assembled and tested again.

The Cosmopolitan deposit is about three miles offshore Anchor Point, which is north of Homer on the east side of Cook Inlet. The oil production wells drilled into Cosmopolitan’s oil reservoir will be high-angle wells drilled laterally from an onshore pad.

BlueCrest’s schedule is to begin construction of onshore support facilities this fall and then begin drilling in early January, Johnson said. The first production well would be complete in February 2016 and a second well completed in April, according to information given by the company to the state authority. Production is to begin in late spring, 2016, the company told AIDEA.

Johnson said BlueCrest also plans development of a shallow gas deposit that overlies the oil reservoir but that is not included in the current plan. A tentative contract to sell the gas has been agreed to with Los Angeles-based WesPac Midstream, which plans to develop a medium-sized natural gas liquefaction plant in Cook Inlet to supply LNG to utility and industrial customers in Alaska.

Development of the gas would require construction of two small gas production platforms at the location, Johnson said previously.

The Cosmopolitan deposit has long been known in Cook Inlet. Oil was initially discovered in the early 1960s by Pennzoil, but the discovery was not developed. ARCO Alaska later acquired state leases on the prospect and in 2001 and 2003 ConocoPhillips, which had purchased ARCO’s Alaska assets, drilled exploration wells to confirm the oil discovery and also conducted production tests.

Dallas-based independent Pioneer Natural Resources acquired the leases from ConocoPhillips and drilled another test well in 2007 and also conducted an extended production test. During its production tests ConocoPhillips encountered problems encountered by the well drilled through thick coal seems, company officials acknowledged at that time.

Pioneer Natural Resources did not mention problems during its production tests, however. The leases were sold to BlueCrest and Buccaneer after Pioneer Natural Resources decided to focus on shale oil development in Texas.

Tim Bradner can be reached a tim.bradner@alaskajournal.com.