• New contractor, Spartan Offshore, steps in
By Naomi Klouda
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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