Ben Boettger/Peninsula Clarion BlueCrest Energy Chairman Bob Israel speaks during the ceremonial opening of BlueCrest Energy's Hansen Production Facility - visible in the background - on Saturday, June 25, 2016 at BlueCrest's wellpad north of Anchor Point, Alaska.

Ben Boettger/Peninsula Clarion BlueCrest Energy Chairman Bob Israel speaks during the ceremonial opening of BlueCrest Energy's Hansen Production Facility - visible in the background - on Saturday, June 25, 2016 at BlueCrest's wellpad north of Anchor Point, Alaska.

BlueCrest opens Anchor Point oil wellpad with ceremony

BlueCrest Energy has ceremonially opened their Hansen Production Facility, an oil wellpad on the shore of Cook Inlet near Anchor Point.

A small group of guests sheltered from the drizzle under a canopy in the middle of the 38-acre facility’s gravel wellpad on Saturday. Speakers including US Senator Lisa Murkowski (R-Alaska), state Senator Peter Micciche (R-Soldotna), and BlueCrest President Benjamin Johnson took turns behind a podium, with a low array of girders, tanks and pipes stretching behind them and a humming natural gas-fired power turbine underlying their words. To the south, the 30,000 feet of steel tubing that will case two future oil wells lay stacked in a row that stretched across the pad.

“This is a state that was built with oil and gas, and will continue to be,” Micciche said in a speech before a ribbon-cutting ceremony. “For those that believe we are ready to move beyond petroleum in our economy and what powers our incredible nation, we know that’s not the case. Although times are changing, and we’re suffering from a low commodity price right now, we know things will eventually improve.”

The one currently-producing well on the pad — an exploration well drilled by ConocoPhillips in 2001, putting out about 250 barrels of oil a day — was shut down for the ceremony and subsequent bus tour of the complex. During that tour, Murkowski asked BlueCrest production engineer John Martinek when the most recent producing oil well was drilled in Cook Inlet. Martinek estimated it was 16 years ago. James Carson, Canrig Drilling’s Alaska District Manager, was along for the tour. He guessed the well was in the Redoubt Shoal prospect, drilled in 2000 from the Osprey platform by Forest Oil.

The ten producing wells BlueCrest intends to drill from the Hansen pad will be the first since then. According to a BlueCrest information sheet, within five years the company hopes to be producing 17,000 daily barrels of oil, trucking it north to sell to Tesoro’s Kenai refinery. Although BlueCrest’s underground work has yet to be done, the above-ground equipment is already functioning. Martinek said the facility on the wellpad was built in about nine months.

“Back in June (2015) it was a parking lot,” Martinek said of the site, just north of Anchor Point near Sterling Highway mile 151. “We’d just started driving piles to house our pipe rack. We went into our foundations in August, we started bringing in equipment in September, and the last day of March we brought on our first production.”

Martinek described the wellpad structure as “a pretty complex facility that does a real simple thing.”

“It just separates the oil from the water and the gas,” Martinek said. “But a lot of technology goes into that.”

The oil, natural gas and water are all found within the folded sedimentary layers of the Cosmopolitan formation, a dome-like feature approximately 7,000 feet below the floor of Cook Inlet and about three miles off shore. BlueCrest’s plan calls for a directional drill to penetrate the formation and for the sediment to be opened with hydraulic fracking — a process not used before in Cook Inlet, which would inject a high-pressure mix of sand, water, and chemicals into the well to open cracks through which oil will flow.

Many particulars of BlueCrest’s fracking plans — such as the volume and source of the water used, and where it will disposed of afterward — remain undecided, and the fracking plan has been criticized by local activists and the conservation group Center for Biological Diversity.

Johnson said BlueCrest doesn’t presently have any fracking equipment on site — the work will be done later by North Slope-based contractors after the wells are drilled. The drill rig sitting behind the separation complex presently consists of a 30-foot tall platform. When completed with a 180-foot derrick being shipped from Texas, it will be the largest on-shore drill rig in Alaska, Martinek said.

The rig is also self-propelled, using hydraulic arms to move itself on skids along a row of 20 future wellheads, spaced about 10 feet apart. Ten of these wells will produce oil, while the others will pressurize the reservoir with injections of water. Martinek said the rig could travel between well heads in about a half hour, avoiding the more common practice of disassembling a rig to move it between wells. According to a BlueCrest information sheet, the rig will drill 24 hours a day for around five years to complete the wells — although Johnson said oil prices and the availability of tax credits could change these plans.

“We can stop drilling if prices were to drop,” Johnson said. “Unlike many companies, we have the ability to pause.”

While the oil emerging from the wells will be sold, the natural gas that comes with it will burnt on-site in a pair of generating turbines to power the facility itself. This generating gas is presently being supplemented with purchased gas from ENSTAR Natural Gas Company, delivered through a pipeline running along the Sterling Highway. Martinek said after the next well is drilled, it will produce enough gas for the facility to be powered without gas from ENSTAR. In the future, BlueCrest plans to sell gas to ENSTAR via the same pipeline now delivering to the Hansen facility.

Large-scale gas production won’t be possible through the on-shore wells, but will require off-shore drilling. Although oil, gas and water are naturally mixed inside underground reservoirs, those with a greater concentration of gas tend to lie higher in a formation because of their lesser density. This makes them unreachable with the directional drilling technique BlueCrest is presently using. BlueCrest’s plans to drill three off-shore gas wells are suspended due to the decreased availability of state tax credits to subsidize production.

In addition to the drill rig and separation machinery, the site contains a control room and a 50-bed dormitory for the nine operators, four guards, drillers and other staff. Martinek said “all the long-term workforce is local labor here,” adding that eight of the nine operators are from the Kenai Peninsula and six had graduated from Kenai Peninsula College’s process technology program.

One of these is operator Jessi Hahn, who lives in Homer and graduated from KPC’s process technology program in December. The BlueCrest job is Hahn’s first oil project in Alaska. She said the career is difficult to enter right now, and she was glad to have been hired soon after graduating.

“It gives an opportunity for people coming out of college to have a job and start training and becoming good at it,” she said.

Jayce Roberts, another KPC Process Technology graduate working as an operator at BlueCrest, said operators work 12-hour shifts, two weeks on and two weeks off. Though he had done other oilfield jobs, this is his first job as an operator. He said the BlueCrest facility’s location made it a desirable place to work.

“I live right in Kenai, so it’s a great opportunity versus having to fly to the North Slope, or take a helicopter to a platform or fly across the Inlet,” Robertson said. “I think it’s just a lot more convenient. I’ve done work in remote locations, and everything about it is logistically difficult … There’s a huge advantage to being right here on the highway system.”


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Ben Boettger/Peninsula Clarion BlueCrest's drill rig sits on the wellpad of the company's Hansen Production Facility during a ceremonial facility opening on Saturday, June 25, 2016 near Anchor Point, Alaska. A pipe from a future well can be seen poking up under the black plastic sheet in the foreground. BlueCrests expects the rig to begin drilling for oil in Cook Inlet's offshore Cosmopolitan formation in August, after the rig's 180 foot derrick tower arrives from Texas.

Ben Boettger/Peninsula Clarion BlueCrest’s drill rig sits on the wellpad of the company’s Hansen Production Facility during a ceremonial facility opening on Saturday, June 25, 2016 near Anchor Point, Alaska. A pipe from a future well can be seen poking up under the black plastic sheet in the foreground. BlueCrests expects the rig to begin drilling for oil in Cook Inlet’s offshore Cosmopolitan formation in August, after the rig’s 180 foot derrick tower arrives from Texas.

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