Buccaneer fires its contractor for not paying vendors

Work aboard jack-up rig Endeavour continued Friday. Although workers who had contracts with Archer Drilling quit, they may be rehired, if they apply with Spartan Offshore.

• New contractor, Spartan Offshore, steps in
By Naomi Klouda
Homer Tribune
Buccaneer Alaska has fired its contractor, Archer Drilling, for alleged nonperformance of work that has left the Endeavour jack-up rig languishing at the Homer Dock well beyond its projected stay of two weeks.
In an announcement made public this morning, Buccaneer spokesperson Jay Morakis said the company stepped in after discovering Archer had not paid vendors and was racking up heavy local debt in Homer. Archer is responsible for contracting out work and overseeing the jack-up’s modifications, a job it has fallen short on deadlines and promised work.

“We, Buccaneer, found out last week that there is an issue with Archer Drilling. The issue is that Archer hasn’t paid local venders and we don’t know the reasons,” Morakis said. “Buccaneer, operating with our partners as Kenai Offshore Ventures, has paid in full to Archer all bills with the exception of disputed amounts.”
Archer is responsible for paying its vendors, and is reimbursed by KOV, the partnership made up of Buccaneer, Ezion Holdings, Ltd and the Alaska Industrial Development Export Authority, though AIDEA invested only in purchasing the jack up rig, $24 million, and is not invested in operations.
“Archer was dismissed yesterday (Dec. 13) by KOV for non performance by Buccaneer as the manager of KOV. When we realized the gravity of the payment situation between Archer and businesses they contracted out to do work, we began calling local contractors to get the facts of the situation, to see what bills were unpaid and to do everything in our power to rectify the situation,” Morakis said this morning.
Since contracts are typically confidential, Buccaneer doesn’t have an estimate on the outstanding dollar amounts due, but is working to find out.
A separate arrangement is a contract between KOV and the City of Homer for leasing dock space. So far, the city has received payment for most of the dock lease though a small balance remains outstanding. City Manager Walt Wrede said at a meeting this morning with KOV officials, he was assured that all the contractors hired by Archer Drilling would be paid. “They are moving ahead, with some reorganization but everyone is going to get paid and that’s something that was our big concern,” Wrede said. He had heard a few weeks ago about plumbers and welders going without pay. “This is a hard time year to go unpaid,” he said.
Harbormaster Bryan Hawkins said the city is paid $60,000 per month for Endeavour dockage plus other dockage or moorage fees for the two or three tugs that anchor the rig. Over the course of four months, that’s $360,000 minimum.

Also today, an agreement was reached for a replacement contractor, this one already drilling in Alaska, Spartan Offshore. That company is operating the other jack up rig in Cook Inlet, the Spartan 151.
“We have entered into an LOI (Letter of Intent) with Kenai Offshore Ventures and expect definitive contracts to be signed in the next few days,” said Paul Butler, President and CEO of Spartan Offshore. “We are very pleased to be working with them and their Joint Venture Partners, Buccaneer Energy, EZION and AIDEA as the operator of the rig Endeavour.  I think our experience operating the Spartan 151 in the Cook Inlet over the last 18 months makes us uniquely qualified to take on this challenge and we look forward to a very active 2013.”
All vendors and tradesmen who worked on the Endeavour are encouraged to call Spartan’s office at (504) 885-7449 or fax information to 504.456.6560. More information is available at www.spartanoffshore.com
KOV is assuring that bills will be paid.
“Although this is a situation between Archer and the contractors it had hired, we as the manager of KOV have a vested interest in the Endeavour and so we began reaching out to local contractors to help rectify this situation as fast as humanly possible,” Morakis said.
Archer Drilling is an international corporation that oversees rig operations for oil and gas companies all over the world. In Alaska, the Endeavour job appears to be its first contract. Calls to the only Alaska office listed, in Kenai, lead to a recording saying the number is no longer in service. Inquiries to the corporate headquarters in Oklahoma City have not yet been returned to the Homer Tribune
Buccaneer’s first contract work with Archer Drilling began upon purchase of the Endeavour jack up rig two years ago. While it was docked in Singapore, Archer was in charge of overseeing modifications to fit the rig for work in the icy northern seas. Its work continued when the rig was offloaded in Homer, but Buccaneer held the understanding that remaining modifications would take just over a week.
“We were never supposed to be at the dock for four months,” Morakis said. The delays are part of the on-going dispute with Archer Drilling in what KOV is calling “nonperformance.”
The American Shipping Bureau signed off on the list of its requirements, approving the jack up when it left Singapore. But in Alaska, the ASB made additional requirements. That is one reason for the delay at the dock. The manufacture’s recall on a swift rescue boat caused another delay, and likewise isn’t Archer’s fault. But other work, including installing proper insulation for housing its up to 100 workers, was not done. Sleeping and eating quarters were not yet modified for cold winter conditions. Additional structural welding and plumbing work also required completion.
Now in the eleventh hour, Morakis said KOV believes most of the preparations are complete, but the pay issue made stepping in crucial.

