Morning Headlamp — BlueCrest invests in AK & Hollis French enters the AOGCC mix

No crystal ball needed. The Alaska Oil and Gas Association has announced that the state had its first year-over-year increase in oil production in more than a decade. The state has not seen a yearly increase in oil production since 2002. A spokeswoman for the association, Sarah Erkmann, says the growth can be attributed to tax changes approved by the state Legislature in 2013. She says those changes encouraged companies to invest more in Alaska’s oil industry. Numerous companies testified last Friday before the House Finance committee, letting the committee know that another change in tax policy, especially a tax increase, will not lead to more investment and more production.

Big news from the Inlet. In the next weeks, BlueCrest Energy is expected to begin producing oil from the Cook Inlet. The project is significant because it plans to conduct the area’s first large-scale fracking operation, using the same efforts that have helped turn the Lower 48 into an energy powerhouse. The $77 million rig was commissioned by the company with help from a $30 million loan from the Alaska Industrial Development and Export Authority. BlueCrest Rig No. 1 is being shipped in pieces, taking 115 truckloads to move the rig and related equipment from Texas to the West Coast so it can be hauled on ships to Alaska. “There’s never been any wells like this (in the Inlet), the long horizontal well with the huge multistage frack,” said Benjamin Johnson, BlueCrest Chief Executive, who decades ago helped develop the giant Kuparuk oil field for Arco Alaska Inc., the former big producer on the North Slope and the Kenai Peninsula. The rig will drill wells more than 4 miles long from BlueCrest’s site 6 miles north of Anchor Point, where the company has also built a processing facility. Cathy Foerster, chair of the Alaska Oil and Gas Conservation Commission, said the state has “very stringent” regulations BlueCrest must follow before it can frack, with safeguards designed to prevent a release of fluids into the environment.

 Headlamp is thrilled to see industry leaders willing to invest in Alaska’s resource development. The state has to meet BlueCrest halfway by honoring their commitment to provide tax credits. 

In the search for an applicant to fill the Alaska Oil and Gas Conservation Commission vacancy, Hollis French has emerged as another potential candidate. Three of French’s allies have recommended him to the governor for the appointment. One is Malcolm Roberts, a Walker booster and former aide to the late Gov. Wally Hickel; the two others are Vic Fischer, a delegate to Alaska’s constitutional convention, and Fischer’s wife, Jane Angvik. In the Senate, French was known as an industry skeptic who, in one memorable episode, asked for oil industry officials to be sworn in before testifying before a committee — a move that led to French’s microphone being cut off by the committee chair.

 

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First Reads

Groundbreaking fracking effort, plus first new oil production in years, on tap in Cook Inlet
Alaska Dispatch News, Alex DeMarban, April 2, 2016

Oil production in Alaska shows growth not seen since 2002
Associated Press, April 4, 2016

Hollis French recommended for seat on Oil & Gas Conservation Commission
Alaska Dispatch News, Nathaniel Herz, April 1, 2016

Hard-to-find retired EPA scientist tells where he’s been and why he fought Pebble
Alaska Dispatch News, Lisa Demer, April 4, 2016

King Cove and Murkowski grumble over federal report on refuge road alternatives
Alaska Dispatch News, Eric Martinson, April 1, 2016

Mining tax legislation follows path of oil tax
Juneau Empire, James Brooks, April 3, 2016