• Awaiting permits for tidelands lease 3 miles off Anchor Point
Read Buccaneer’s Contingency plan in case of an oil spill, currently under review by a local task force: HC-01_20121105 BUCCANEER_REV_1.2_REDLINE
By Naomi Klouda
Buccaneer Energy’s first preference is to leave as soon as its tidal lease permits are in hand for the Cosmopolitan Unit three miles off Anchor Point.
The first chance of that happening puts Buccaneer into the second week of December for departing from its moorage on the Deep Water Dock of the Homer Port and Harbor. Buccaneer has extended its dock lease through Dec. 8, according to the Homer Port and Harbor.
Buccaneer issued a status report on Monday saying, “At this point the one driving the schedule is the DNR (Department of Natural Resources,)” said Jay Morakis, the company’s public relations person. “We have a permit to go to Port Graham if the DNR does not act, but we are waiting on them to approve our land use permit. The public comment period should be ending, and at that point we will then have to wait for the DNR to notify us.”
Buccaneer has also applied for and are awaiting the Alaska Oil and Gas Conservation Association’s go ahead on “a gas only determination” so they can move forward and test the gas zones at Cosmopolitan, Morakis said.
Homer City Manager Walt Wrede said the city is also left in a holding pattern while Buccaneer is awaiting a permit to lease tidelands.
“They have let us know they might need a couple of more weeks. Their preference is to get to the Cosmopolitan Unit so they can put their legs down. They could then work on their drilling equipment,” Wrede said. “They can’t do that on the dock, but they could right at the spot where they hope to start drilling.”
Another option is a move to Port Graham for wintering over. Already the jackup rig Spartan 151 is settled in for winter storage there, outside the Kachemak Bay Critical Habitat area. Buccaneer was granted a permit to winter the rig in Port Graham Bay.
If worse comes to worse, the City of Homer is prepared to let the Endeavour jackup rig remain in the harbor. It would need to be moved from the Deep Water Dock, however, Wrede said. “We would see if we could move it to the side of the dock, to make the face of the dock available to other vessels.”
The town’s fuel deliveries are made at both the Deep Water Dock and on the Pioneer Dock, but generally winter months see a slowing down of vessel requests for the dock.
The City of Homer has fielded quite a few public phone calls since the jackup rig’s arrival on Aug. 24.
“There are people who think it’s great, that it’s generating business and jobs and that we’re not always saying ‘No, no, no’ to everything,” Wrede said. “This is a slow time of year and people are appreciative of the jobs. At least one hotel is full, restaurants are seeing more people than they probably would. Yes, people are upset about it. They believe it is a violation of the critical habitat area plan to have it there. It represents oil and gas to people and they don’t want to see it here in Kachemak Bay. But what we hear here is much more balanced. A lot of people are happy.”
The Alaska Industrial Development and Export Authority has also received inquiries about its partnership with Buccaneer in owning the Endeavour. But it issues information to the media only on its investment, and not about the drilling plans at Buccaneer.
“The policy pressure point is at AIDEA. As a state entity, spending the people’s money, they will have the eyes of legislators upon them,” noted Larry Smith, who has served on numerous boards and helped form local environmental organizations. AIDEA invested $24 million into the purchase of the jack up rig, said AIDEA’s Karsten Rodvik. The total project cost was $105 million, counting retrofitting the rig for work in the far north. The investment is shared by Buccaneer and Ezion Holdings Ltd., a large Singapore-based offshore development company.
“This investment by AIDEA deals only with the Endeavour jack-up rig,” Rodvik said. “AIDEA is involved in this project in order to accelerate oil and gas exploration and production in Cook Inlet to help secure long-term energy supplies for Alaskans. The region’s economy will benefit and jobs will be created. This is consistent with our mission.”
Buccaneer came to AIDEA for lending help. The $24 million is to be paid back in five or six years. “Buccaneer presented AIDEA with a business case to bring a jack-up rig to Alaska for drilling in Cook Inlet. We were not approached by others,” Rodvik said.
Though there has been persistent talk of Buccaneer’s possible financial problems after workers and contractors saw their payments delayed, AIDEA sees Buccaneer as good for its word.
“AIDEA conducted a long and complex due diligence and negotiation process before making the decision to proceed. The participation and commitment of Ezion Holdings, Ltd. was a key factor in AIDEA’s approval of the Endeavour project. Ezion has secured and guaranteed $66 million of loans for the project. Ezion is also investigating other potential investments in Alaska energy resources,” Rodvik said.
The company doesn’t yet have an approved oil spill contingency plan for winter operations or a permit to drill in the inlet. It also has applied for a separate permit from the Department of Natural Resources to stage the rig offshore at the Cosmopolitan Unit. That permit, if approved, would allow Buccaneer to move from the Homer Dock sometime in early December, said Jonne Slemons, deputy director at DNR.
This is consistent with Buccaneer’s plans to leave Dec. 8, if permits are granted.
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