City Manager Wrede said in the update from KOV this morning, he was told the Endeavour will likely be here a few more weeks. Buccaneer has received Department of Environmental Conservation food and waste water permits and now is awaiting a Certificate of Compliance with the U.S. Coast Guard. That involves an inspection by a crew traveling to Homer from Morgan City, La., a process that could take a few weeks. The ABS signed off in approval on Nov. 30

Indications from the Department of Natural Resources on its permits are that in the coming weeks the Endeavour may be good to go as well, Morakis said. The goal is to head to the Cosmopolitan Unit.
“We’re hoping this won’t impact the timeline for the rig to leave. Work is substantially done,” Morakis said.

AIDEA was made aware of a situation regarding the operator of the Endeavour last week, said Karsten Rodvik, external affairs manager.

“As the preferred member of KOV LLC, our first concern and main priority is for Alaska workers and businesses to be promptly paid,” Rodvik said in an email. “We are pleased that our partners are responding quickly and responsibly, and we are confident in their ability to resolve this matter as soon as possible.”

AIDEA will continue to monitor the situation during this transition process, to assure that obligations are met.  “Our goal, along with our partners, is to have all work on the rig completed so it can get to work in Cook Inlet for the benefit of Alaskans,” he said.

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Posted by on Dec 14th, 2012 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.

17 Responses for “Buccaneer fires its contractor for not paying vendors”

  1. JJ says:

    Buccaneer is full of BS they have not paid the vendors and they are full of it we busted are ass on the rig thanks to us the employees that worked are butts off. they can point the finger but we have all heard of buccaneer not paying its bills so who do you think is telling the truth. We got the rig were it is all the abs has passed and we just got signed off on be able to use all facilities on board all we needed to do was pas coast guard inspections, all that stuff passed 1 day before archer said that we only had a contract for ship yard and while we worked ship yard a drilling contract was supposed to be drawn up and brought forth so we could drill but KOV and buccaneer did not produce a contract and with ship yard done we could not move forward with any thing because they did not produce a contract for us what else was the company to do? Pay for every thing its self! and not get a contract. KOV and Bucc are in charge why would Archer keep paying for something they didn’t own Bucc was sapossed to take over all expences it is there rig would you invest millions into some one els’s truck you worked on, when you don’t own it! It sounds like Buccaneer had a scheme and played it well they are the broke company fronting as good investment witch we all know is a like. Signed a former employee of archer.

    • Local says:

      hey jj – does buccaneer have boilers to heat the crew quarters? kinda need those to drill offshore alaska in the winter. and what about the boom for that big crane? that’s sorta important too.

  2. Brewser says:

    As a British employee on Endeavour and now home after Thursday’s news I want to say firstly thanks to the folks of Homer for putting up with us and in my eyes making us welcome, I loved the place and people. Secondly sorry for how this turned out but I can assure you this is nothing to do with Buccaneer firing Archer, Archer had to leave this project as Buccaneer would not or more likely could not pay what they owed to Archer, no company can afford to throw its own money at someone else’s venture and be denied payback. Archer will go on with its business of supplying excellent drilling teams to the oil industry. Buccaneer are about to sink into oblivion.

  3. Whiskey says:

    Archer have had nearly a year to modify this rig and still haven’t got it passed the us costal inspection. No wonder why the contract has been lost. Archer couldn’t organize a sausage sizzle

    • DC says:

      Workers that have not been paid, have not been paid by Archer, to suggest different is misleading… Archer was paid to bring the rig up to drill ready status in Singapore and it was to drill within a few weeks of arriving in the inlet, yet it has been 4 months of fixing their previous work that was not up to standard…..KOV is the company that own The Endevour rig not Buccaneer and that is a JV between the Alaskan government, Ezion and Bucaneer, to suggest the Alaskan government and Ezion are broke is ill informed….

