Editor’s note: This story has been changed to correct the height of BlueCrest’s drill rig. The rig’s platform is 30 feet tall; the derrick mounted on top of it will be 180 feet tall.
Within a few weeks drivers passing between Anchor Point and Ninilchik may see a new feature on the coastline — BlueCrest Energy’s 180 foot-tall drill rig, scheduled to be erected soon on the oil company’s wellpad around Mile 151 of the Sterling Highway.
With the rig — shipped from Houston, Texas — BlueCrest plans to drill a well that will curve into the Cosmopolitan sandstone formation, about 3 miles from the Cook Inlet shore and 7000 feet beneath it, to extract oil. BlueCrest employees, contractors and consultants held a public meeting in Ninilchik Tuesday to answer questions about the company’s plans to extract oil with hydraulic fracturing, or fracking — pumping the well with high-pressure fluid to create cracks, millimeters wide but up to 200 feet long, through which oil can seep from the rock.
The Fort Worth, Texas-based company sold its first barrel of oil from a pre-existing exploratory well to the Tesoro refinery in Nikiski in March and is presently sending “three or four trucks (of oil) per day” to Tesoro, said Larry Burgess, BlueCrest’s health, safety and environment manager.
Later this year, the company plans to begin trucking 5,000 barrels per day from its well pad to the Tesoro refinery. In five years, after the planned 20 wells — 10 producing and 10 for water injection to keep the reservoir pressurized — have been drilled on its pad, BlueCrest expects to be producing 17,000 barrels per day, according to an information sheet company representatives distributed at Tuesday’s meeting. The project is expected to operate for 30 years.
“Construction (of the well pad) is almost complete right now,” Burgess said. “ …The construction contractors have all left, with the exception of a few local contractors. The drill rig is arriving as we speak. Many parts have arrived on site and are being assembled as needed… They’ll be finished in — a good guess is about four weeks. We hope to be drilling in August.”
During the question and answer session afterward, fracking opponent Mary McCarthy — who stood to Burgess’s left throughout the presentation holding a sign with the name of her Facebook group “Stop fracking the Kenai Peninsula” — asked Burgess about an Alaska Department of Natural Resources permit necessary for the project. In an interview, McCarthy said she was planning to file a Public Information Request about the permit’s status, which she said members of the Alaska Oil and Gas Conservation Commission had told her was “secret.”
“How are you doing all this if you haven’t been permitted yet?” McCarthy said.
Burgess said BlueCrest would need about 300 state, federal and Kenai Peninsula Borough permits to operate, including separate permits to drill and frack. Burgess said that for the fracking permit, “we haven’t even submitted an application yet, because the design for the frack isn’t completed.” BlueCrest has also not yet been given a drilling permit, which Burgess said usually takes two to four weeks to issue.
Among other questions, the approximately 60 Ninilchik residents at the meeting asked about the effect the project’s trucking would have on local traffic and about the material that would be used to frack the well.
Burgess said when the pad is in full production, BlueCrest plans to ship its oil with about 32 trucks visiting the site daily. The company has contracted Carlile Transportation for the first year of transport.
Burgess agreed with a commenter who, citing the problems of increased large vehicle traffic and the possibility of spills, said trucking wasn’t the best transport method.
“Trucking the oil is the riskiest prospect for me,” Burgess said. “The safest way would be a pipeline, but that’s probably not going to happen. So the other way is by vessel. And there are issues with moving it by vessel as well… We don’t want it to go into the water.”
Burgess said a pipeline between the BlueCrest site and the Tesoro plant wouldn’t be economic at any oil price or production level, but barging could become a practical alternative once BlueCrest begins producing about 10,000 barrels a day, which he estimated could take about five years.
Burgess’s presentation included a graph breaking down the general components of fracking fluid in proportions he said were usual for the industry: 99.51 percent water and sand and .49 percent other components, including lubricants, gels and corrosion and scale inhibitors. However, BlueCrest has yet to determine the specific composition of the fluid it will use. According to a company information sheet, its fracking fluid will be designed based on geological data gathered during drilling.
“There’s a lot of questions about what’s in fracking fluid,” Burgess said. “… 99.5 percent of frack fluid is water and sand. The other half percent are chemicals. There’s about 30 chemicals in there. The vast majority are benign.”
Burgess said the specific chemicals would be identified before fracking began.
Other questions about the fracking fluid concern the water it will require. This is an undetermined quantity, although according to a BlueCrest information sheet fracking one well can use between 1 million and 15 million gallons. BlueCrest will frack 10 wells. The water’s source is also undecided. Burgess said BlueCrest initially planned to get water from a well near its site, but decided against it due to resident concerns.
The fracking water’s ultimate destination is also up in the air. After opening cracks in the rock, the remains of the fracking fluid are removed from the well, stored on site, and later shipped to another well designed to contain oilfield waste. The disposal wells to be used haven’t been chosen yet, though Burgess said that for shipping economy BlueCrest would likely use a disposal well the Kenai Peninsula. The Alaska Oil and Gas Conservation Commission’s website lists several permits for disposal wells on the Kenai Peninsula, including at the Deep Creek unit approximately 6 direct miles from the BlueCrest site.
Although several speakers voiced opposition to the project, McCarthy was the only person present to identify herself as a member of an organized anti-fracking group. She said Stop Fracking the Kenai was a group of about 10 people who opposing the BlueCrest project with an online petition to Gov. Bill Walker asking for a three-year moratorium on the project and “a public debate and publicly vetted research on the potential consequences of fracking in the Cook Inlet and on the Kenai Peninsula.” The online petition currently has 871 signatures on MoveOn.org.
“I’m looking at getting lawyers involved,” McCarthy said. “I’ve contacted national organizations, and we’re moving on the possibility of doing an injunction. If we can get an injunction or a moratorium, that implies time to actually look at the research.”
Reach Ben Boettger at ben.boettger@peninsulaclarion.com.
