Jack-up oil drilling rigs head for Cook Inlet

• Alaska buys share in rig, to partner in drilling
By Randi Somers
Homer Tribune

Jack-up oil drilling rig

Jack-up oil drilling rig

Two jack-up oil drilling rigs are en route to Cook Inlet from the Gulf of Mexico and are expected to be temporarily stationed here, incurring opposition from environmental protection activists.
The rigs have rounded the tip of South America and are moving north in the Pacific. At last word one was photographed off the coast of Chile and expected here by late May.
Environmental concerns arise partially because of an incident in 1977 in Kachemak Bay resulting in disruption to the delicate ecosystem of the bay and concerns about spilled petroleum products.
“We expect safe drilling practices that protect our fisheries and the families they support,” Cook Inletkeeper director Bob Shavelson said. “Based on Escopeta’s apparent violation of the Jones Act – and its selection of a drilling rig that has questionable capacity to operate in the harsh conditions of Cook Inlet – we have serious concerns about Escopeta’s willingness to operate responsibly.”
The two are Buccaneer Alaska Operation’s rig “Adriatic XI” and Escopeta’s, “Spartan 151,” expected to arrive around May 25. Once they arrive, with the concurrence of the Alaska Oil and Gas Conservation Commission, they will be prepared for mobilization to the drilling sites somewhere in Cook Inlet.
The foreign-built heavy-lift vessel “Kang Sheng Kou” carrying the Spartan 151 rig reportedly does not have a Jones Act waiver. That act requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The purpose of the law is to support the U.S. Maritime industry.
The Kachemak Bay Conservation Society’s website states that in the early ‘80s, following an incident in 1977 when a jack-up rig was stuck in Mud Bay, KBCS fought a battle to keep jack-up oil rigs from being stationed in Kachemak Bay. There was a proposal to barge drilling rigs, that would later set up in Cook Inlet, into Kachemak Bay and park them across the Bay in some of the coves. It was a contentious issue. Ultimately, KBCS and other conservation groups prevailed in the issue because so many people were opposed to bringing the jack-up rigs into the Bay for many reasons. A Critical Habitat Management Plan was written that included a policy prohibiting storage of oil rigs in the critical habitat area. Specifically, the policy states:
“To avoid damage to fish and wildlife habitats, disturbance to fish and wildlife populations and displacement of public use of Kachemak Bay Critical Habitat Area, drilling rig storage will not be allowed in the Kachemak Bay Critical Habitat Area.”
The KBCS website states, “The Alaska Department of Fish and Game has now issued a permit that will allow Buccaneer Alaska to bring the jack-up oil drilling rig ‘Adriatic XI’ into the Homer Harbor for this winter and likely subsequent winters. ADFG is apparently considering a jack-up rig a ‘vessel’ when it is towed into the harbor which appears to be a way of evading the regulation. There were a lot of good reasons not to bring these rigs into Kachemak Bay when the policy was finally added to the Management Plan.”
Harbormaster Brian Hawkins confirmed that Buccaneer has been negotiating with the Homer Port and Harbor to tie up their barge/rig “ Adriatic XI” at the deep water dock for the winter months. “We don’t expect it to firm up for awhile but they’ve had positive response in the permitting phase,” he said, adding that it would be “legs up” with the barge, which carries the drill rig, just tied to the dock. Buccaneer Alaska LLC, a company based in Houston, Texas, owns gas wells in Cook Inlet. They operate as a subsidiary of Buccaneer Energy Limited.
The KBCS acting director Hal Shepherd is active in the challenge to oil and gas expansion in Cook Inlet. “The plan says that no rigs will be stored in critical habitat area. The city has ownership of the area up to the tip of the Spit and the state is saying they don’t have jurisdiction to stop the rig because the city owns the property. But the state owns the water column so it seems to be a question of what could happen while they are docked in state waters at the city-owned pier. For us the question is ‘Is the state complying with the law and the spirit of the (conservation) plan.’ It is obvious what was intended.”
Escopeta has been required to produce a contingency plan telling how they will deal with a spill, blowout or other type of accident at the rig during drilling. It is expected to be on the KBCS website by today. The public can contact DEC or KBCS websites to comment until May 20, Shepherd said.
Meanwhile, the state is buying into the drilling operation.
Last Thursday Gov. Sean Parnell signed HB 119, which allows the Alaska Industrial Development and Export Authority (AIDEA) to invest in a corporation or LLC. AIDEA plans to use the bill’s provisions to finance a jack-up rig for Cook Inlet.
According to the Alaska Journal of Commerce, on April 1 AIDEA’s board unanimously approved a $30 million investment in the jack-up rig “Adriatic XI” that is being brought to Cook Inlet by Buccaneer Energy Ltd., an Australian company, and Ezion Energy Holdings of Singapore.
Kenai Offshore Ventures, the company formed to own the jack-up rig, would drill at least four wells in Cook Inlet under the agreement, which has some terms yet to be finalized with AIDEA. Buccaneer holds offshore leases in Cook Inlet that are expected to be the initial targets for exploration.

