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Vol. 13, No. 31 Week of August 03, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Pacific Energy gets extension to hire heavy lift vessel for jack-up

State oil and gas officials have given a Cook Inlet operator 60 additional days to hire a ship capable of bringing a specialty rig to Alaskan waters.

California-based independent Pacific Energy Resources Ltd. now has until Sept. 29 to sign a contract with a heavy lift vessel operator to bring a jack-up rig to Alaska.

Pacific Energy recently signed a three-year contract to use a Blake Offshore jack-up rig to drill exploration wells at offshore Cook Inlet prospects such as the Corsair unit.

A jack-up rig is a mobile unit well-suited for shallower offshore drilling, and is seen by many companies as the lynchpin of several proposed exploration ventures in Alaska. Without the rig, many previous ventures have been delayed or abandoned.

The Blake 151 jack-up rig is stationed in the Gulf of Mexico, and needs to be towed several thousand miles to Alaska. Pacific Energy said it is negotiating with six different carriers, trying to find a company capable of making the trip, but couldn’t get everything in line by the original July 31 deadline.

Adding to the presumed delay is the fact that the carrier most likely won’t be an American company, forcing Pacific Energy to get a federal exemption of the Jones Act requirement that tankers in U.S. waters be built, owned and manned by Americans.

While Pacific Energy is confident it will get the exemption, federal officials won’t start the process until a carrier has been found and contracted.

Pacific Energy plans to start drilling at Corsair in 2009 and believes the prospect contains 500 billion cubic feet of gas and 100 million barrels of oil.

The company produced nearly 4,600 barrels of oil per day from its Alaska leases in July.

Following an announcement earlier in the month that Pacific Energy received $101 million by selling part of its onshore assets in Calfornia, the company announced on July 31 that it brought in around $34 million from the final part of the sale.

That money will be used for capital projects like those in Alaska, and for debt reduction.

Extension may have downside

The extension may have one negative outcome for Pacific Energy.

The company is currently appealing a state decision to take back several pacific Energy leases around the Corsair unit because of disuse. Pacific Energy had asked for those leases to be brought into the boundaries of the unit, which would automatically extend their life.

Originally, the independent suggested Corsair might not be economic without the expansion acreage. Recently, the company said the leases already within the unit contain a new prospect.

By asking for an extension of the deadline for a heavy lift vessel, the state Division of Oil and Gas said Pacific Energy is contradicting its earlier claim.

“The Division interprets PERL’s vessel contract extension request as a repudiation of its appeal argument that delivering the rig is uneconomic without the expansion leases,” Acting Director Kevin Banks wrote to the company.

Pacific Energy officials could not be reached for comment.

—Eric Lidji



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