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Escopeta responds to DO&G questions Company says concerns about drilling in Cook Inlet and increasing regional supplies should trump expenses and timelines Eric Lidji For Petroleum News
Escopeta Oil should find out soon whether the state will once again give it more time to line up a drilling program to explore an offshore prospect in the Cook Inlet basin.
The Houston-based company made what could be its final plea to the state in a June 23 letter, responding to seven questions the Division of Oil and Gas posed back on June 18.
The letter adds little to the public record on the Kitchen Lights unit because two key pieces of information — a line item account of expenses to date and proof that other companies have offered to buy Escopeta’s assets — are being held as confidential.
However, among the technical responses, Escopeta President Danny Davis also claimed that a win for Escopeta would also be a win for other companies and the State of Alaska.
“This project is not about how much has been spent by whom, it is about the responsibility of all involved to get wells drilled next year to provide much needed natural gas to the people of Alaska and the Railbelt area,” Davis wrote.
Hopes to have a rig by March The state is faced with deciding whether an extension would actually lead to drilling at Kitchen Lights. Escopeta bought its first Alaska leases a decade ago, but has yet to successfully arrange all the pieces needed for exploration in shallow, sub-Arctic waters.
Escopeta has asked the state for more time on several occasions since 2007, when it became operator of the Kitchen unit, a forerunner to Kitchen Lights. This past May, the company made its most recent request, asking for another 180 days to get a drilling rig.
Drilling in shallow waters, like those in the Cook Inlet basin, requires a mobile drilling unit called a jack-up rig. Over the years, Escopeta has tried to secure a jack-up rig contract with several companies, only to see each deal fall apart for various reasons.
Negotiations with Pride Drilling In its June 23 letter, Escopeta said it is now near the finish line again. Escopeta has been negotiating with Houston-based Pride Drilling Co. to bring the Pride “Hawaii” rig up to Alaska next March. To back up that claim, Escopeta included a June 21 letter from Pride that references “technical/operational suitability studies,” needed to make sure the rig will work in Alaska, that Pride must complete the companies can finalize an agreement.
Escopeta also included recent letters from various contractors lined up to work on the program, including two that offered Escopeta lines of credit based on state money Escopeta could get by bringing a jack-up rig to Alaska and drilling an exploration well.
The remaining issues simply aim to prove up claims Escopeta has made in recent weeks: that it has all the permits it needs except those specifically related to drilling and that the current moratorium over offshore drilling does not extend to the Kitchen Lights prospect.
Asked by the state to detail its efforts to meet the existing timelines for drilling at Kitchen Lights, Escopeta said that if “Pride Drilling Co. cannot move forward Escopeta will contact other rig companies capable of supplying a jack-up rig suitable for Cook Inlet.”
Escopeta recently missed the current commitment to have a jack-up rig headed for Alaska by June 30, making it all but impossible to meet the commitment to drill a well by Dec. 31. However, Escopeta has said that with the 180-day extension, it can get back on the current timetable by the end of 2011, or the second year of required work commitments.
If the state doesn’t grant the extension, Escopeta has suggested it would file an appeal.
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