Alaska News

BlueCrest plans Cook Inlet oil development

BlueCrest Energy Inc. is moving forward with an oil field development in the Cosmopolitan prospect in Cook Inlet, offshore the southern Kenai Peninsula, Benjamin Johnson, the company's president and CEO, told the Alaska Oil and Gas Congress on Sept. 17. But although the Cosmopolitan oil pool lies in offshore leases, all oil drilling will be done from an existing onshore well pad using extended reach drilling techniques, Johnson said. The company's site plan for the onshore facilities envisages up to 30 wells. And BlueCrest has a letter of intent for the use of an onshore drilling rig, Johnson said.

"We do plan to start drilling onshore next year," Johnson said. "Facilities should be in place by early 2016 and it should be in production in the first half of 2016."

Gas development?

Johnson said that BlueCrest has also been developing a plan for natural gas production at Cosmopolitan, using two offshore monopod platforms of similar design to what Furie Operating Alaska has built for its Kitchen Lights gas development. The platforms would be connected by pipeline to BlueCrest's onshore facilities. But a decision to proceed with the gas development is contingent on BlueCrest finding a market outlet for the gas, Johnson said.

The company needs to make sure that there is somewhere for the gas to go before spending $500 million on the project, he said.

If the gas development does proceed, the offshore platforms would be small and inconspicuous, with minimal scenic impact -- the platforms would be for gas production only and would be automated, with triple redundancy systems, Johnson said.

Johnson commented on his company's emphasis on environmental protection, with the company planning many steps to protect both the environment and the company's neighbors.

Discovered in 1967

Pennzoil first discovered oil at Cosmopolitan when drilling the Starichkof State No. 1 well in 1967 using an offshore jack-up rig. But that well did not penetrate the core of the structure and the results of the drilling were dismissed as uneconomic. In 2001 Phillips Inc., later to become part of ConocoPhillips, directionally drilled the Hansen No. 1 well from onshore into the prospect, confirming the original oil discovery and also finding other productive sands in a deeper formation.

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In 2003 ConocoPhillips drilled a sidetrack to the Hansen well, flow testing oil at 1,000 barrels per day and eventually producing 14,851 barrels of oil from the well.

In 2005 ConocoPhillips and Pioneer Natural Resources partnered to conduct a 3-D seismic survey over the prospect. Pioneer subsequently acquired a 100 percent interest in the prospect. In 2007 Pioneer plugged the original well completions in the Hansen sidetrack and drilled another sidetrack that undulated through some of the oil bearing sands and tested at 300 barrels of oil per day.

Following a hiatus during the financial crisis of 2008, Pioneer returned to Cosmopolitan in 2010 to fracture stimulate that second sidetrack well, flow testing 250 barrels per day of oil and ultimately producing more than 33,000 barrels. The company proposed a development program for the prospect, but, following a change of heart in 2011, relinquished all but two of the leases in what had been the Cosmopolitan unit.

Offshore well

Buccaneer Energy Ltd. acquired the two remaining leases from Pioneer, but with BlueCrest taking a 75 percent interest in the leases. Apache Corp. acquired the other Cosmopolitan leases in a state lease sale but sold these leases to Buccaneer and BlueCrest in 2013. Buccaneer and BlueCrest subsequently drilled the Cosmopolitan State No. 1 well offshore, using the Endeavour jack-up rig that Buccaneer had brought to Alaska with financial assistance from the Alaska Industrial Development and Export Authority.

In 2014, as part of a sequence of events leading to Buccaneer's bankruptcy, Buccaneer sold its interests in Cosmopolitan to BlueCrest, thus making BlueCrest the 100 percent owner of the Cosmopolitan leases.

Buccaneer's access to a jack-up rig for drilling vertically into the Cosmopolitan structure had been a major motivation for BlueCrest's interest in Cosmopolitan, Johnson said. And the well that the two companies had drilled in 2013 had encountered high-permeability sands, charged with natural gas, at vertical depths from 800 feet to 5,400 feet he said. The 3-D seismic that ConocoPhillips and Pioneer had shot in 2005 found clear definition in images of the outside of the Cosmopolitan structure, but gas had caused clouding of the images from the structure's top and middle, Johnson said, adding that the well drilled in 2013 had enabled some fine tuning of the seismic images.

Another well?

In an application for an authorization for minor disturbance of marine mammals, filed with the National Marine Fisheries Service in July, BlueCrest said that it plans to drill another offshore Cosmopolitan oil exploration well, the Cosmopolitan State B-1 well, during September and October 2014, probably using the Endeavour jack-up rig, but possibly using Furie's Spartan 151 jack-up rig, should that rig be available. If a full 60-day drilling period cannot be completed in the fall, the drilling would be deferred to the spring of 2015, the application said.

This story originally appeared in Petroleum News and has been republished here with permission.

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