NEWS BULLETIN

September 04, 2011 --- Vol. 17, No. 78September 2011

Alaska regulators put Escopeta on self-imposed drilling leash

While Escopeta Oil Co. has begun drilling its long-anticipated exploratory well in Alaska’s Cook Inlet, it is doing so under unusual constraints recommended by Escopeta executives to mitigate the safety concerns of a state official.

In a letter dated Friday, the day the Houston independent spud its well, state Oil and Gas Division Director Bill Barron told Escopeta he agreed with the company that “the best way forward” was to drill only to a subsea true vertical depth of about 4,800 feet, a 13 &3/8 casing point.

At that point, “after successful installation and testing of this casing,” Escopeta must halt drilling until the state Department of Natural Resources “evaluates and determines the reasonableness and prudence of moving forward with additional drilling,” Barron’s letter said.

The total depth of the Kitchen Lights Unit No. 1 well will eventually be about 16,000 feet, which will take it down to the pre-tertiary zone, stratigraphically equivalent to the Jurassic interval.

Barron’s letter is the product of meetings between state officials and Escopeta executives on Thursday and Friday, prior to the start of drilling.

Initially, Barron seemed nervous about Escopeta, which is drilling both its first offshore well in Alaska and the first exploratory well from a jack-up rig in the Cook Inlet basin in nearly two decades.

But in Friday’s letter Barron praises Escopeta’s team and their willingness to work with DNR on shared priorities, which appear to center on operational safety.

The arrival of the Spartan 151 jack-up is welcome news, Barron said in his letter, but “A well control incident in Cook Inlet could have devastating consequences for the state and the state’s most vital industry.”

Escopeta spokesman Steve Sutherlin told Petroleum News on Saturday night that the company is just glad to be drilling, and that it can live with the restriction.

The company is confident it can drill to total depth safely and without rushing before ice buildup in Cook Inlet closes the drilling season, Sutherlin said.

Further, if total depth can’t be achieved, Escopeta can re-enter and finish the well in the spring, he said.

Under a deadline from the Division of Oil and Gas, Escopeta must drill a well in the unit to the pre-tertiary interval by Oct. 31 in order to keep its leases — a deadline that some regulators think is putting too much pressure on Escopeta.

Sutherlin said it is his understanding that Barron has signaled that, if necessary, he might be willing to give Escopeta more time to complete the well and thus keep the Kitchen Lights unit intact.

Editor’s note: See full story in the Sept. 11 issue of Petroleum News, which will be available online by noon on Sept. 9 at petroleumnews.com


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