• VP won’t pledge to no future fracking; explains process for disposing of drilling muds
By Naomi Klouda
Buccaneer Alaska’s first town meeting turned into a confrontation between Homer people pushing for specific answers on gas development plans, and officials wanting to layout projects in their own long-range points.
The push and pull led to a discussion into the methods for disposing drilling muds, blowout prevention and a refusal to promise against future fracking. About 125 people attended the meeting Wednesday night at the Bidarka Inn.
Mary Ann Pease, the moderator for discussions between the public and Buccaneer Alaska’s Mark Landt, is owner of MAP Consulting Inc, an Alaska company. Her consulting credits include public relations for Alaska Communications and for the Pebble Partnership. According to her biography on a Pebble website, Pease was responsible for the successful acquisition of the Beluga River Gas Field for Anchorage Municipal Light and Power and has handled projects for several other significant resource projects.
Landt, vice president of land and business development for Buccaneer, has 15 years in Alaska oil and gas development and 25 years in the industry. Together they answered questions after the powerpoint presentation.
“We are here tonight to present information about our projects on our development in Cook Inlet. Oil and gas exploration development is a controversial subject in coastal communities, there’s no doubt about it,” Pease said during introductions. “Ours is an energy-based society. Hydro carbon production is necessary to our energy needs. The objective tonight is to explain how drilling will operate in the inlet and to address specific concerns. Again, this is not a debate. This is a dialogue meant to bring us to a better place by the end of the evening.”
Landt said he didn’t expect for the Endeavour jack up rig to be at the dock for these past nine weeks. The unexpected equipment and needed work included a recall on a fast rescue craft. That required a factory-provided upgrade. An older general alarm system failed and needed replacement. An installation of a replacement valve in a firefighter system also needed to be done. It is of “paramount importance to commit to safety,” on Buccaneer’s part, Landt said.
Landt took issue with recent comparisons of the Endeavour to the George Ferris jack up rig, circa 1970’s. The 82-foot legs of the Ferris couldn’t be lowered into deep water and substrata without getting stuck, he said. “The depth of the legs, the mud and fact it was stationary were critical.”
The Endeavour has a security system to keep it from miring down in mud, and a new hydraulic leg-jetting system that blasts off mud. In 1975, a system like this was not available. “This is not and will never be a George Ferris situation,” Landt said.
In the presentation on Cook Inlet’s Cosmopolitan Unit, Landt said the initial acreage was acquired in March 2010. The company’s first Alaska well was drilled at Kenai Loop in April 2011. First gas sales to Enstar were established in January 2012. The Endeavour jack up rig arrived Aug. 24. Buccaneer is currently drilling its fourth well on Kenai Loop.
Buccaneer is hoping to move the Endeavour from Homer to the Cosmopolitan Unit the first part of November, he told the Tribune Tuesday.
The Cosmo Unit, three miles offshore from Anchor Point, is in 50 feet of water, making it a shallow well. The company plans to drill 60-80 feet into the substrate. The well is named after the Hansen’s, who own the land surface rights. This is not an exploratory well, Landt said. It was drilled by Penzoil in 1960 and is a known reserve. He expects to be able to drill for gas this winter.
When questioned about which permits were now in hand for the Cosmopolitan work, Landt could not say specifically. They will need an Alaska Department of Natural Resources Division of Oil and Gas lease plan of operations and a SHPO Section 106 Clearance, as well as a division of mining permit. From the Department of Environmental Conservation, they will need a general air permit, authorization for Temporary Storage of Drilling Waste, an oil discharge prevention and Contingency Plan, and applications for Permit to Drill and Sundry Notices. They also will need a well site survey for geo-hazards.
Cook Inletkeeper Advocate Bob Shavelson asked about an Oct. 19 DEC letter denying Buccaneer’s C-Plan request. Given that outcome, “how do you plan to get your C-plan in one month?” he asked.
The Alaska Gas Conservation Commission and the DEC are currently in a conversation to exempt Buccaneer from a new C-Plan initially, but when it comes to the actual drilling work, the C-Plan must be approved, Landt responded. The depth of drilling also is of importance to trigger what stage the C-Plan is necessary. Buccaneer plans to drill only to the gas zone depth, not in the substrata zones, he added.
Landt was asked how the planned work accounts for requirements under the Marine Mammal Protection Act for the endangered beluga whales. Though the Cosmopolitan Unit is not in the critical habitat area designated for beluga, Buccaneer has federal, state and DEC compliance permits for work in the critical habitat at other Cook Inlet lease sites.
“We have a marine mammal monitoring plan and a monitoring program on the rig,” Landt responded.
As in a Homer City Council meeting, Landt promised to make the company’s Contingency, or C-Plan, available for public review “soon.”
Kachemak Bay Conservation Society Director Roberta Highland inquired about bonding in case an industry accident causes extensive environmental damage. “What kind of a bond are you required to have in case of a worst-case scenario?” she asked.
“We’re not going to imagine things here,” Pease said.
Landt was prepared to comment on the question initially. An audience member called out “If you’re not prepared to comment, you’re not prepared to drill.”
Another person said: “We keep being told we will be told later.” At that point, Landt said the company has multiple bonds from $100,000 to $500,000 and a Certificate of Responsibility for $83 million.
Worst case scenarios are limited by variations in drilling volumes and pressure, Landt said.
