Oil firm owed $75M prepares to pause drilling

ANCHOR POINT, Alaska—An oil company that the state owes about $75 million in refundable tax credits to is preparing to pause drilling off the shore of Alaska.

Benjamin Johnson, the CEO of Texas-based BlueCrest Energy Inc., said the company is currently drilling a lengthy production well that should be ready to flow oil in September.

But after that, the company might need to suspend drilling operations until alternative financing is secured, the Alaska Journal of Commerce reported.

BlueCrest Energy is the sole owner and operator of the Cosmopolitan oil project on the edge of the Cook Inlet. If it is forced to pause drilling, about 300 employees could be affected.

“We were hoping we could squeak by and make it without any additional tax credits; we’re working to try and avert that (drilling stoppage),” Johnson said. “Hopefully in the best case we’re pausing briefly, only for a month or two, on the drilling. It might be longer; we just don’t know.”

The state has paid BlueCrest $27 million in tax credits since the company purchased the project in 2012.

But the company now holds about $75 million in refundable credit certificates and expects to earn another $15 million for eligible drilling and development work, Johnson said.

Gov. Bill Walker has been criticized by energy industry representatives and many Republicans in the Legislature for vetoing $630 million of tax credit payments in 2015 and 2016, contending the state could not afford to spend the money and drain savings dwindling from years of ongoing budget deficits in the $3 billion range.