BlueCrest to drill at least one well in 2018

Oil producer BlueCrest Alaska Operating intends to drill at least one new well in 2018 from its onshore pad between Anchor Point and Ninilchik, according to a plan of development it submitted Sept. 27 to the Alaska Department of Natural Resources’ Division of Oil and Gas.

The Forth Worth, Texas-based BlueCrest previously halted drilling in August 2017 — after drilling two of the five wells it had planned that year — citing the state government’s nonpayment of about $75 million in refundable tax-credits owed under Alaska’s oil and gas tax credit program.

BlueCrest CEO Benjamin Johnson declined an interview request about the company’s current plans.

BlueCrest ultimately hopes to drill and hydraulically fracture 20 directional wells from its onshore pad — 10 producing and 10 for pressure injection — into the Cosmopolitan sandstone formation located about 3 miles from the Cook Inlet shore and 7,000 feet beneath the inlet bottom. BlueCrest started producing oil in April 2016 from a converted exploration well originally drilled by ConocoPhillips in 2001, but didn’t start the first of its own wells until November of that year. In 2017 BlueCrest completed and fracked that well, which is now producing about 330 barrels a day. In March 2017 BlueCrest began drilling a second well and completed it in May.

Drilling 7,000 foot-deep directional wells three miles out required what BlueCrest described in its recent plan as “the largest most powerful operating rig in Alaska.” The 210 foot-tall rig was shipped from Houston, Texas and constructed near Anchor Point at a cost of about $40 million, aided by a $30 million loan from the state-owned Alaska Industrial Development and Export Authority. The company also received roughly roughly $27 million in state aid through the cashable tax credit program meant to attract smaller producers to Cook Inlet.

With the state running multi-billion deficit budgets in fiscal 2015 and 2016, Alaska Governor Bill Walker vetoed a total $603 million in payments for these tax credits from those years’ budgets, leaving BlueCrest short an expected $75 million in credits and triggering its August hiatus while the company sought other funding sources. The Alaska legislature ended the state’s oil and gas tax credit program in July.

BlueCrest outlined its goals for 2018 in the plan submitted to the Division. Though it states the company will be evaluating the results from the two previous wells “to determine our path forward,” the plan includes drilling at least one new well and says “our best candidate for drilling” is a well into the Starichkoff zone — a strata in the Cosmopolitan formation about 6,740 and 7,005 feet deep, in which driller Penzoil discovered hydrocarbons in 1967. Various explorers of the Cosmopolitan formation have since found oil and gas in the strata, including ConocoPhillips, Pioneer, and Buccaneer, an Australian exploration company that previously leased the Cosmopolitan unit before going bankrupt in May 2014. Buccaneer had sold its share of the Cosmopolitan field to BlueCrest in January of that year.

The Division of Oil and Gas approved BlueCrest’s application to designate a participating area — a section of rock known to contain recoverable hydrocarbons — including the Starichkof zone on August 29.

Reach Ben Boettger at

More in News

Johni Blankenship signs her name after being sworn in as Soldotna City Clerk at a city council meeting on Wednesday, Nov. 30, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Blankenship sworn in as Soldotna city clerk

Blankenship comes to the City of Soldotna from the Kenai Peninsula Borough

Demonstrators hold signs supporting Justin Ruffridge and Jesse Bjorkman for state office on Election Day, Nov. 8, 2022, in Kenai, Alaska. (Jake Dye/Peninsula Clarion)
Nov. 8 election results certified

The outcomes of local races for state office remain unchanged

The Kenai Peninsula Borough administration building is photographed on Tuesday, March 17, 2020, in Soldotna, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)
4 candidates vie for borough mayoral seat

The special election is slated for Feb. 14

Spruce trees are dusted with snow on Dec. 22, 2020, in the Kenai National Wildlife Refuge near Soldotna, Alaska. Some areas of the refuge are open to harvest of holiday trees for non-commercial uses beginning Thanksgiving. (Photo by Jeff Helminiak/Peninsula Clarion)
Snowmachine use permitted in Kenai National Wildlife Refuge beginning Dec. 1

Areas now available include those “traditionally open to snowmachine use”

Stephanie Queen. (Courtesy photo)
Queen to step down as Soldotna city manager

The resignation comes as Kenai finalizes negotiations with potential city manager Terry Eubank

Houses are seen in Seward, Alaska on Thursday, April 15, 2022. (Camille Botello/Peninsula Clarion)
Seward delays action on short-term rental regs

The limits are meant to ameliorate the city’s housing shortage

Kenai Central High School Culinary Students roll out dough for Christmas cookies as part of bake sale preparation on Tuesday, Nov. 29, 2022, at Kenai Central High School in Kenai, Alaska. (Jake Dye/Peninsula Clarion)
Guest chefs ready to help

High school culinary students will do holiday baking for you

COVID-19. (Image courtesy CDC)
COVID-19: Hospitalizations fall statewide, rise locally

The state reported no new resident deaths from COVID-19 this week

Senator-elect Jesse Bjorkman, center, participates in a candidate forum Oct. 17, 2022, at the Soldotna Public Library. Bjorkman was elected in November to represent Alaska Senate District D on the Kenai Peninsula. (Ashlyn O’Hara/Peninsula Clarion)
Bjorkman joins Senate majority caucus

He is one of 17 members of the bipartisan group

Most Read