A Texas-based oil company plans to pause its onshore drilling operation in Cook Inlet in September, leaving about 150 workers without a job for the time being.
Currently, Blue Crest Energy has two wells drilled at its 38-acre drill site just north of Anchor Point and plans to finish a third before halting operations. CEO Benjamin Johnson says the company isn’t shutting down the field, but it won't drill any new wells until it is payed $75 million in tax credits it’s owed by the state, or finds funding elsewhere.
“We reached the point that we need the other money. Now, the state has paid us $27 million in tax credits, and we’ve taken that money and reinvested that 100 percent to get us where we are, " Johnson explained. "Without the receipt of the remaining tax credits, we’ve got to now change our investment plan, and that’s not easy to do.”
Currently, just one well is producing oil, and Blue Crest plans to bring the remaining two on line in the coming months.
Johnson expects the $525 million project to produce thousands of barrels of oil per day, but it needs more wells brought on line to make the operation financially sustainable.
Alaska’s Legislature eliminated the state’s cash-credit program last month, which gave cash payments to companies producing less than 50,000 barrels of oil per day to promote oil exploration. The state has also been slow to pay out tax credits companies have already earned as it deals with the fiscal crisis.
Johnson says the company can live with the new law, but he says Blue Crest is looking elsewhere to fund its operations for the time being.
“Some companies may be able to deal with not getting the payments. Perhaps we could deal with not getting all the payments, but this is the result of not getting at least a substantial portion of them," Johnson said. "We have to stop for now.”
He doesn't know when workers will get back to work and declined to say where and how Blue Crest is seeking additional funding.