October 11, 2011 --- Vol. 17, No. 86October 2011

Escopeta finishes first phase of KLU drilling

Escopeta Oil Co. has completed the first stage of drilling at its Kitchen Lights Unit No. 1 well and now must wait for word from the state before it can continue to total depth.

Escopeta recently reached a depth of 4,933 feet at the offshore well in the Cook Inlet, the depth where the state asked the company to temporarily stop work. “We’re at Checkpoint Charlie right now,” Escopeta contractor Steve Sutherlin told Petroleum News today.

Sutherlin is a former Petroleum News reporter and a minority owner of the company.

Although Escopeta intends to drill KLU No. 1 to 16,000 feet, the Alaska Department of Natural Resources told the company to pause at 4,800 feet while it “evaluates and determines the reasonableness and prudence of moving forward with additional drilling,” according to a Sept. 2 letter from Division of Oil and Gas Director Bill Barron.

After logging the well at its current depth, Escopeta plans to open the existing 12 and 1/4-inch wellbore to 17 and 1/2 inches and then run the 13 and 3/8 inch cement casing.

Escopeta could conceivable continue drilling this year, but only if the company and the state both feel comfortable with moving forward this fall, Sutherlin said. The company recently performed a successful test on its blowout preventer equipment, he added.

It remains to be seen how the state-requested delay will impact state-imposed deadlines for Escopeta to reach a total depth by this fall or lose the unit, but Sutherlin said the company is operating on the assumption that the sides will come to an agreement.

He said Escopeta officials plan to meet with state official soon.

RCA allows CEA to purchase Fire Island wind power

The Regulatory Commission of Alaska has given the go ahead to power utility Chugach Electric Association to purchase electrical power from a wind farm that Cook Inlet Region Inc. plans to build on Fire Island, offshore Anchorage. CIRI needs power purchase agreements to secure the funding needed to construct the wind farm, with a 2012 deadline for construction completion if the project is to qualify for a nearly $19 million federal grant.

The wind farm has caused controversy among the Southcentral Alaska power utilities, primarily because of the fluctuating nature of wind power generation, and the potential cost and stability impacts of those power fluctuations on the Alaska Railbelt power grid. Questions have also been raised about the cost of the power from the wind farm, with that cost causing an initial increase in consumer’s electricity bills, but with the subsequent cost of wind power expected to remain stable for many years to come.

In an Oct. 10 order the RCA commissioners said that, with an immediate decision on the power purchase agreement needed to meet the required wind farm construction schedule, the commission will allow Chugach Electric to recover the cost of the Fire Island wind power from its customers. However, given the issues raised by the purchase agreement, the commission has not approved the tariff that Chugach Electric submitted in conjunction with the purchase agreement. The commission is opening a new docket to track the progress of the Fire Island project and requires Chugach Electric to reimburse other utilities for any costs those utilities incur as a consequence of integrating fluctuating power from Fire Island into the grid. Chugach Electric must “to the extent possible” protect other utilities from grid reliability problems and costs resulting from Fire Island power integration, and must submit a revised tariff incorporating a plan for power rate recovery, the commission said.

See stories in Oct. 16 issue of Petroleum News, available to subscribers online at 11 a.m., Friday, Oct. 14 at

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