The Endeavour-Spirit of Independence jack-up rig — idling at dock in Homer since late August — could start drilling after the snow melts, an official with Buccaneer Energy said Friday.
What was planned as a short-eight day stay in Homer before leaving to drill in northern Cook Inlet waters turned into a months, and seasons-long marooning of the rig due to delays, repairs and permitting complications. Eventually, Buccaneer and the company hired to prepare and operate the rig, Archer Drilling, parted ways.
Buccaneer Alaska President Jim Watt, during a luncheon speech to The Alliance in Kenai, made little mention of the rig during an update of his company’s multiple-well drilling program in Cook Inlet and the Kenai Peninsula. When asked about the subject, Watt said the rig’s delay was for “unforeseen issues with the work that simply was not adequate,” from Archer.
Archer has filed a $6 million lawsuit in Texas District Court seeking payment for what it says are past-due bills for services and expenses from Buccaneer. Archer maintains it almost terminated its contract with Buccaneer twice before it did and that the rig was not ready to move from Singapore as more repairs were needed.
Watt said during his speech that the rig’s delay is an indicator of Buccaneer’s commitment to safety and protecting the environment.
“Yes it has taken longer, yes it has cost more money for the company, but we want a rig we can be fully confident in to perform this operation offshore and that’s the focus,” he said.
Watt was also asked if Alaska’s oil and gas permitting processes were a factor in the rig’s delay.
“It is just something that slows the activity and it is part of doing business in Alaska,” he said. “We are certainly focused on safety and environmental protection. ... But nonetheless, if we could have a one-stop shop where we could obtain permits, 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, these things would help augment the activity that I think Southcentral Alaska needs to increase oil and gas production.”
After parting ways with Archer in mid-December and reaching a preliminary agreement with Spartan Drilling to take over repairs, Buccaneer officials said there would be no delay in it reaching its first drilling destination at the Cosmopolitan unit off Anchor Point.
At one point during his speech, Watt said the rig could be mobilized in February or March, but had a different answer when asked to clarify the company’s time frame afterwards.
“Every time we say a time frame we have proven ourselves to be wrong,” he said. “I’m going to say this spring. You know, hopefully. We are working on it. I don’t have a drop dead date and it is one of the things we are working with (Spartan) to rework the scope of work that needs to be done to move that rig out to location.”
Watt said he had confidence in Spartan to operate the Endeavour, referencing the company’s work on the Blake 151 rig owned by Furie Operating Alaska, which has worked for the past two summers in the Kitchen Lights Unit.
The two companies are in the “final discussions” of a long-term agreement for Spartan to take over rig operations, he said.
Buccaneer has some, but not all the permits it needs to drill at Cosmo, Watt said. After drilling there, the rig will head to Buccaneer’s leases at the Southern Cross Unit and then to its Northwest Cook Inlet Unit, a change from previous plans.
Southern Cross is an oil-saturated area while the Northwest Cook Inlet unit is a multi-stack pay with shallow gas and deeper oil. Watt said old test wells on Northwest and Southern Cross were promising.
“A lot of majors, went they looked at these opportunities in years past … it just didn’t make the hurdle in terms of their interest level to drill,” he said of those two units. “But for independents such as Buccaneer, it was of key interest to us and is something that we are pleased to capture and have in our portfolio.”
Pioneer Resources previously worked Cosmo — known for its gas and smaller, deeper oil reserves — onshore looking for oil with extended-reach well drilling.
“What we are looking to do is probably progress that as well from an oil development standpoint ... but offshore we are looking to develop the gas,” Watt said.
Buccaneer would focus on gas production in 2013, Watt said, from its Kenai Loop and West Eagle areas.
He said he wanted to open up the Kenai Loop and explore the area more by expanding from the current four wells to six or eight eventually. Watt said the company wanted to duplicate its Kenai Loop success to its 50,000-acre West Eagle prospect, which is northeast of Homer and Kachemak Bay.
Watt said Buccaneer was working to unitize the area, drill a well in the first half of this year and serve the gas to local markets.
“We are focused on satisfying the local market in terms of natural gas, but then again, if there is a lot of natural gas found, we have a potential of moving that to the LNG plant and exporting it,” he said.
Brian Smith can be reached at email@example.com.