“The worst case varies by location and well, from 800 barrels a day to 5,500. This is not a drilling exploration. We are going back into where wells were already drilled. We know what type of pressure to anticipate. We can design drilling mud (mixes) to keep pressure in the formations,” he said.
In case of an earthquake, operations would be “shut down during any disturbance,” Landt said in response to another question. “Do you have the capability to shut down immediately?” he was asked.
“Absolutely,” he answered.
Buccaneer’s power point presentation listed the permits required for drilling at the Cosmopolitan Unit. When asked about which permits are checked off, Landt said he didn’t have the answer but would post it online “if that proves appropriate.”
Another audience member took issue with the energy company’s name, asking if they would be like the definition provided in the Dictionary.
“Buccaneer means a pirate sea robber (who) raided Spanish colonies of the American Coast – is this what we can expect from you, cause that’s your name?”
“Thanks so much for the little history lesson,” Pease said.
Landt noted that Homer is named after con man Homer Pennock.
Amy Christiansen, also in the audience, wanted to know more about the history of the Endeavour, formerly called the Adriadic XI, and built in 1986. The rig was retired years ago and sent to Singapore and put in dry dock, she noted. What has been done to bring it up to safety since its retirement, she asked.
The rig was outfitted with new engines and new generators. It was not retired, but was placed in storage in 2004 near Singapore, Landt said. “We started negotiations in 2010. During a period of inactivity for the oil industry, it was not retired, it was inactive. Much of what we’ve done is that in moving it from southeast Asia to the north sea we had to take the air conditoners off, for example,” Landt said. “We put boilers and heaters on it. We needed to make it operable in Cook Inlet.”
It will be completely outfitted for the north’s icy climatic conditions by the time it receives full approval to drill from the Alaska Oil and Gas Conservation, he said.
To assure that the resources won’t be sold overseas when Southcentral Alaska is in need and a natural gas shortage is predicted by 2015, Landt responded that the gas is set in an existing sales contract to feed into Enstar’s grid.
A segment of the discussion focused on disposing of drilling muds, which contain toxic chemicals along with hydrocarbons.
There are two ways to dispose of the muds. Buccaneer is contracting with companies whose specialty is disposing of drill muds. In one case, companies can reinject the muds back into a Class 2 well. Or the materials can be solidified with an agent like sawdust and can be placed in a local landfill.
Buccaneer will follow state and federal permits from the EPA, Landt responded.
Many questions continued to focus on blowout prevention. Stu Schmutzler asked how long would it take to cap off a well once a hole had been severed. “The primary prevention are the drilling fluids, being able to anticipate pressure by adjusting the fluids,” Landt said.
Blowout Preventors, called BOPs are on the rig itself. What happens if the drill is physically moved or knocked over by a movement such as an earthquake? Schmutzler persisted.
“I am not aware of a situation where movement of earth caused damage on a well,” Landt said. “The primary well control is really your muds. The BOP is last resort. Muds are so designed to hold pressures back in the formation.”
Is there any chance that, as a gesture of good will, Buccaneer would agree to zero discharge of drilling fluids, local environmentalist Nina Faust asked.
That isn’t practical, Landt said, because it would involve 100s of boxes and numerous shipping trips to dispose. “That increases traffic and would be disruptive on fisheries as well.”
The category of job questions also was long. Archer Drilling is the primary contractor to manage the rig and it does the hiring. It is a large drilling contractor that operates 1,000 rigs around the world.
Buccaneer’s role is to oversee the operation. “A Buccaneer company person supervises and they do the physical operations,” he said.
At the proposed West Eagle drilling unit, Landt said the company will be focused on supplying good jobs. There will be 15-31 needed crew positions once Glacier Rig is brought from Kenai. So far, 81 are hired at Buccaneer’s Alaska sites, including 47 Alaskans earning a salary between $57,000 at entry level and $175,000 for more senior positions. Buccaneer has dealt with 313 vendors and has spent $53 million since arriving in Inlet. Employees can look at a possible five years or more of work, he said.
People who access the Caribou Hills as a recreational site should be able to continue even when West Eagle goes into drilling mode in 2013. A recreational user wanted to know if there would be access problems.
“If there are, it won’t be from us. It’s not our road,” Landt responded.
To understand future development, since Buccaneer possesses nine units in the Homer area, there was a request to compile a map that overlays units with street names and landmarks. Landt said that was a good idea and he would try to make those available.
Water was also a big issue, since Homer residents find numerous problems gaining access to clean well water during low rain tables. Natural chemicals like arsenic also are in Homer waters. Landt has said the company likely will need to purchase city water and have it trucked to the site. Once it is to be disposed of, the water would undergo the same process as drilling muds: it would be injected back into a Class 2 well or put in landfills with a mixture like sawdust.
If successful the West Eagle pipeline would hook into the North Fork pipe to Anchor Point or it would link in with Hilcorp’s eventual pipeline. “We would look at both,” he said.
On the topic of fracking, Landt said that method for extraction wouldn’t be necessary in the formations around Homer. But he would not pledge, when asked, that no fracking would ever be done around Kachemak Bay.
“I can’t commit the company or the industry to say no to future fracking. The technology evolves all the time and there are many safe ways of fracking,” he said.
Lifelong resident Mossy Kilcher told Landt Homer people ask these questions out of respect for the local ecosystem.
“We ask these questions because of a deep love for this special place and not because we are anti-this and anti-that,” she said.
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