      I suspect KOV are not willing to pay twice for work that was likely done poorly the first time and rightly so!….. Spartan Offshore are more than willing to take over the rig, clearly they understand the situation and have no concern over payments……

      • Andy Brews says:

        Good to hear Spartan have no concerns over payments Don, that’s just the way buccaneer like it. Company spokesmen like yourself can assist in creating and maintaining buccaneers smokescreen but it won’t fool the majority of people. Suddenly becoming concerned that local contractors have not been paid is laughable. Thanks to the many stories in the Homer tribune over the last few months regarding buccaneers standing and credibility it just won’t wash that they are now the ” caring company “. They hired someone to buy a rig, they bought a rig in a far worse state than they could of imagined ( how long ago did the buyer jump ship and sever his ties to buccaneer?) This lack of homework on what they had actually purchased is down to them but they are trying to deflect blame and apportion there inadequacies onto others. Looks good from a distance….strong decision making and leadership rescues the day? Its merely a carefully manipulated situation to get fellow investors off there back of course there fellow investors know nothing about the oil industry so conveneantly are easily fooled. Bring in the cavalry when the rigs nearly ready and hey presto what a good job we,ve done, might fool some but not all. It will be very interesting to see if some real problems / concerns with some major components onboard that were flagged up only last week suddenly ain’t problems any more. Oh and while your on the moral crusade how about asking Spartan to re-employ the local guys who joined Archer and put a massive amount of hard work in to get this rig ready.

    • Andy Brews says:

      That’s not true, we had 2 sausage sizzles whilst on this project.
      Got to get your facts right Whiskey before trying to discredit Archer.

  4. Toolie says:

    Has Buccaneer proven itself capable of responsibly developing Alaska oil and gas?

    • Bear says:

      Yes Toolie they are producing gas from kenai loop field and have another well drilled and currently being tested.

  5. picpic says:

    As a concerned community member and Alaskan I fear that we will benefit little in the way of jobs, having a voice in our energy destiny and energy sustainability. The companies have a great deal and too many tax breaks will be given to corporation and multinationals while the commons will have services cut, unfunded and be left to pay for all the needs of their communities.

  6. Local says:

    Buccaneer is hapless, and they are not an upright player. they have lied to our community leaders (they promised our city council they would provide their blow out plan, and they have not). mark landt has been deer in the headlights, unable to answer even the most basic questions and evasive and misleading when he does. jay morakis sits in some new york city high rise and spins the media narrative but he wouldn’t know a halibut from a flounder if you paid him. buccaneer has violated our laws, failed to pay workers, and is reaping massive subsidies to fuel its business plan (can you imagine if you or i got 65 cents back on every dollar we spent for just doing our business?). nice to have a few jobs here in the winter, but not with bottom dwellers like buccaneer. just because they drilled a well in the kenai walmart parking lot doesn;t mean thay have a clue about operating offshore. and now they bring in the spartan crew – a bunch of southern boys who could give a lick about our home. maybe landt and morakis and jim watt should move to homer, start to pay some local taxes, and get a taste of what its like to foist this nonsense on a bunch of pissed off people who live and work here.

  7. rigrunner says:

    Just for your information, while the rig was in Singapore getting “refurbished”, Archer was using RIS to do all the refurbishing. RIS is owned by none other than Archer. As I know this because I was there in Singapore and worked on the Endeavour. RIS did the very least they could get away with. There were a lot of inspections that were bought. The rig was not even ready to go to work when it left Singapore. It could have withstanded another year of work before sending it to its first job. No, the living quarters have no boiler system to keep warm. BUT they did install 2 brand new air cond. units while in Singapore. What a scam they had going on. The Endeavour IS a very good rig and will do great IF it is fixed up correctly. Lots of work still needs to be done. Heating on that rig will be a GIGANTIC problem. The heating system that was installed for all the water lines is “piss pore” to say the least. Those lines will freeze up and burst everywhere. Other serious problems still exist. Corrections need to be done and some management people on the rig itself needs to be discharged for their lack of serious concern for the environment of Alaska and for the rig. I think Spartan Offshore will be a very good fit for the Endeavour IF Spartan puts the correct management of people on the rig to work it correctly.

