Mishaps, permit delays stall plans for Inlet exploration

Tim Bradner

A series of mishaps and regulatory winkles with a jack-up rig have caused Australian independent Buccaneer Energy to give up hopes to drill two oil offshore exploratory wells in Cook Inlet in 2012, a company official told an Alaska agency on Oct. 30.

Buccaneer Energy Vice President Mark Landt told the board of the Alaska Industrial Development and Export Authority, or AIDEA, that the jack-up rig Endeavour will be moved in the next two weeks from the port of Homer to its Cosmopolitan oil prospect offshore Anchor Point, on the Kenai Peninsula north of Homer.

AIDEA owns one third of the jack-up rig along with Buccaneer and Ezion Holdings of Singapore.

Landt said a series of problems delayed final certifications for the rig after its arrival in Alaska from Asia, including the need to replace a defective lifeboat and make repairs to the rig's fire alarm system, which performed when the rig had departed Singapore but failed tests after arrival in Alaska. Other equipment on the rig had suffered minor damage during the ocean transit from Asia and is being repaired or replaced, he said.

There have been other regulatory wrinkles, such as disagreements by inspectors in Alaska over approvals for certain rig systems given by inspectors in Singapore before the rig departed there.

Buccaneer had hoped to drill an offshore prospect in north Cook Inlet after arrival but the delays caused that well to be rescheduled to 2013. The company shifted to a secondary goal to drill an oil prospect in the southern part of the Inlet that is outside of the winter Cook Inlet ice zone, but other delays are now complicating that plan.

Landt said Buccaneer must secure an amendment to an oil spill contingency plan approved by the Alaska Department of Environmental Conservation to drill its second target, the Cosmopolitan prospect. Securing that is expected to take about 90 days.

An official with the state DEC said that Buccaneer had requested the change as a minor amendment to its spill plan, which would have allowed streamlined processing, but the agency determined it to be a major amendment, which means it must go out for public comment. The DEC also raised several issues with Buccaneer in a request for more information, said Graham Wood, an official with the agency's spill response group.

Landt told AIDEA's board that a fallback plan is to ask for state permission to drill only to a gas zone at Cosmopolitan that is at approximately the 6,000 foot level and above the oil zone. This could be allowed without having the amended oil spill plan. The Alaska Oil and Gas Conservation Commission must rule on that request, he said.

"If we can start drilling for gas before we get the oil spill contingency plan approval we can deepen the well once we get it," Landt said. Reaching the oil zone will require drilling an additional 1,000 feet, he said.

In another development on Cook Inlet offshore exploration, state officials said Furie Operating Alaska, a Texas-based independent, is finishing up work on its Kitchen Lights No. 2 exploration well in north Cook Inlet. The company is using the Blake 151 jack-up rig, which was brought to Cook Inlet last year.

Furie completed work on its first Inlet exploration well, Kitchen Lights Unit No. 1, earlier this summer. That well was started last fall but not finished before the company was requires to halt drilling for the winter under conditions set out in its permit.

Furie was required to stop drilling by Oct. 3 in 2012 but is being given an additional few days to wrap up operations before moving the jack-up rig off the location, the Department of Environmental Conservation said. No information has been released by Furie on results of its exploration other than an initial estimate last year that the first well encountered gas zones with the potential for producing about 800 billion cubic feet of natural gas.

In other Southcentral Alaska exploration developments, Buccaneer has essentially completed drilling of a second onshore gas production well at its Kenai Loop gas field near the city of Kenai. The well was drilled to a location about 2,000 feet from the company's first well in the field, which is now producing 6 million cubic feet a day.

Potential producing sandstone layers were encountered in the second well that are similar to the first well, Buccaneer said in a press release, but the company has not yet said that it will put the well in production.

Alaska Journal of Commerce