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Posted by on May 11th, 2011 and filed under Headline News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

14 Responses for “Jack-up oil drilling rigs head for Cook Inlet”

  1. Lindsey Gillis says:

    I do believe that we have to be very careful as we move forward on drilling in the Cook Inlet. At least the Adriatic XI is built to operate in the very cold waters of the North Sea. It can stand in 300 feet of water so withstanding the currents of the Inlet is not going to be an issue. It also has -10 degree rated steel so Ice will not puncture it. Buccaneer Alaska and KOV will be hiring local talent and creating jobs. At the same time, we need the natural gas or we will begin shutting down in Anchorage. So we need to be vigilant, watching Danny Davis closely is a good idea, but we also need to be pragmatic. From the coverage it does not appear that the Escopeta rig can even pass inspection since it does not have a BOP system on board. Without one installed properly I cannot believe the State would let him drill. Buccaneer all ready operates offshore in the Gulf of Mexico and has for years without incident.

  2. AK Stunt says:

    “The Kachemak Bay Conservation Society’s website states that in the early ‘80s, following an incident in 1977 when a jack-up rig was stuck in Mud Bay”

    LOL really the best they could come up with was something from 35 years ago?

    I would hope to think we all have learned LOTS of stuff in the last 35 years

    I honestly think that’s literally beating a dead horse.

  3. Bruce Webb says:

    Someone hasn’t done their homework. The Adriatic XI jack-up drilling rig is in Malaysia (Southeast Asia)…. not on it’s way to the Cook Inlet. Be careful about the propaganda published by a foriegn company attempting to buy a rig with Federal stimulous money funelled to the State AIDEA, making the State of Alaska an equity owner in a jack-up rig that will compete directly with private business and investment. There has been lot of hipe about the Spartan 151 not being able to work in the Cook Inlet, but Buccaneer failed to mention that they tried contract the 151 for months – even after Escopeta had it under contract. Escopeta and Spartan are going to hire Alaskans when the rig gets here in a couple of weeks. According to the industry reports that are published weekly, Buccaneer still doesn’t even have a rig under contract. It appears Buccaneer’s entire business model was to get the State of Alaska to buy them a rig through AIDEA, then get the State of Alask to pay for their well under SB309. Unfortunately for them, Escopeta was able to use private investment dollars, equity and capital and get their rig here first – beating Buccaneer to the punch. Escopeta has their hat in the ring, not in their hands. Of course, that’s just my opinion, much like this article was the writer’s opinion.

  4. Richard says:

    Bruce, maybe you should get your facts straight. I can tell you for certain that Spartan has already crewed up the 151 with the hands that were already assigned to the rig. They are not hiring locals. The crews will be going to the rig in a couple of weeks. Like I said, they are all from the south.

    • Bruce Webb says:

      It is my understanding that the rig supervisor and the actual rig engineer and a few others (like sanitation operator, etc) will be coming, because they are familiar with the operations, unlike anyone here. But as far as the drilling crews, Spartan already put out ads and the local papers and the State employment offices requesting resumes for the drilling crew. The rig will pull up to Nikiski in about two weeks. The modifications are going to be done by local contractors.

      • Tammy Mck says:

        I feel people who live here need to take a stand and not allow these rigs here what didn’t we learn alot about exxon valdez spill lets stop these corporate foreign companys from destroying what little natural Habitat in the world we need to do this for our children and future generations and besides we don’t really benefit from the rigs being here our gas and oil prices are through the roof Stop these Globalist from taking over.

    • Bruce Webb says:

      Richard,

      I’m curious…. you say “I can tell you for certain”. How exactly is that? Who are you and what connection do you have to the Kitchen Lights Unit prospect that Escopeta is going to use the Spartan 151 to drill?

