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