• Endeavour jack up rig might start drilling this spring
By Naomi Klouda
Buccaneer Alaska hopes to salvage the season with spring drilling at the Cosmopolitan Unit, but first has U.S. Coast Guard inspections and a C-Plan approval before it can set to drilling.
In the latest update on status from the Australian oil and gas concern, President James Watt told a Kenai group last week he wants to aim for a March or April drilling date.
Speaking to the oil industry’s Alliance in Kenai, Watt blamed the rig’s delay on unforeseen issues with the work that simply was “not adequate,” from Archer.
Spokesman Jay Morakis, issuing the update on Monday, said currently Spartan Offshore is assessing the jack up rig Endeavour and itemizing any needed work remaining to be done. Buccaneer and its contractor Archer Drilling severed ties in December. Archer filed a lawsuit in a Texas Court alleging $6 million in unpaid bills and expenses incurred by Archer on behalf of Buccaneer. Buccaneer disputes the charges and hired Spartan Offshore to take over.
“What’s happening right now with the changeover from Archer to Spartan is they are inspecting all the work done by the Archer crew to see what is left to do prior to going to the U.S. Coast Guard for approval,” Morakis said. “Prior to their departure, Archer said there was minimal work. We know there’s more work, the question is how much to take it up to the highest operational standards.”
No target date for completing this is set yet. At the same time, the Department of Natural Resources is reviewing the C-Plan, which needs to be approved before any drilling at Cosmo. This outlines what would be done in case of an oil or gas spill in Cook Inlet to clean it up or cap a blown well. A public announcement will be made when these two processes are complete, he said.
“With the Land Use Permit, we can move to the Cosmo Unit and drop the legs but nothing else.”
The two remaining permits, one from DNR and one from the Alaska Oil and Gas Conservation Commission, are needed prior to any spring drilling.
“We just finished the second round of public comment on the C-Plan. Buccaneer has received those comments and responded and is now awaiting DNR to hopefully approve the C-plan. They are reviewing our response to the comments. There’s no hold up anywhere else,” Morakis said.
Buccaneer, long rumored to be suffering financial difficulties, also gained a cash infusion through a combination of equity stock offerings and new investors. The total raised is approximately $20 million, Morakis said.
As for vendors in Homer who worked on the Endeavour last fall and had not been paid by Archer or Buccaneer, Morakis said the company is still moving through the process.
“There are still loose ends on the finances – there is no update on that as of yet. They are still working through that,” he said.
Homer Port and Harbor, charging various fees for dockage, wharfage and moorage, has received regular payments, said Harbormaster Bryan Hawkins. In fact, the harbor has already shown double the revenue it projected for the deepwater dock, at $278,269 collected so far.
A spot on the horizon
Buccaneer considers its Kenai Loop wells a bright spot on the Alaska horizon. A fourth well was recently successfully tested at capable of producing 4 million cubic feet of natural gas per day. The field’s total production rate is 10-11 million cubic feet per day, which is already in delivery to Enstar and two smaller non-utility Cook Inlet companies, Buccaneer Director Dean Gallagos announced in a news release to investors. No. 4 well should be in production soon. Getting the gas to the market could take anywhere from 30-45 days, provided AOGCC works with Buccaneer. If the AOGCC approves the production plan it could be earlier. If not then it take the full 30-45 days.
Gallagos noted Southcentral Alaska is currently experiencing severe gas shortages and the winter peak pricing of incremental gas supply has reached $22 per metric cubic food. “This high pricing range is weather and supply related and could remain in place while winter heating conditions persist; the additional gas available from Kenai Loop field is capable of being sold into this spot market,” he said.
“This can feed natural gas to the market almost immediately. We should be able to provide to the markets 10 million cubic feet of gas a day,” Morakis added “That’s why we want to get to Cosmo is because it has significant gas flows. Once we’re able to get the rig to Cosmo, that’s more significant gas to get to market as well.”
Buccaneer grew leery of giving estimates on its time to move away from the Homer dock. “We have to wait to see how much work is left to do on the Endeavour. Once we know, and subsequently complete that work, we will move to U.S. Coast Guard inspections and the rig will depart once we are certified,” Morakis said. .
Watt is also advocating for a one-stop shop for obtaining permits. Gov. Sean Parnell introduced a bill in the Alaska Legislature asking for a beginning of this kind of streamlining.
“If you could have a plan of operations that was good for an area instead of having one for every well that you had to drill, it would help augment the activity that I think Southcentral Alaska needs to increase oil and gas production.”
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