      I have worked in the oil and gas industry in permitting and regulatory affairs for about 20 years. Much of which was with the DNR, now retired. I have been assisting Escopeta with this project since 2007. My daughter has a royalty interest in the field, so you might say I have a vested interest in its success.

      I have actually sat down and talked with the President and Operations Manager of Spartan about local hire and rig contracts…. have you? I have met and talked with the local Alaskan contractors that will be working on the project – both in the rig modifications and drilling activities….. have you?

      I have personally spoken to Senator Begich and Congressman Young about the Jones Act Waiver…. I assume you have as well.

      What exactly are your qualifications for being so “certain” that Escopeta and Spartan are not going to use Alaska workers and contractors? I’m a lifelong Alaskan from the Statehood era, this stuff is important to me. Where did you come from?

  5. Bob Shavelson says:

    Assuming the numerous news reports on the issue are true, Escopeta is rolling the dice by loading up and setting sail for Cook Inlet without a Jones Act waiver. And, according to the AOGCC, Escopeta did not have the blow-out preventer available for inspection in the Gulf prior to transit. And if they’re bringing in outside workers, too, it seems they’re willing to roll the dice to get the $25 million tax giveaway offered by the state. Let’s hope our regulators learned some lessons from the BP Gulf Disaster…..

    • Bruce Webb says:

      Bob,

      You are correct. The 15,000# BOP system was not yet installed while at Copper Dock in Galveston Texas. When the rig gets to Nikiski, there is going to be a flurry of activity from LOCAL contractors installing the new high-pressure lines, choke manifold and BOP equipment. It will of course be inspected by the AOGCC, US Coast Guard and DEC before being released and moved onto the drilling location.

      I know some of the Alaskans already hired to work on that rig, and most of the local industry contractors, personally. A lot of hipe and mis-information propoganda on this issue. Maybe instead of listenning to other competitors, people should call Spartan directly and ask.

      As far as the Jones Act, I guess it is a roll of the dice. I suppose if Escopeta doesn’t get it we (residents of the Cook Inlet) will be missing out on a great opportunity and have to rely on someone else to find or bring us natural gas. Maybe the State of Alaska will buy a rig and drill a well itself. It would be very hard to believe an investment of around $40,000,000 for this well wouldn’t have a back-up plan. The rig isn’t here yet, guess we just have to wait and see how the saga unfolds.

  6. wes cannon says:

    Wintering at the DWD is good revenue for the City.

    • Bruce Webb says:

      Yes it is! The rig has to dock somewhere that is ice free. During the winter, fishing, tourism and dock services are dow, so it would be a very good, low-impact, revenue source between November and March. Since the rig would be docked and hooked up to the port services, there would also be very little emmissons from the rig, and zero discharges.

      It would also be an excellent opportunity for the local schools to take advantage of tourng the rig and learning how it operates – especially the safety and environmental aspects.

      Lastly, there are a heck of a lot of fantastic artists in Homer, and there are a heck of a lot of oil and gas related people in Alasak who would buy art with a jack-up rig…. I would! I would hang it in my office or in the reception area.

      • ozzie oiler says:

        Dear Bruce Webb , Just on your first paragraph copied here ; Be careful about the propaganda published by a foriegn company attempting to buy a rig with etc etc

        Please show me where BCC [Buccaneer oil the foreign company ] has made comment [propaganda] about Escopeta or anyone else ?
        I don’t believe the writer of the above article by Randi Somers is an employee of BCC ? and I certainly haven’t read or heard any other comments from BCC ?

        Further you should be thankful that BCC is coming to Alaska as some of the majors are pulling out and over here in Oz we keep hearing about your impending gas shortage . Low and behold we’ve only been there one year and all going well in the next few days we’ll have proven up a nice little gas supply for you as well .

        If the mob at Escopeta hadn’t stuffed around with law suits and broken promises for the last x years they could of done the same .

        Now we read they are breaking the law to get a rig up to the inlet so as to keep their leases . Golly gosh how about calling a spade a spade mate .

        Us dumb Ozzies might be a little slow on the uptake at times but we don’t like being accused of something we haven’t done .
        I believe folks associated to Escopeta like your self are the ones doing the damage talking dribble plus showing up to meetings trying to sway others against a little oiler form down under .

        Please note beside being a small time shareholder of the above company I am not an employee of BCC or any of its subsidiaries and I will defend there right to do what they are doing as much as I’ll tear them to shreds if they screw up !

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