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While Buccaneer drilling rig sits in Homer, cash registers jingle

HOMER -- Although Buccaneer Oil got a city extension allowing the company to moor its jack-up rig, the Endeavour, at Homer's Deep Water Dock until Saturday, it doesn't look likely state permits will be issued by then to allow the rig to put legs down at the Cosmopolitan site off Anchor Point and begin oil and gas exploration.

Buccaneer's original intent been to stay for just eight days after its arrival in August.

"The next thing you know, we're in October," said Homer Harbormaster Bryan Hawkins.

The delay has been good news for the port. Initially, the Endeavour paid about $900 in dockage fees, but because the 310-foot long triangular-shaped rig and associated activities essentially used the whole dock, the city renegotiated a fee at $1,996 a day, tax included. Two tugs also pay a combined $728 a day when at the Deep Water Dock but regular harbor fees of $625 a month when in the inner harbor, Hawkins said.

The status for the Endeavour's permits includes:

• A public notice for comments on Buccaneer's Oil Discharge Prevention and Contingency Plan was published Nov. 26, with a comment deadline of Dec. 28;

• A public notice for comments on Buccaneer's Lease Plan of Operations for the Cosmo site was issued on Wednesday, with a comment deadline of 5 p.m. Jan. 3. That notice notes that Buccaneer plans to drill two oil-and-gas exploratory wells, but may choose an option for a gas-only exploratory well at its Cosmo #1 site, subject to approval by the Alaska Oil and Gas Conservation Commission.

• A tidelands permit to moor in state lands near Port Graham has been issued.

• A comment period ended Nov. 28 for another tidelands permit at the Cosmo site. The Division of Mining, Land and Water reviewing the permit application.

The Endeavour could move to Port Graham while waiting to work at the Cosmo site. Buccaneer has not said if it intends to move there soon or wait in Homer.

Buccaneer said that despite the delays, everything seems to be coming together now.

"We are waiting on our approved spill plan so that we can test the oil prospect at Cosmopolitan," said Jay Morakis, a Buccaneer spokesman. "We are almost ready for our ABS (American Bureau of Shipping) and Coast Guard inspections, so things seem to be moving along nicely."

Originally Buccaneer had planned to drill with the Endeavour at the Northwest Unit in upper Cook Inlet, but scrapped those plans when it couldn't get the rig there before the winter ice season shut down drilling in the upper inlet.

Work on the rig has provided Homer with an economic benefit. Hawkins said the city hasn't done an analysis of that work, but he noted that 50 to 60 people have been working on the Endeavour, about 10 of them hired locally. The others have been staying at Land's End Resort and the Best Western Bidarka Inn, Hawkins said. Homer Steel Fabricators, a local firm, has been doing welding work, and longshoremen, plumbers, electricians and roustabouts also have been employed.

On a visit last week to Kenai, Gov. Sean Parnell told the Peninsula Clarion that he wasn't aware of any state permitting holding up the rig. "I have not heard that the state is standing in the way of moving that jack-up rig," Parnell said. "I understood that they have not met certain requirements along the way and I think that's right for the state to hold them accountable in those moments, but at the same time this is part of our investment, too. We want it done right and we want it done as soon as possible."

Since a Sept. 16 storm forced the Endeavour to lower its 410-foot high legs into the mud layer of the bay, it has been legs-down by the Deep Water Dock -- a situation that some environmentalists contend violates a Kachemak Bay Critical Habitat Area management plan prohibiting storing drilling rigs in Kachemak Bay. Cook Inletkeeper and other environmental groups raised that point in letters to the Alaska Department of Fish and Game.

Fish and Game Commissioner Cora Campbell said Buccaneer wouldn't be fined for putting its legs down.

"We don't have any plans to fine them for doing what they thought was the safest and best thing to do, given the circumstances and the storm that they were in," Campbell told the Clarion last week. "We have asked, though, that as soon as they are able to meet requirements to move the rig that they remove the legs from the substrate and come into compliance. We have talked with the company and their plans for the rig and their timeline, but we don't anticipate damage to fish and habitat from them bringing the legs up and moving out of the harbor."

If Buccaneer extends its stay beyond Saturday, the city wouldn't have a problem with that, Hawkins said. With the M/V Tustumena state ferry out of service and only a few dockings this month by the M/V Kennicott at the Pioneer Dock, that dock is open for other vessels. Hawkins said the Endeavour could be moved to the inner face of the Deep Water Dock if needed.

The Endeavour has boosted the Port and Harbor enterprise fund, Hawkins said. The city budget anticipated earning $63,000 in fees at the Deep Water Dock this year. Even before the Endeavour arrived, the dock had earned about $82,000. And by the end of October, the Deep Water Dock had brought in $175,000, Hawkins said.

Michael Armstrong can be reached at michael.armstrong(at) Brian Smith of the Peninsula Clarion contributed to this story.

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