Small oil company moves forward with plans for fracking in Cook Inlet

A small company chasing oil at a fracking operation in Cook Inlet indicated in August it likely could not drill additional wells because Alaska owed it some $100 million in tax credits and the company was having trouble lining up new loans.

But BlueCrest Energy recently filed new plans with the state to drill at least one well next year at the Cosmopolitan Unit. The company has conducted extended-reach drilling and hydraulic fracturing there, to stimulate oil production deep beneath Cook Inlet.

If approved by the state, the drilling could support scores of jobs at the Kenai Peninsula project, about 6 miles north of Anchor Point.

In early September, the state paid most of the $77 million the Legislature appropriated this year to address obligations to multiple oil companies under the state's cash credit program, Ken Alper, Tax Division director, said Wednesday.

Some transactions are lingering due to paperwork issues, but all the companies know how much they can expect, Alper said.

How much of that $77 million was earmarked for BlueCrest, and whether the money has helped the company move ahead with drilling in 2018, is unknown. Officials from BlueCrest Energy, based in Fort Worth, Texas, did not return requests for comment Wednesday.

Alper said Wednesday he could not release specific amounts paid to individual companies. The state discloses that information once a year, in April.

The state paid $73 million under the program in 2016, distributed to 12 entities. The Legislature ended the cash tax-credit program this year. But applications from companies are still arriving, and the state expects to pay more than $900 million to oil companies in the future, Alper said.

BlueCrest president Benji Johnson told reporters in August the company might have to pause drilling after completing its second extended-reach well in September, in part because of the delayed credit payments. A work stoppage would lead to 150 layoffs of full-time workers, he said.

It was unclear Wednesday whether the company's plans to drill a new well next year prevented the layoffs.

Cosmopolitan, eyed for decades by exploration companies as a potentially big prospect, is currently producing a tiny amount of oil — about 400 barrels daily.  The crude oil was worth about $60,000 in state royalties in August.

BlueCrest's plans for next year, filed Sept. 27 with the state Division of Oil and Gas, show it drilled two wells this year and did additional well work, using what it describes as the "most powerful operating rig in Alaska." A $30 million loan from the Alaska Industrial Development and Export Authority helped pay for the drilling rig's construction.

The 2018 plan, limited to two pages, calls for drilling "at least" one well. BlueCrest said it would also file permitting requests to conduct other well work as it seeks to boost oil production, including hydraulic fracturing as needed.

The state has until Dec. 1 to decide whether to approve the plan, said Sean Clifton, a project assistant with the oil and gas division.

Correction: An earlier version of this article inaccurately referred to Ken Alper as Alaska's revenue commissioner. He is the Tax Division director.