Cook Inlet Energy Race Is On

 The oil and gas industry is about to start exploratory drilling in the deeper waters Cook Inlet, perhaps already has.

Yesterday afternoon the jack-up drilling rig owned by Escopeta Oil was poised to begin drilling, awaiting a nod from state Oil and Gas Division Director Bill Barron, who was waiting for an inspection report from the Oil and Gas Conservation Commission due later in the day.

Barron said he’s glad to have Escopeta in the Inlet, and all the problems he complained about in a letter earlier this month appear to be resolved.  It was a difficult arrival for the company, and Texas owner Danny Davis did not survive it, but stepped down in an apparent effort to get resolution of Jones Act issues involving the use of a Chinese vessel to move the rig from the Gulf of Mexico around South America.  The Jones act forbids the use of non-U.S. boats to deliver between U.S. ports and Davis contended there was no U.S. vessel that could safely do it tried to use a waiver that was intended for a different vessel.  The Customs and Border Protection Office is not saying what its enforcement action will be but has said it won’t sieze the rig.

If Escopeta drills, it qualifies for a state tax credit of 25 million dollars for the first well, and also credits for the next two wells.  Its rig is called the Spartan 151.

Another company, Buccaneer Energy, is also operating with state financial help. It has 30 million dollars from the Alaska Industrial Development and Export Authority to help it buy a rig it has acquired from Trans Ocean for 68 and a half million dollars.  That rig is in Malaysia.  It’s called the Adriatic Eleven.  Buccaneer should have it fitted out and across the Pacific by April or May.  Buccaneer’s rig can drill in waters a littler deeper than Escopeta’s.

Both companies are looking for crude oil, but would be happy to sell natural gas as well. The Cook Inlet market is not big enough to make an offshore gas field pay off.   Buccaneer is already producing onshore gas in the city of Kenai and drilling a second well there.  A contract to sell that gas to Enstar is pending approval at the Regulatory Commission of Alaska.

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