Though BlueCrest Energy is on schedule to begin drilling for oil, the gas production is on hold.
BlueCrest Energy’s shore-based drill and pad, located about six miles north of Anchor Point, will begin developing the Cosmopolitan field in Cook Inlet at the beginning of next year and expects first oil by April 2016. There are also several shallower gas pools the company has planned to develop.
However, it is uncertain at present whether the gas field will be developed at the same time as the oil, according to Benjamin Johnson, president and CEO of BlueCrest. The plan to develop the gas depends on a potential partnership with WesPac Midstream, an Irvine, Calif.-based LNG production company, which would finance the recovery of the gas.
The oil is located deep beneath the Inlet, but the gas pockets are shallower and cannot be accessed through the directional drilling. The partnership with WesPac would allow BlueCrest to develop the gas through offshore monopods.
The current uncertainty of the current oil and gas tax credit program in the state has put the gas development on hold, Johnson said. The oil will move forward as planned, but for now, WesPac is waiting to see whether the tax credit program will continue before moving ahead with developing the gas, Johnson said.
“If those credits do not continue, there is no certainty as to when or if that large gas field will be developed,” Johnson said. “It’s really just a question of the economics. It’s very expensive to develop that gas, and it may not be economic to develop them now. If we can keep the tax credits the way they are now, WesPac says they’ll go ahead and develop it.”
WesPac’s plan has been to build an LNG facility at Port MacKenzie on the west side of the Knik Arm. BlueCrest would sell its gas to the LNG facility, where it would be liquefied and shipped into the Interior for use, where diesel is expensive and cheaper fuel could benefit many Alaskans, Johnson said.
Whether the gas development moves forward or not, BlueCrest will keep the public informed, Johnson said.
“The gas production is actually on hold knowing what will happen with the tax credits,” Johnson said. “Hopefully we can get that going really soon. Right now, there’s just a lot of uncertainty.”
In the meantime, the construction of the company’s drilling facility is underway. Contractors and employees are there regularly now, according to Johnson.
The Alaska Pipeline Company, an affiliate of natural gas supply company Enstar, has proposed to construct a 3,900-foot pipeline from the existing Anchor Point Pipeline system to reach the facility. BlueCrest paid for the pipeline, an estimated $1.47 million, according to the application.
The construction is estimated to be completed this week, according to Lindsay Hobson, the communications manager for Enstar. The line will not come into operation for another few weeks, she said.
Because the Anchor Point Pipeline system is a transmission line and not a distribution line, there are no customers connected to the system, Hobson said. The transmission line connects to a distribution system that reaches from Anchor Point to Homer through a pressure reducing station, but customers will not notice any changes due to the presence of the line, she said.
The line is being established with a two-way meter, which will allow the pipe to serve as a two-way system. Enstar can deliver gas to the facility until BlueCrest is recovering enough gas to sustain itself. At that point, the meter can be switched so the gas line can be used for delivery. However, Hobson said it had not yet been determined whether Enstar would purchase gas from BlueCrest.
“At this point, I don’t know that Enstar will be one of the customers,” Hobson said. “It’s just too speculative.”
BlueCrest has projected that its facility could produce up to 50 million standard cubic feet that would be transported through the Anchor Point Pipeline system, according to the application.
APC wrote that one of the benefits of establishing the pipeline will be to bring an additional supply of gas into Cook Inlet and in Southcentral Alaska, where there is an increasing demand for gas. The APC’s pipeline network extends from the Mat-Su Valley to Homer.
Whether the gas development moves forward or not, BlueCrest will keep the public informed, Johnson said.
“The gas production is actually on hold knowing what will happen with the tax credits,” Johnson said. “Hopefully we can get that going really soon. Right now, there’s just a lot of uncertainty.”
Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.
