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Buccaneer, AIDEA close jack-up deal; rig to arrive next spring
The State of Alaska is officially in the drilling business.
The Alaska Industrial Development and Export Authority recently closed its deal with a private joint venture to buy, upgrade and mobilize a jack-up rig for use in Alaska.
Under the deal, AIDEA and Kenai Offshore Ventures LLC, a company owned by Buccaneer Energy Ltd. and Ezion Holdings Ltd., will invest in a jack-up drilling rig.
The parties signed a Joint Ownership Agreement earlier this year, but the contract required Kenai Offshore Ventures to first complete a list of activities. With those conditions met, AIDEA will now begin funding up to $24 million in the project.
“The conclusion of this deal is another very positive step forward for Cook Inlet oil and gas resource development,” AIDEA Board Chairman Hugh Short said in a prepared statement. “AIDEA’s investment in this rig will not only help secure long-term energy supplies for Alaskans, it will create job growth and help advance the region’s economy.”
AIDEA is a public corporation of the State of Alaska.
Rig now in Singapore Kenai Offshore Venture previously bought the Adriatic XI jack-up rig from Transocean Offshore Resources Ltd. for $68.5 million, but plans to rename it Endeavour — Spirit of Independence. The rig recently arrived at the Keppel FELS Shipyard in Singapore where it will undergo upgrades and modifications for use in Alaska, according to AIDEA.
The parties expect the rig to begin its trip to Alaska in April and start drilling in May.
The funds needed to purchase the rig include $44 million of senior debt facility from Oversea-Chinese Banking Corp., $17.6 million of the preferred interest investment from AIDEA and $6.9 million from Kenai Offshore Ventures split between its owners.
Kenai Offshore Ventures said it expects to repay both facilities within five years.
“With completion of this transaction, we have achieved what was initially considered by some, to be a very ambitious goal — to acquire an offshore jack-up rig,” Buccaneer Director Dean Gallegos said in a prepared statement. He added, “Furthermore, the Endeavour represents a strategic asset, ensuring Buccaneer will feature predominantly in the ‘renaissance’ of exploration activity in the offshore waters of Alaska.”
While Buccaneer intends to first use the rig to complete a four-well drilling commitment, starting at its Southern Cross unit next summer, its wholly owned subsidiary Kenai Drilling LLC will market the rig to third party operators in Alaska for five years after the rig arrives in the state. Archer Drilling Co. will manage all drilling operations. The companies are considering potential customers in Cook Inlet as well as northern Alaska.
Transocean built the Adriatic XI/Endeavour in 1982 and upgraded it in 2004. The rig is constructed of steel rated to 10 below zero Celsius, includes 10,000 and 15,000 psi blow-out preventers and features that can be integrated to existing Cook Inlet operations.
Buccaneer recently submitted an oil discharge prevention and contingency plan, or C-plan, for its drilling program to the Alaska Department of Environmental Conservation.
The DEC is taking comments on the C-plan through Dec. 13.
—Eric Lidji
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