Alaska is facing a potential shortfall in local natural gas production, leading urban utilities to consider importing more expensive supplies from outside the state. However, two small companies, BlueCrest Energy and HEX, have reserves that could help fill the gap. Both companies are seeking government assistance to drill wells on their state-leased lands in order to access the gas.
Anchorage-based HEX is in a hurry to start drilling from its Julius R platform in Cook Inlet offshore of the Kenai Peninsula before winter sets in. The company is waiting for a decision from the Alaska Department of Natural Resources to reduce the royalty it pays to the state. On the other hand, Texas-based BlueCrest is planning a longer-term project that involves building a new offshore platform to produce large amounts of gas, pending state loans to match private investor contributions.
The decision by Alaska lawmakers to slash the oil and gas tax credit program budget has made potential investors wary, creating challenges for companies like BlueCrest. While HEX is pushing for a reduction in royalties to proceed with drilling, BlueCrest is exploring new financing options after the Alaska Industrial Development and Export Authority agreed to forgive a significant portion of its previous loan.
As the state closely monitors development commitments from Cook Inlet producers, including BlueCrest, time is running out to address the impending gas supply gap. Despite challenges, both HEX and BlueCrest are hopeful that their projects can contribute to meeting Alaska’s energy needs in the coming years.
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Photo credit alaskapublic.org
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