State needs to be cautious when extending its ‘open for business’ invitiation to anyone

In Alaska, and more recently, in Homer, we frequently here the mantra we’re “open for business.”  The intent of course is to present a business-friendly face to potential investors so our community can reap the promised benefits of jobs and contracts such businesses might bring.  

But “open for business” has to mean something more than simply open to any business, because if not, we’ll attract corporations to Cook Inlet and Kachemak Bay with low standards and a profit-at-any-cost mentality. And local residents ultimately will bear the cost.

The best example in recent years has been Buccaneer Energy, the Australian company run by Texans that pushed its way into Cook Inlet chasing massive state subsidies (Buccaneer’s chairman famously told an industry conference that Alaska is “about the closest thing you’re going to get to free money from a government in the world”).  

This past week, Buccaneer announced it was plugging its West Eagle well east of Homer after drilling a dry hole.  Now, with its stock valued at less than a penny and creditors circling, it’s a safe bet Buccaneer’s days are limited.  But Buccaneer has cut an ugly swath across Cook Inlet, and the Buccaneer experience presents strong arguments why we need to better scrutinize our potential business partners:

When Buccaneer brought its jack-up rig to the Homer dock, it promised it would be there less than a month. But it knew full well the rig had been dry-stacked in Asia for a decade, and needed substantial upgrades. That’s why it sat there a year, while Buccaneer scrambled to fix its mess. Yet Buccaneer persisted in the lie these delays were unanticipated. 

While Homer reaped considerable moorage fees from the rig — and local welders and others found some good, temporary employment — the rig’s presence in the Kachemak Bay Critical Habitat Area has now prompted the Alaska Department of Fish and Game to rollback critical habitat protections across the entire state.

Buccaneer has always been a financial house of cards, with few assets and considerable debt.  It survived by fooling investors (including the Alaska Industrial Development and Export Authority, which pumped roughly $25 million of our public dollars into the jack-up rig) into believing it had a viable business plan — based largely on huge subsidies offered by our state for exploration drilling. 

But Buccaneer managers had no clue about operating in Alaska, and they quickly over-extended themselves. In Upper Cook Inlet, they defaulted on contracts by failing to drill as promised at the Northwest Cook Inlet and Southern Cross Units; at West Eagle outside Homer, they also defaulted on their unit agreement, but the state has bent over backwards to let them cure their defects.  

On the wetlands surrounding the Kenai River, Buccaneer blasted over 800 shotholes — creating craters the size of pick-up trucks — when conducting seismic work without any permits.  They apparently hadn’t heard about the king salmon crisis and the impacts of seismic blasting on juvenile fish, but our state and federal agencies didn’t lift a finger. 

Offshore, Buccaneer’s jack-up rig dumped tons of contaminated drilling muds into the some of the richest fish habitat in all of Cook Inlet off Anchor Point.   

Perhaps most disturbingly, Buccaneer had zero respect for Cook Inlet residents. They plowed through local properties with seismic testing equipment in the central Kenai Peninsula without landowners’ consent, and they routinely failed to pay local businesses in Kenai and Homer on time, if at all.  

They are facing serious claims in court they are stealing gas from CIRI’s adjacent leases at Kenai Loop. They ignored local residents who told them the road to the West Eagle prospect was too dangerous for heavy trucks carrying shifting cargos, and tragically, a young man lost his life. A few days after that horrible accident, a rig worker apparently lost a couple fingers at West Eagle, but that’s never been reported.

Throughout Buccaneer’s fiery trajectory across Cook Inlet, our local, state and federal governments provided little push-back to the company’s shoddy operations. 

The fact remains, our current permitting system has few tools to filter out the bottom feeders, and the current trend — through HB 77 and other policy changes — is to limit public participation even more.

So, instead of a full-throated cry of “open for business,” Alaskans and their local businesses would be better served with a due diligence review before any permits get issued for large projects that impact our local communities; something that would ask basic questions about a company’s financial wherewithal, its commitment to local people and jobs, and its desire to protect the fish and water resources that make our home unique. 

Otherwise, we’ll just continue to see more pirate ships on the horizon.

Bob Shavelson is the executive director of Cook Inletkeeper, an Alaskan organization with offices in Anchorage and Homer which is dedicated to protecting clean water and wild salmon throughout the Cook Inlet watershed.