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Buccaneer: 100 million barrels of oil discovered in Cook Inlet

Sean Doogan
Buccaneer Energy's jack-up rig Endeavor spent its winter in Homer. Courtesy Peter Law

Buccaneer Energy has discovered petroleum reserves in Cook Inlet that may hold as much as 100 million barrels of oil, the Australian-based company has announced. That's less than a year of Prudhoe Bay production; still, the find could mean hundreds of millions of dollars in royalty payments to the state over the life of the fields.

The announcement comes as the company continues to drill wells using its Endeavor jack-up rig. The company brought the rig to Cook Inlet on 2012 and encountered permitting and other problems.  It ended up paying more than $500,000 to the city of Homer for docking, security and other services while the rig was docked in the harbor last winter.

“None of this would have been possible without that rig, because a jack-up rig is the only type that can efficiently drill in that area,” said Buccaneer spokesman Richard Loomis.

Changes in an oil and gas company’s reserves can greatly affect stock price.  By market close on Friday, Buccaneer’s share price had actually fallen about one cent to just over 3 cents per share.

The state says it believes Buccaneer’s estimates.

“Buccaneer is a publicly traded company and has had a third party verify their finds -- which must be done in accordance with SEC rules,” said Cathy Foerster, a commissioner with the Alaska Oil and Gas Conservation Commission. “So we are confident in the numbers.”

That was not the case in November 2011, when Escopeta Oil Company (now Furie Oil and Gas Company) announced it had found 3.5 trillion cubic feet of natural gas. Escopeta was not a publicly traded company, so it was not under SEC regulation.

At the time, state officials said they doubted the size of Escopeta’s find -- the discovery was later downgraded to 750 billion cubic feet.

Buccaneer has until the end of 2014 to begin work on its Cook Inlet wells. Production would happen sometime after that, according to Loomis. The state collects 12.5 percent in royalties from oil produced, so the find could bring in anywhere from a few hundred million to $1 billion depending on how much oil is actually recovered, and the price when it is pumped.

However, no state oil taxes are collected from Cook Inlet production, while natural gas is taxed at a rate of 17 cents per million cubic feet.

Contact Sean Doogan at sean(at)alaskadispatch.com

CORRECTION:  An earlier version of this story incorrectly stated the size of an Escopeta Oil Company (now Furie Oil and Gas Company) natural gas find in Cook Inlet.  Alaska officials downgraded that find to 750 billion cubic feet.