Since Buccaneer Energy arrived on the scene in Alaska in the summer of 2011, it has seen a few victories and a host of unexpected problems.
Thanks to incentives passed by the Alaska State Legislature and investment of taxpayer dollars in new oil and gas exploration in Cook Inlet, the Australia-based company had big plans for Alaska.
A key part of the plan was the 400-foot-tall jack-up rig Endeavor, which arrived in Kachemak Bay in August of that year with the intention of getting right to work on several leases the company held throughout the inlet.
It wasn’t long, however, before Endeavor became the first of many problems for Buccaneer. While the 30-year-old rig sat idle at the Homer Deepwater Dock, it was discovered that it needed many repairs. The company had to scrap plans to drill at Tyonek and the Cosmopolitan Unit while Endeavour awaited permits and inspections at the Homer harbor.
Then, during a massive windstorm in September, the Endeavor damaged the Deepwater Dock and was forced to extend its legs into 18 feet of mud in Kachemak Bay in order to stabilize the rig. Officials with the Alaska Department of Fish and Game eventually decided that the presence of the Endeavor – even with its legs extended – did not violate provisions of the Kachemak Bay Critical Habitat Area.
In the spring of 2013, as Buccaneer prepared for a busy summer drilling season, the company’s relationship with the Homer community, which had not seen any oil and gas activity since the 1970s, suffered a setback. The City of Homer accused the company of falling more than six weeks behind in its dock payments, owing a total of more than $75,000.
At the same time, a group of local workers who had been repairing the Endeavour rig walked off the job, saying they had also not been paid in weeks. Buccaneer eventually settled its debt with the city and blamed the labor dispute on a subcontractor. That argument quickly found its way into the court system.
The Endeavour rig did eventually drill at Cosmopolitan Unit last summer, finding a gas deposit at a depth of about 4,300 feet and flaring a well at that location.
Meanwhile, Buccaneer saw some success with its onshore project at Kenai Loop, near the Kenai Wal-Mart, although the company is now locked in a legal battle with Cook Inlet Region Incorporated over whether that project was conducted properly. The two sides will go back to the Alaska Oil and Gas Conservation Commission for another hearing next month.
While the company struggled to meet deadlines for its work in and around Cook Inlet, Buccaneer also found itself under fire at home in Australia. An attempted board of directors’ coup was fought off last July and company CEO Curtis Burton kept his job. But the message was clear that many of Buccaneer’s shareholders were not happy with the company’s direction.
A series of capital raising efforts and selling of assets followed, with Buccaneer giving up much of its stake in several Cook Inlet leases and onshore projects.
Last December, as the company prepared to move its onshore Glacier drilling rig from Kenai to Homer, to begin work on its West Eagle project out East End Road, the shakeups continued at Buccaneer. Alaska President Jim Watt was fired, as was Vice President Allen Huckabay and Alaska Spokesperson Christina Anderson.
2014 began with Buccaneer selling off its remaining 25 percent share in the Cosmo Unit and half its interest in Kenai Offshore Ventures, the partnership between a Singapore-based investment firm and Alaska taxpayers that helped fund the purchase of the Endeavor rig.
With new loans secured, the company began work at West Eagle in January. A few weeks later, however, the company faced its latest hurdle when the only well it drilled at the location came up dry and it was forced to abandon the project.
Now, with Buccaneer Energy’s stock on the Australian Stock Exchange sitting at less than a penny per share, some shareholders are calling for the Australian Securities and Investments Commission to conduct an investigation of the company’s activities.
The State of Alaska will be on the hook for much of the cost of Buccaneer’s efforts in the area.
In his latest quarterly report, Burton said the company has so far recovered $30.5 million from the state through ACES, with another $24.5 million co-invested in the Endeavor jack-up rig through the Alaska Industrial Development and Export Authority.