KTVA: BlueCrest Energy launches ‘Cosmopolitan’ project at Anchor Point

Anchor Point – Cook Inlet may be an aging oil field, but it still has some surprises. A Texas company struck oil in March near Anchor Point and hopes to tap a reservoir that could hold between 70 and 200 million barrels of oil.
BlueCrest Energy may have its headquarters in Fort Worth, Texas, but it’s headed by Benjamin Johnson, who grew up in Kenai and graduated from high school there. Johnson’s parents lived in a cabin on the Anchor River just before he was born.

He said the project is a dream come true.

“I see that as part of the big circle of life,” Johnson said. “It really is a heritage for me.”

Johnson’s Kenai ties helped put the project on the fast track. On Saturday, investors and Alaska leaders came to cut the ribbon for the Hansen Production Facility — named for the Hansen family, which homesteaded on the property.

Sen. Lisa Murkowski did the honors of cutting the ribbon.

“It’s a tough time for our state right now, but you know, our reality is that we’ve had some tough times and then we’ve had some really great times, and we ride it through,” Murkowski said.

These days, as oil companies weather low prices, they’re more likely to scale back. But BlueCrest Energy has stepped up investment, partly because it has benefited from oil tax credits and a $30 million state loan, which financed a jack-up drilling rig.

Johnson called it a wise investment.

“The state receives about a 300-percent return on the money for the credits that would be paid to us for drilling these wells,” Johnson said.

Depending on the price of oil, Johnson said the state could earn several hundred million dollars in royalties — possibly as much as $500 million — over the 30-year life of the project.

“Those credits go away in Cook Inlet in the next 18 months,” said Sen. Peter Micciche, a Republican from Soldotna who supports credits. “Projects like this will be challenged.”

The Legislature passed House Bill 247 this year, which scales down the credits. The governor has yet to sign the bill. There’s also the possibility he may veto the appropriation for the tax incentives in the budget, which Micciche said he hopes doesn’t happen.

Even so, Micciche feels more work needs to be done to target credits for companies, which can guarantee results for the state. Some companies like Buccaneer, which received tax credits, have left the state owing local contractors money.

Sen. Bill Wielechowski, an Anchorage lawmaker who fought to reduce oil tax credits, said the BlueCrest Energy project might be a win-win for the state. He said there are two big questions Alaskans need to ask: Do companies really need the tax credit? And would they have made the investment without it?

Wielechowski said under Alaska’s current policy, it’s hard to know if the state will truly benefit from tax credits.

In general, he said, small, independent companies like BlueCrest are a good investment for the state. He’s more skeptical of the major producers on the North Slope. So far, BlueCrest has received about $25 million in tax credits. The company expects to receive another $125 million.

The company hoped to develop gas as well as oil, but put those plans on hold now that credits will soon be phased-out. BlueCrest said the project never would have come to fruition without the credits, which helped offset low oil prices.

Over the last 50 years, five other oil companies tried to develop the unit, known as “Cosmopolitan.”

Bob Swenson, the geologist who named the unit, was at Saturday’s ceremony. In the 1990’s, when he worked for ARCO, he tried to convince his bosses there was a major deposit of oil. But they eventually gave up on the prospect.

He named it “Cosmopolitan” because the company wanted to transfer him and a group of other geologists out of Alaska. And when they refused, management complained they weren’t “cosmopolitan” enough to move.

Swenson said he feels vindicated, but also believes it took a company like BlueCrest to find the oil.

The company is using new fracking technology, as well as extended drilling, in which four miles of pipe will stretch out underneath the Inlet, to tap a 7,000- foot reservoir.

“You really had to stay at it. It’s a very difficult reservoir,” Swenson said. “And so it needed people that were very, very committed, that understood the prize was there.”

For the employees that work at the Hansen Facility, where the gas and water are separated from the oil, the prize is in the jobs that allow them to work near home.

“It’s exciting,” said Jessica Hahn, one of the operators, who works out of a computerized room that controls the entire facility. “There’s so much learning that goes on everyday.”

She and several others were hired after studying oil production at the Kenai Peninsula College.

About 20 workers will staff the production facility, while another 80 to 100 will work the drilling rig, which will be operated by a local company. Almost all are Alaskans.

So far, more than 130 vendors took part in the project.

The company expects the prospect to produce 17,000 barrels of oil a day, once it’s fully operational.

Link to the original article: http://www.ktva.com/bluecrest-energy-launches-cosmopolitan-project-at-anchor-point-652/

By:  Rhonda McBride

Related Issues: Energy