Jack-up options considered

Escopeta Oil looks for different drilling rigs to bring to Cook Inlet

Posted: Thursday, November 16, 2006

Escopeta Oil Co. will not be held hostage by the owners of a jack-up rig aimed at doing exploration drilling in Cook Inlet, according to a company spokesperson.

“Escopeta has been approached by other companies with jack-up rigs,” said Steve Sutherlin, an Anchorage-based adviser for Escopeta.

The Texas independent is involved in a contract dispute with the Abbot Group, the English oil services company that owns the Songa Tellus jack-up rig, which Escopeta had hoped to use in the inlet as early as next month.

Initially, Escopeta contracted with the Songa Drilling Co. to bring its Songa Tellus rig to Cook Inlet to conduct exploration drilling in Escopeta’s Kitchen offshore prospect, believed to contain huge amounts of natural gas.

Escopeta made national headline news five years ago with estimates of 12 trillion cubic feet of natural gas and 1.35 billion barrels of oil at its Kitchen and East Kitchen prospects.

Earlier this year, Songa Drilling was sold to the Abbot Group, and according to Escopeta President Danny Davis, Abbot now wants more money for leasing the drilling rig than Escopeta agreed to in its Songa contract.

“Abbot wanted more money, but they can’t change the contract now. We had a deal,” Davis said.

Under terms of the agreement, Songa was to have its Tellus rig refurbished at Port Arthur, Texas, and have it reconfigured for working in Cook Inlet.

Escopeta arranged to have the Songa Tellus picked up by heavy lift vessel Tai An Kou in June for delivery around the Cape of Good Hope and on up to Alaska.

Sutherlin explained that the rig would go around the tip of Africa rather than South America because Southern Hemisphere winter waters are considered less risky on that route by company insurers.

“We paid Songa a half million dollars up front and they were supposed to get the rig ready and we were to have the boat there to pick it up,” Davis said.

“It was supposed to be ready June 1, June 15,” he said.

When the Tai An Kou arrived at Port Arthur this summer, the rig, which was being completely refurbished to operate in Cook Inlet, was not ready, Davis said.

In Cook Inlet, drillers are not allowed to discharge process water and other liquids from drilling operations, so Songa Tellus is being equipped to meet the requirement, Sutherlin said.

“Songa Tellus is the right rig for Cook Inlet,” he said.

“Ideally (Abbot and Escopeta) would get things worked out,” Sutherlin said.

In a press release issued Nov. 9, Escopeta said, “The Songa Tellus isn’t the only drilling rig that could do the job, but it’s well matched to the job ... not too big, not too small.”

When asked on Monday what other companies with jack-up rigs contacted Escopeta, Sutherlin said he has “heard the name Rutter and Wilbanks,” and said, “Escopeta has been approached by Rowan Drilling.”

“If Songa doesn’t deliver as agreed under the terms of the contract, Escopeta would go with another drilling company rather than delay the project in Cook Inlet,” Sutherlin said.

Although he said Davis told him the companies’ attorneys are involved in the contract dispute, Sutherlin said, “Hopefully the whole thing would stay out of the Texas court.”

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.

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