Jack-up rig coming to inlet

Moveable drilling platform could help spur oil, gas exploration

Posted: Monday, March 20, 2006

This summer, a jack-up oil rig will be in Cook Inlet.

That’s what Escopeta Oil Co. LLC Chief Executive Officer Danny Davis is saying, although it has been said before.

“It’ll be there,” Davis said Thursday.

Contracts have been executed with Coscol Investment and Development Co. of Hong Kong and deposits have been paid for the Tai An Kou heavy lift vessel to bring the Songa Tellus rig to Alaska from the Gulf of Mexico.

“They’ll pick up the rig in the Gulf in June and be drilling by about Aug. 15,” Davis said.

Escopeta expects to drill four exploratory wells from the rig, and make it available to other oil company interests in the inlet.

Last year, Escopeta was unable to find an available jack-up rig, and was not able to secure financing for the venture.

This year, the company has partnered with Centurion Gold Holdings Inc., a South African resource development company.

One hurdle facing Escopeta this year is the Jones Act, a maritime rule that prohibits foreign flag vessels from picking up cargo at one American port and delivering it to another.

The jack-up rig is considered cargo, according to Davis, and the Tai An Kou is a 520-foot long Chinese-flag ship.

“We’ve asked Gov. (Frank) Murkowski for help on the Jones Act, but we haven’t heard back from him,” Davis said.

“We hope to work through that issue with the help of the governor,” he said.

The exploration wells will be drilled in approximately 70 feet of water, six miles north of the Kenai Peninsula.

The first well will be drilled and tested to 17,000 feet within 120 days of the Aug. 15 start date, Davis said.

Known as the Kitchen Prospects, the Escopeta-Centurion targets include the East Kitchen, North Alexander, Kitchen and South Kitchen wells, which could contain recoverable reserves of up to 7 trillion cubic feet of natural gas and between 435 million and 1.2 billion barrels of oil.

The company’s in-house geologist estimates 450 million barrels of oil and 2.7 trillion cubic feet of natural gas to exist in the No. 1 East Kitchen target and 800 million barrels of oil and 4 trillion cubic feet of gas in the No. 1 Kitchen target.

The Songa Tellus is an independent leg, cantilever jack-up rig that can work in 250 feet of water with a drilling depth of up to 20,000 feet.

Davis said the Tai An Kou will bring the rig to port in Homer, and from there it will be moved into and around the inlet by tug.

“We’re gonna crew the rig with Alaskans,” Davis said, adding that between 50 and 70 jobs would be created in Cook Inlet.

Davis would not say how much the company is spending on the rig, but Bill Popp, Kenai Peninsula Borough oil, gas and mining liaison, said day rates for jack-up rigs range from $28,000 to $75,000 with the average being $47,705 “just to have the rig under contract.”

Houston, Texas-based Escopeta has 130,000 acres of lease holdings in Cook Inlet, making it the third-largest lease holder.

The company is not involved in any Cook Inlet oil and gas production as yet.

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