No takers for co-op rig, court papers say

A drilling rig at the center of an Alaska bankruptcy case might be sold, but “no buyer has been found for the rig despite months of efforts to find one.”

So says a recent filing in U.S. Bankruptcy Court in Anchorage.

The National 1320 drilling rig belongs to Naknek Electric Association, a small power cooperative serving villages in Southwest Alaska.

The co-op filed for Chapter 11 bankruptcy protection from creditors in September 2010 due to problems with a costly geothermal drilling program.

The co-op has said it bought the National 1320 rig in Eastern Washington in 2009 for $8.5 million, and made $3 million in winterization and other improvements.

The rig has been used to drill one exploratory geothermal well so far, at a site outside the village of King Salmon.

A group of Naknek Electric creditors including oilfield services company Baker Hughes on June 7 filed a motion asking the court to approve a settlement concerning their liens on the rig and related equipment.

The motion says no buyer has been found for the rig, which “is most likely worth considerably less than” the Baker Hughes lien claim of $3.5 million.

—Wesley Loy