BlueCrest Energy is producing its first barrels of oil from the Cosmopolitan Unit north of Anchor Point. Company officials say the new crude is high quality and some of the cleanest they’ve ever seen.
BlueCrest Energy’s struck first oil on the very last day of March. Larry Burgess, BlueCrest’s Health and Safety Environmental Manager says they’re filling between 250 – 350 barrels a day.
“…very clean, very nice looking oil. We have filled our production tanks and we sent out our first tanker for sales yesterday. It went to Tesoro last night and we offloaded and we’re filling another tanker today. So we are not only producing oil but we are now selling oil to Tesoro,” said Burgess.
Burgess says the producing well was drilled onshore by Conoco Phillips and the oil flows on its own.
“We just open the valve and out comes the oil,” said Burgess.
They’ll keep sending tankers out to the Tesoro Refinery in Nikiski until their storage tanks are ready to be refilled. Burgess doesn’t know what price BlueCrest is getting for the oil. He says that is being negotiated right now.
BlueCrest Energy has been working to develop the Cosmopolitan Oil fields in Cook Inlet since last year. They have installed a drill pad to the north of Anchor Point and they have an onshore rig being delivered piece by piece from Texas.
“That rig should be arriving in its entirety mid-May, maybe the third week in May. We’ll start assembly in May and June, commission the rig and we expect to spud that first well in July,” said Burgess.
Burgess says BlueCrest has plans to drill 20 more wells from shore. They already have one offshore well left over from an older project and the Alaska Division of Oil and Gas gave them permission this month to drill another well offshore. They initially expect to produce up to 17,000 barrels of oil per day.
There’s also a chance the company will try to produce the natural gas reserves in Cosmopolitan. That’s partly why they asked the state to allow a second well to be drilled offshore this summer.
“So we would be drilling to the oil zones, passing through the gas zones as basically a data gathering well. We want to drill it to gather as much data as we can about the formations,” said Burgess.
Burgess says the company will use the data they collect to make future decisions on their plans for the Cosmopolitan reserves.
“Well we want to get an idea of how far the oil goes and how thick the gas zone is right there,” said Burgess.
Plans to drill that exploratory well are complicated by the fact that there are only two jackup rigs in Alaska capable of doing the job. One is the Randolph Yost contracted by Furie Operating Alaska and the other is the Spartan 151 docked in Seward and owned by Spartan Offshore Drilling.
“We are definitely looking at the Spartan 151 to potentially drill this exploratory well. We don’t know if we’re going to be able to do it this summer or not,” said Burgess.
Burgess says they are almost done with the permitting necessary to operate the rig but they need to confirm some of the materials they’ll need to drill the well are available. And there’s other prep work to be done.
“…take a look at the bottom of the sea floor, make sure we’re going to set the rig in a stable location. We have to do some of that work. If we decide to do this,” said Burgess.
Bottom line on gas development: Burgess says three things could impact BlueCrest’s decision. He says the company wants the state to keep its Oil and Gas Tax Credit Program the same to incentivize drilling offshore. And he says they’ll need someone to sell the gas to.
“If the fertilizer plant reopens, that would be a tremendous boost to our incentive to go after the gas but right now there’s a very limited market,” said Burgess.
Burgess is referring to a former fertilizer plant in Nikiski that closed in 2007. A Denver-based company is considering reopening it. He also says the price of natural gas needs to come up significantly.