Jack-up rig now at lease site

With little fanfare but much anticipation, a small group of residents watched early last Friday morning as the Endeavour-Spirit Independence jack-up rig left the Homer Deep Water Dock en route to its drilling assignments.

Among those watching was Homer Harbormaster Bryan Hawkins, who has come to know the rig well since it first came to his port.

“The view has changed,” said Hawkins of the massive rig and its three, 410-foot legs that had been part of the Kachemak Bay scenery since it arrived in Homer on Aug. 24, 2012.

The Endeavour spent 218 days at the dock and racked up about $500,000 in harbor fees, Hawkins said.

“When I sailed I used to complain that a town has a suction factor and it is hard to break that sometimes, and I don’t think this operation could exemplify it better than anybody,” he said with a laugh. “Wow.” 

The rig departed the dock about 8:30 a.m. on Friday towed by two Titan tugs — with a third on stand-by — and within an hour the Endeavour had rounded the Homer Spit and was heading out of Kachemak Bay toward the Cosmopolitan oil and gas lease site off Stariski Creek north of Anchor Point.

 Buccaneer will need at least two more approvals from different state agencies before it can drill the Cosmo area.

It took three tries for the rig to depart Homer as bad weather last Tuesday and Thursday scuttled plans, Hawkins said, adding that winds were clocked at 35 knots Thursday afternoon. Friday morning’s sunshine and calm waters, however, made conditions perfect to leave.

U.S. Coast Guard inspectors from the Marine Safety Detachment Homer and Marine Safety Unit Texas City on March 23 and 24 had inspected the Endeavour and issued it a Coast Guard Certificate of Compliance. Coast Guard inspectors also inspected  the Spartan 151 jack-up rig moored in Port Graham and issued it the same certificate. The certificates are good for two years.

Buccaneer had intended the rig — owned by a consortium of itself, the managing partner, Ezion Holdings and the Alaska Industrial Development and Export Authority — to be in Homer only a few days for work after its voyage last fall from Singapore.

The jack-up rig wound up staying in Homer through the winter as Kenai Offshore Ventures, the drilling firm, and its contractor Archer Drilling made repairs and upgrades. Buccaneer and Archer eventually parted ways over a disagreement about the work.

Archer filed a $6.5 million lawsuit against Buccaneer seeking payment for what it said were past-due bills for services and expenses. Buccaneer filed a counterclaim seeking $30 million in damages for lost revenues and other expenses. Spartan Drilling — which has operated Furie Operating Alaska’s Blake 151 jack-up rig the last two seasons — has taken over operation of the Endeavour.

Buccaneer has a land use permit to put the rig’s legs down at the Cosmo site, but is still waiting for approval from the Alaska Department of Environmental Conservation on its amended Oil Discharge Prevention and Contingency plan, or C-Plan. By late Friday, the Endeavour had set up at the Cosmo site, with the giant rig clearly visible from Anchor Point, Stariski, Happy Valley and even Diamond Ridge in Homer.

Graham Wood, DEC section manager for exploration, production and refinery, said the state sent Buccaneer a second request for additional information on its C-Plan on March 14, but has not yet heard back. That document was a nine-page, 27-point request for information.

Buccaneer’s plan is approved for summer operations in the northern portions of Cook Inlet in four locations — two at the company’s Northwest Cook Inlet leases, and two at Southern Cross leases. The Cosmo plan is a winter drilling amendment to that plan.

Although there is no deadline for Buccaneer to respond to DEC, the summer drilling season begins on April 15. If Buccaneer waits to drill, or cannot get its winter C-Plan approved before that date, it would not automatically be allowed to drill on April 15, Wood said. The company would need to amend the plan again — albeit not as major of an amendment like the winter plan — before drilling in the area, Wood said.

Jay Morakis, of JMR Worldwide, Buccaneer’s public relations firm, said the Alaska Oil and Gas Conservation Commission also still needs to certify the rig before it can drill.

“Really, we’re at the final stages here of what we need to get done as far as permitting,” he said.

Cathy Foerster, Chair of the AOGCC, said the organization will inspect the rig once it is on location. That inspection is an intensive, one- or two-day process with two or more inspectors. 

“We’ll get out there and do the complete rig inspection and we’ll do that in conjunction with the first blow out preventer test that they have to do before they commence operations,” Foerster said.

Completion of the drilling certification is not dependent on any other state or federal permits the company may need. Foerster said AOGCC’s permit doesn’t absolve the company of its responsibilities with other agencies.

In mid-September 2012, the Endeavour was forced to lower its legs while docked during a storm that was severe enough to snap two of its mooring lines. Concerns in the area mounted that the rig would not be able to pull its legs up, as was the case with the George Ferris, a Standard Oil-owned jack-up drilling rig that got stuck in Mud Bay and had to be freed with explosives in 1976.

“There were concerns of being able to pull the legs out of the mud and there was no issue,” Hawkins said. “They just worked them slowly and it took about a half an hour or so.”

Watching from atop a hill in Homer on Friday, Bill Smith, Kenai Peninsula Borough Assembly member, said he was glad history did not repeat itself with the Endeavour.

“It’s moving real slow, but I’m glad it was able to pull its legs up out of the mud and leave the dock,” he said. “I was working on the Spit when the George Ferris started going down.”

Smith and Hawkins agreed the Endeavour’s presence was good for the area’s economy as it put to work many local contractors — more from the central Kenai Peninsula area than the Homer area, Smith said.

“The local hire wasn’t to the extent that the Buccaneer people were implying, but nonetheless it was a pretty good shot in the arm over the winter, which is usually a little slower period for us,” Smith said.

While good for the area’s economy, Hawkins said he was ready to see the rig depart.

“They have a mission and we want to see them be successful and bring product to the pipeline,” he said. “I’m happy and proud that we were able to facilitate their needs.”

Brian Smith can be reached at brian.smith@peninsulaclarion.com.