An Alaska natural gas producer filed for bankruptcy protection last week, pointing to challenges producing enough gas in Cook Inlet and the state’s decisions to withhold many millions of dollars in cash tax credits the company had counted on.
Furie Operating Alaska, owner of an offshore production platform in Cook Inlet and a subsea pipeline, wants to quickly find a buyer, the company’s interim chief operating officer told federal bankruptcy court in Delaware last Friday.
“I believe a prompt sale of the debtors’ assets and/or equity interests represents the best option available to maximize value for all stakeholders in these Chapter 11 cases,” said Scott Pinsonnault, Furie’s interim chief operating officer, in a filing in federal bankruptcy court in Delaware last week.
The company, with offices in Anchorage, faces debts of about $450 million, primarily for large loans used to cover costs, according to its petition for bankruptcy. The value of its assets falls somewhere between $10 million and $50 million, the company said in its petition for bankruptcy.
Among the Alaska contractors owed is Cruz Construction, providing oilfield support services. They’re due $21,000, court records show.
“For us it’s unfortunate, but hopefully they get things together in Chapter 11 and get their debts paid,” said owner Dave Cruz.
“The real big factor to me is the state promised payback on tax credits and that got vetoed,” Cruz said. “That hit 'em pretty doggone hard.”
After oil prices and state revenues crashed starting in 2014, the state began reducing the annual tax-credit payments it had long made to small independent companies to encourage oil and gas exploration. The state began paying the legal minimum required by law, rather than the amount companies applied for and had come to expect.
Former Gov. Bill Walker began capping the payments in 2015, and the Legislature later followed.
The Legislature has since ended the program, but the state still owes many companies. Furie says it’s owed $105 million.
Other companies have also faulted the reduced credits for hurting operations, including Texas-based Caelus Energy that has sold off North Slope prospects and struggled to advance what it calls a large oil discovery at Smith Bay on the North Slope.
Furie also had trouble delivering enough natural gas to meet contractual agreements to utilities, including early this year when an “operational" problem blocked its sub-sea pipeline, halting gas deliveries for a period of time, Pinsonnault told the bankruptcy court.
The company lost about $200 million combined the last two years, selling about $65 million in gas over that period. It employs seven workers and contractors.
“Historical construction delays and cost overruns” added to the problems, and the company struggled to pay its debts, he said.
Lindsay Hobson, a spokeswoman with Enstar Natural Gas, said Furie has been unable to deliver “expected volumes of gas” for a number of months. The company provides a small part of Enstar’s gas portfolio, she said.
“We’re in pretty regular communications and are in negotiations about the future of that contract,” she said.
Furie owes $7.2 million to the Department of Justice, its petition shows. That’s tied to the $10 million penalty the company agreed to pay in 2017 after it violated the Jones Act.
The act requires that American ships and crews be used to haul goods from one U.S. port to another. In 2011, the company used a foreign ship to haul a jack-up drill rig from Texas to Alaska.
The company, named Esopeta Oil Company at the time, was racing to start drilling in Alaska, to take advantage of the tax credits, the federal government said.
Officials with Furie could not be reached Friday.