Oil Patch Insider

Shell tries to help Cook Inlet explorers Renaissance, Escopeta

Over the past few months independents Renaissance Alaska and Escopeta Oil have been talking to Shell about using one of the major’s Beaufort Sea drilling units for offshore wells in Alaska’s Cook Inlet basin.

Shell has been assembling a fleet of vessels for the Beaufort, including two drilling units — the Frontier Discoverer, a drillship, and the Kulluk, a floating drilling platform. Prior to, and after, an Aug. 15 federal court order that extended a stay on Shell’s Beaufort Sea activities, the company has been looking for a way to make one of its drilling units available to drill two Cook Inlet wells for Escopeta and four wells for Renaissance, including the companies’ promising Kitchen and Northern Lights prospects.

But so far nothing has worked out, even though Shell and Escopeta were close to a final deal for use of the Frontier Discoverer, and Renaissance is in the process of filing two sets of permits — one for Shell’s drillship and one for a jack-up rig. (Escopeta already has its Kitchen permits, although since the permits are rig-specific, it will have to submit changes to the permits when it contracts for a jack-up.)

“It would have been quite a sight to have the 750-foot Frontier Discoverer drilling in the Cook Inlet,” Escopeta President Danny Davis told Petroleum News Sept. 6.

“Assisting another company whenever possible is consistent with the way we do business,” Shell’s spokesman in Alaska, Curtis Smith, told Petroleum News Sept. 6. “With Escopeta and Renaissance, Shell saw an opportunity to keep our equipment running and our crews working. It’s too bad it didn’t work out this time.”

Davis, the first to approach Shell, said Shell spent months evaluating the Frontier Discoverer and Cook Inlet’s drilling conditions to see if it could use the drillship in the inlet’s shallower waters.

“I’d like to take my hat off to Shell. We appreciated their ingenuity,” he said.

Escopeta “basically had a deal cut for use of the Frontier Discoverer when the engineering evaluation came in,” Davis said. Designed for deeper waters, the “BOP and slipjoint design along with our shallow water depth, 20-foot tides and 6 to 8 knot currents, would hinder the Frontier Discoverer from staying over the well location.”

Under a State of Alaska unit deadline to drill a well at its Kitchen prospect by Dec. 31, Escopeta has been trying to bring a jack-up rig to the inlet for several years. It is the only Cook Inlet explorer that has actually had a contract signed for a jack-up in almost 20 years — and it is the only company to get a Jones Act waiver to use a foreign-flagged vessel to bring a jack-up to Alaska.

But the jack-up Escopeta originally signed, the Songa Tellus, was “not ready to load on the heavy lift vessel in June 2006, which cost us a lot of money and a big delay in getting our wells drilled,” Davis said.

The Kulluk was not under serious consideration, Renaissance President Mark Landt told Petroleum News Sept. 5, because it’s still moored in the Canadian Beaufort. (The Frontier Discoverer is in Dutch Harbor.)

“If Shell had been able to drill in the Beaufort this summer, then it would have been closer to haul down to Cook Inlet to drill in the winter. The benefit to Shell would have been that it could keep the rig warm and they wouldn’t have had to moor it in the Beaufort over the winter. … It’s too late and too costly to do anything with it this winter,” Landt said.

Landt and Davis are talking to rig contractors about bringing in a jack-up for 2008 drilling — as early as April for Escopeta. The two companies are not working together, but Davis said if he were to work with another company it would likely be Pacific Energy, which just bought Forest Oil’s Alaska assets.

“If we do decide to work with another oil company it will be Pacific Energy. Their buying Forest’s assets in Alaska was a phenomenal purchase for them and good for Alaska. … I believe Pacific Energy is sitting on hundreds of millions of barrels of oil and quite a few tcf of gas,” Davis said.

—Kay Cashman