AIDEA releases $50M credit line for Cook Inlet gas drilling

The Alaska Industrial Development and Export Authority released the first draw from a $50 million revolving line of credit to HEX Cook Inlet LLC in May, supporting a $40 million HEX investment to drill two offshore wells this year in the Kitchen Lights Unit, a state lease area in upper Cook Inlet. AIDEA approved the facility in two 2024 board resolutions (G24-08 in August, G24-12 in October) and finalized the loan documents earlier this year. The amount released in May was not disclosed.

The financing is not AIDEA's first for HEX. In October 2023, the company repaid an earlier $7.5 million AIDEA loan eight months ahead of schedule — a record the authority cited when approving the new facility. HEX, described in AIDEA materials as Alaska's only locally owned and operated independent gas producer, acquired the Kitchen Lights assets from Furie Operating Alaska through that company's federal bankruptcy in 2020.

The AIDEA loan is one piece of a broader pattern of state supports for the Kitchen Lights operation. In early 2025, the Department of Natural Resources' Division of Oil and Gas issued a Preliminary Findings and Determination approving a modified royalty rate for Kitchen Lights gas, cutting the standard 12.5% rate to 3%, backdated to September 1, 2024. The higher rate returns only after the unit reaches $712 million in gross revenue.

The Legislature has considered several related measures. House Bill 271, introduced by Rep. Zack Fields, D-Anchorage, would put the royalty reduction into statute. A Senate bill from Sen. Jesse Bjorkman, R-Nikiski, would have authorized the state to acquire private overriding royalty interests in Cook Inlet. A Senate Resources Committee bill, SB 50, proposed changes to how oil and gas property is assessed for tax purposes; it did not advance.

All of this plays out against a documented Cook Inlet supply concern. State and utility filings identify a forecast gap between Cook Inlet production and Southcentral gas demand later in the decade if no new local production comes online, and utilities have begun regulatory planning for imported LNG as a backstop.

AIDEA's May 21, 2025 board meeting, at which the financing was reviewed, was public. HEX president and CEO John Hendrix said the funding was "critical to keeping Alaska's energy resources developed by Alaskans." AIDEA presented a symbolic check to Hendrix and Furie staff.