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Buccaneer seeking clemency for Cook Inlet units; wants more time
Buccaneer Alaska LLC believes its “good faith, diligent efforts” to meet work commitments should allow it to keep two Cook Inlet units poised for termination.
The local subsidiary of an Australian independent blamed its failure to drill at the Southern Cross and North West Cook Inlet units this year on “environmental conditions beyond its control,” and wants permission from the state to try again next summer.
“While Buccaneer has undoubtedly experienced frustrating setbacks during the 2013 summer season, these setbacks were not for a want of effort, and more importantly, Buccaneer’s considerable successes overshadow these setbacks,” President James Watt wrote in a Nov. 25 letter to Department of Natural Resources Commissioner Joe Balash.
Specifically, Buccaneer brought a jack-up rig to Cook Inlet, upgraded it for Alaska operating conditions, spent some $2 million to permit wells at the two offshore units and spent $12 million beyond permitting to move its rig to the Southern Cross unit before abandoning the effort for the year because of unsafe conditions, according to Watt.
He also pointed to other work, including production from the onshore Kenai Loop field, drilling at the offshore Cosmopolitan prospect and permitting at many other fields.
DNR still deciding The Department of Natural Resources told Petroleum News it is still deciding what to do about the units, but said its options include termination, as well as other possibilities.
The fate of the two units could differ.
Buccaneer was able to get a rig to Southern Cross this year, but by September it was clear that the company would be unable to finish a well in time to move the rig to the North West Cook Inlet unit and start drilling before the mandating end of the summer season.
Buccaneer is asking the state to approve a Suspension of Operations for Southern Cross, which would keep the unit in default but excuse the company for missing its deadlines.
As for North West Cook Inlet, Buccaneer is arguing that it could drill on those leases much faster than any other company, given that it has already secured a rig and permits.
Delays and defaults Buccaneer is blaming its failure to drill on a domino effect of delays.
Those delays began when its Endeavour jack-up rig took longer than expected to get to Alaska in summer 2012 and spent months docked in Homer undergoing upgrades.
By the time the rig was ready, the open water season had ended in upper Cook Inlet, and Buccaneer had missed its October 2012 deadline for drilling an initial well at each units. The state placed both units in default, and gave Buccaneer until October 2013 to cure the default by drilling a well at each unit. A typical default cure is 90 days, but the state gave Buccaneer a year because of its success in bringing a jack-up rig to the basin.
Buccaneer used the rig to drill the Cosmopolitan No. 1 well this past spring and announced discoveries beyond those known for the prospect, but testing took longer than expected, which delayed its timetable for Southern Cross and North West Cook Inlet.
Once Buccaneer got the rig to Southern Cross, the company was forced to relocate because of sea-floor erosion. The end of the open water season again pre-empted drilling.
—Eric Lidji
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