Cook Inlet natural gas producer says it’s sitting on large deposit, but nobody wants in

An oil platform at dusk
Cook Inlet oil platforms are visible from shore near Kenai, Alaska. (Rashah McChesney/Alaska’s Energy Desk)

Natural gas is essential to generating heat and electricity for many Alaskans. A looming shortfall from Cook Inlet, though, has utilities, lawmakers and residents concerned.

BlueCrest Energy, an oil and gas developer that operates in Cook Inlet, says it’s sitting on a huge natural gas deposit that could power and heat homes for years. However, a new report from the Northern Journal finds that the company isn’t getting a lot of attention from investors.

Northern Journal reporter Nat Herz says the hesitation comes as natural gas extraction in the region has become more difficult, and, rather than using the nearby Cook Inlet gas the utilities have relied on for more than 60 years, they’re considering importing liquified natural gas from outside Alaska.


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This interview has been lightly edited for length and clarity.

Nat Herz: This is a really touchy issue, because Alaskans and Alaska politicians in particular, you know, we love our homegrown fossil fuels. The oil and gas industry is obviously a linchpin of our economy here. It’s an industry in which a lot of people take a lot of pride. And so the idea that we might actually need natural gas from outside of Alaska to continue heating our homes and generating our power is actually very offensive to a lot of Alaskans, and to a lot of Alaska policymakers. 

The issue is not that there is no gas left in Cook Inlet. The issue is that the gas, even when we actually know exactly where it is and that there are large quantities of it, is getting harder and harder to produce and more expensive to produce. And so this company in particular that I kind of profiled in this story, Bluecrest Energy, they have third-party validated data and information that really gives pretty high confidence — this is backed up by state officials and state experts — that they are sitting on an enormous pool of gas in Cook Inlet, just offshore of the community of Anchor Point.

This is probably enough gas to power all of Southcentral Alaska’s power plants and home heating needs for the next, you know, several years. But nonetheless, this company says, “Actually, we’re having a really hard time raising the money that it would take for us to get this gas out.” And the reason for that is that they need to build an offshore platform in the very harsh and unforgiving waters of Cook Inlet, at a cost of about $350 million.

Wesley Early: I’m curious, I know Bluecrest is relatively small compared to other Cook Inlet operators. What are the other operators in the Cook Inlet doing when it comes to this issue of natural gas and whether or not to get it out?

NH: Yeah, so there is actually another company that is somewhat similarly positioned to Bluecrest, Hex, which is a company that’s run by an oil and gas industry veteran in Alaska, John Hendrix. They also have what they say — though maybe with a little bit less data to back it up — that they have access to a similarly sized very large pool of gas that they don’t even need to build a platform to access. They could just drill wells from an offshore platform in Cook Inlet that already exists. However, Hendrix, who runs this company, says the cost of borrowing money to drill these wells is really high, because investors are really skeptical that this is sort of a safe bet. Because you know, sometimes you drill wells, they don’t produce exactly what you expect them to produce. 

And they’re also not sure that the utilities that currently buy gas are going to be continuing to buy gas for a long time, because what if the electric utilities are able to successfully transition away from fossil fuel-based power and start generating most of their power from renewables like wind and solar, which is the thing that they’ve said they’re going to do? Also, what if Alaska ends up finally getting the money to build the enormous natural gas pipeline from the North Slope and supplying, you know, local Anchorage-area markets at low prices? That really would destroy the business model of Cook Inlet producers. So this is a really hard environment.

WE: So, it sounds like there’s a lot of different reasons why investors are hesitant to buy into these natural gas projects. What are state government officials doing to try to make it more enticing or to make it easier for natural gas producers?

NH:  Yeah, I mean, Gov. Dunleavy has proposed basically some royalty reductions, which is sort of a form of taxes that are paid on production of oil from state leases. The problem is that kind of proposal — and even if you get into actual payments upfront to oil companies to reimburse them for drilling costs — it’s not, particularly for the royalties, you’re not making that money back until you start actually producing oil. And it takes a very long time to start producing oil if you’re starting just with like designing a platform or even drilling a well. And so it’s not clear that investors are really going to be sold on these policy proposals, and clearly they’re not yet flocking to Cook Inlet. 

But really, I think it’s pretty clear where this conversation is going: The utilities, you know, the folks who produce our electricity and sell us our natural gas as heating fuel, they’re saying that at this point, even if it’s more expensive than what we’re paying now, we have a lot more confidence that we can just call up a producer of liquified natural gas outside of Alaska, order up a cargo of LNG and ship it into the Anchorage area and use that to meet our needs for the short and medium term until we’ve kind of moved, at least our electricity generation, to renewables, and that that is going to be a more reliable and at least a cost-competitive option with trying to drill more gas in Cook Inlet, just because of the tough environment that that companies are facing in Cook Inlet. So I think that’s really where this conversation is headed.

Wesley Early covers Anchorage life and city politics for Alaska Public Media. Reach him at and follow him on X at @wesley_early. Read more about Wesley here.

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