  8. Toolie says:

    Is the Rig ready to go now.?…as per the Australian Securities Exchange press release

    “As previously advised, since the Endeavour’s arrival in Homer in late August 2012, Kenai Offshore has been working with local contractors through the Endeavour’s project manager, Archer Drilling (“Archer”), to complete various rig upgrades and repairs ahead of the final vessel inspection and certification. This included rectification of work that had been completed in Keppel Fels shipyard in Singapore.

    The Company is pleased to advise that all work has now been completed and preliminary findings from the final inspections by the American Bureau of Shipping (“ABS”) conducted in the last week indicate one minor door replacement and some minor paperwork requirements are outstanding. A formal report from ABS is expected this week to confirm these two small outstanding items, after which the Company will then be able to proceed with inspections by the US Coast Guard (“USCG”) to receive approvals to operate in US waters. Drilling operations will commence as soon as all necessary drilling permits have been received and the Alaskan Oil and Gas Conservation Commission (“AOGCC”) has given approval to proceed.

  9. Getgo says:

    Wow rigrunner some pretty serious allegations there.
    Why would Archer management need to be discharged through lack of concern for Alaskas enviroment? and for rig condition? Buccaneer have company men onboard and they call the shots and make the decisions.
    Singapore was a massive challenge as the rig was far worse than was initially thought but the budget stayed the same…pay cheap get cheap, dont need this, dont need that etc etc was all Buccaneers management would say.
    Time was also lost because R.I.S suspended work as Buccaneer failed to pay them ( sound familiar )
    It was Buccaneer who were desperate to get this rig over to the states, regardless of its condition. They knew more time was needed.
    Who would have the best information on whats acceptable in U.S / Alaskan waters im guessing Buccaneer, did they provide advice etc ? funny that only 1 week ago the air dryers, P tanks and engines have been flagged up as not being in acceptable condition for working Alaskan waters!! bit late to find out i would of thought….Buccaneer of course are not going to blame themselves.
    Of course you think Spartan will do a good job, you left the project to join them.
    There is something very fishy about this whole thing, and i look forward to the truth coming out in the near future.

  10. get real says:

    well its time to get real and be real. I left a company of 5 years to try to advance my carreer which lasted an entire 3 months. And here we are typing this and unemployed. reflecting back I wish I could have had a tour of my new ENDEAVOUR before sticking my neck in the chopping block. A few years back I had the oppurtunity to be involved with bp on one of there endeavours from the start. LIBERTY the largest most advanced drilling rig on the planet. $993.000.000 million dollars.. nine hundred ninety three million dollars almost a billion dollars it still sits dark and quiet never used… have we forgoten already.. the spill… remember…that rig was shut down over safety and enviromental concerns.and we where worried about that rig and this thing. So all off a sudden here they are with a floating train wreck rig and myself being unemployed and sure a little disgruntled but also honest and also I dont have anything to lose by being phony and job scared.. folks I have been on the truely most advanced state of art rigs on the planet one of which sits unused on liberty island.. And folks this rig is not one of them.. this rig is the most run down unkept, rusted, greasy, filthy, inoperable. in disrepair pile of shit that I have ever seen or been on in my 23 years on rigs and as at the end all stood around staring at each other because everything on the rig needed repaired and replaced and nothing to fix anything with and you mean to tell me that #uckeeneer didnt know that when they plopped down the cash to get it out of the salvage yard. folks about another 100 million and she will be ready to go and oh and by the way a electrician accidently drilled a hole thru the hull and it looked pretty thin hmmm i guess 30 years old… so if buccaneer expects archer to pay there bills who is buccaneer going expect too pay when the biggest rusted frozen dilapitated piece of shit on the planet catches fire topples over into the inlet with 30 men on board spewing crude… hmmm.. oh i got it….. EVERYBODY………WHILE THERE BACK IN KIWI LAND DRINKING FOSTERS AND COMPLAINING I WANT MY LIFE BACK……

  11. Pete says:

    To the guys and contractors who worked on the jur in Alaska could you please tell me if Archer terminated the contract and walked off or did Buccaneer terminate the contract ?
    I note the current law suit and management of Archer stating they terminated it but also note in the asx release where buccaneer said they terminated the contract ;

    thanks guys Pete
    ps; for those out of work contact spartan as they have put the feelers out for workers .

  12. what? says:

    ‘for those out of work contact spartan as they have put the feelers out for workers’.

    Who the heck want to work on this dangerous run down rig that hopefully will never be put to use, and why would anyone want to work for Buccaneer with their known incompetence and non payment?

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