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THE EXPLORERS 2005: Wanted: Jack-up Escopeta Oil going ‘giant hunting’ in Alaska’s Cook Inlet with new South African partner Kay Cashman Petroleum News
Escopeta Oil President Danny Davis predicted an independent oil company would be the first to bring a jack-up into Cook Inlet and it looks as though he’s proven himself right.
As The Explorers was headed to press the Houston-based independent snagged a partner willing to take majority ownership in its 130,000 acres under lease in Cook Inlet in order to provide Escopeta with the funds to drill five exploration wells in the next two years — drilling which will require bringing a jack-up into the Southcentral Alaska basin. (See Escopeta profile on page 82.)
Escopeta’s new partner is Johannesburg-based Centurion Gold Holdings Inc., which said in its Oct. 21, 2005, press release that it is “the only South African junior gold mining company publicly listed in the United States” — OTCBB: CGHI.
Centurion CEO and Chairman Dale Paul told Petroleum News that Escopeta will remain operator of the leases, which include the offshore Kitchen prospects and the onshore North Alexander prospect. The companies believe its Kitchen prospects could contain the inlet’s missing giants, i.e. large oil and gas fields that remain to be found in Cook Inlet, as postulated by the U.S. Department of Energy in its 2004 report on Cook Inlet natural gas.
“We think we have a possible total resource of 1.2 billion barrels of oil and 7 trillion cubic feet of gas,” Davis said. The game plan Paul said well permitting will be initiated “almost immediately.”
The game plan is to bring the jack-up rig to drill East Kitchen in the spring of 2006.
“After that our idea is to see if ConocoPhillips and Pioneer (Natural Resources) want … to take it down to Cosmo in December. There’s no ice problems down there and then we would bring rig back as soon as possible in spring 2007 and drill the No. 1 Kitchen well which is the thrust fault trap on the eastern flanks of Middle Ground Shoal,” Davis said.
Next on the list is Kitchen in March 2007 and South Kitchen in July 2007.
The onshore North Alexander prospect would be drilled in the winter of 2006-07 using a conventional rig.
“One of the reasons we’re trying to press forward so quickly is according to DOE … the Cook Inlet basin will basically be out of gas in 2009,” Davis said. Looking for a jack-up “My most important job in the next couple of weeks is to find a jack-up rig. … When we looked at moving a jack-up to Alaska three to four years ago the mobilization and demobilization cost was $4 million. The same bid today is at least $12 million. … Day rates were $35,000 per day. Our last quote a year ago was $65,000 a day,” he said.
Rowan Drilling was Davis’ first choice for a drilling contractor. “They have experience in Cook Inlet and they’re a first class company. … (But) after speaking to Rowan last week, they’re a bit too proud of their equipment. … They want me to pay tens of millions of dollars in advance to bring them to an area where they will eventually make tens of million in profit. What we’re looking for is a drilling contractor who will make a deal with us that makes sense.”
The “upside for the contractor that moves a jack-up to Alaska is fantastic,” Davis said, referring to the companies that have expressed interest in getting a jack-up in to drill offshore Cook Inlet wells, including ConocoPhillips, Forest Oil and Prodigy Oil and Gas.
“There were about nine or 10 wells that needed drilling then,” he said. “And I understand there are another three to four wells that need to be plugged and abandoned that will require a jack-up.”
Davis plans to approach Alaska Gov. Frank Murkowski who last year pledged in the neighborhood of a $6 million advance in state funds to help get a jack-up to the inlet.
“In my opinion the money the state spends to move a rig here will be repaid to the state from the oil companies that will need the services of that rig,” he said.
A first for Centurion The Cook Inlet deal will be Centurion’s first venture into the oil and gas sector, Paul said.
The company said its management saw the deal with Escopeta as “an unprecedented opportunity to develop major oil and gas reserves in Alaska at a time when prices make it attractive to enter the oil and gas business. … Management believes that the Cook Inlet agreement opens up new financial frontiers for the shareholders of Centurion and if successful could possibly make Centurion one of the stronger independent oil companies in the United States.”
More information on Centurion can be found on the company’s Web site: www.centuriongold.com
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