THE INDEPENDENTS 2003: Escopeta seeks jackup rig, partners

Houston firm calls Cook Inlet a bargain, hopes to develop East Kitchen prospect in 2004

Steve Sutherlin

Petroleum News

Houston-based Escopeta Oil and Gas will share favorable new seismic analysis on its East Kitchen Cook Inlet leases with potential investors this winter, with an eye toward development in 2004. The company expects to find 450 million barrels of oil and 2.5 trillion cubic feet of natural gas in the prospect, based on its latest studies.

“East Kitchen is one of the largest untested basins in the U.S.,” Escopeta President Danny Davis told Petroleum News in October.

Davis said Cook Inlet is a bargain, compared to the Gulf of Mexico, where companies are drilling in 6,000 feet of water and risking more money to find smaller reserves than would be the case in the inlet. If larger independents knew what Escopeta knows about the inlet, the companies would elect to invest in Cook Inlet, he said.

Investors are cautious about the inlet because of the very real costs of mobilizing a drilling rig to the area, and because of historic permitting delays and excessive environmental regulations, Davis said, adding that companies not current on the situation are unaware of the strides the Murkowski administration has made to clear hurdles to development.

Escopeta is attempting to solve the drilling logistics challenge by lining up owners of neighboring prospects to share the cost of bringing a jackup rig to the inlet. Davis is working out the details with Rowan Drilling, he said.

Davis said his company’s East Kitchen prospect is in the same structure as Forest Oil’s Corsair prospect and Prodigy Alaska’s Northern Lights prospect — an anticline that lies south of the North Cook Inlet field. Davis said all three prospects, which are separated by faults, hold great promise.

“Cook Inlet is a very unexplored basin,” he said.

Cook Inlet is the place to look for natural gas to serve the local area, as opposed to expensive efforts to deliver North Slope gas.

“Cook Inlet gas is ready to go to market a lot faster than anything on the slope,” he said.

Shallow gas drilling in the region holds promise to boost supplies, but the opportunities for a home run are underwater in the inlet, Davis said.

“We just happened to be in the right place at the right time to pick those leases up,” he said.

In 2002 Escopeta transferred 100 percent of its working interest in its Cook Inlet leases to BBI Inc., a holding company owned by Davis and Lawrence Berry of Berry Contracting Inc. of Texas. BBI is the third-largest leaseholder in the inlet with 120,000 acres.

This winter, Escopeta will drill for coalbed methane in the central United States, “just for something to do,” but its long-term focus is on Cook Inlet, Davis said.

Escopeta and Davis first did business in Alaska in 1993, Davis said. In 1994 it invested with Stewart Petroleum Co. on the Cosmopolitan prospect in Cook Inlet. Davis holds a royalty interest in the unit.