U.S. Customs and Border Protection has levied a $15 million fine against Escopeta Oil Co. for violating the federal Jones Act by transporting the Spartan 151 jack-up rig from Texas using a foreign-flagged vessel. The rig eventually arrived in Cook Inlet. Customs, which is part of the U.S. Department of Homeland Security, or DHS, also said if Escopeta feels "there are extenuating circumstances," it can object and file a written "petition for relief" within 60 days with Patrick McGownd, Customs fines, penalties and forfeitures officer in Anchorage, who signed both the letter and the accompanying penalty notice. The fine was issued on Oct. 13.
The $15 million fine is equivalent to the value of the Spartan 151, a determination that was made by Customs, McGownd said.
When Petroleum News emailed Escopeta Oil's current president, Ed Oliver, for a reaction to the $15 million fine, the company's strategic officer, Steve Sutherlin, replied by email, "Escopeta is reviewing its options."
Danny Davis, president of Escopeta when the jack-up left Freeport on March 18, told Petroleum News on Wednesday: "I don't think we owe any fine whatsoever. I don't think Escopeta broke any laws taking the rig from Galveston to the Cook Inlet.
"When the facts come out in a courtroom or in an agency review, they will be able to see we actually broke no laws," said Davis, who resigned in August but remains a minority-interest owner in the Kitchen Lights unit leases. Davis had been president of the Escopeta group of companies since the first one was founded in 1993, an investor with Stewart Petroleum in the Cosmopolitan play. He was also the driving force behind bringing the jack-up to Alaska, the first in Cook Inlet since 1994.
In Wednesday's interview, Davis pointed out that within two weeks of denying Escopeta a Jones Act waiver, the Obama administration issued 46 waivers to foreign companies.
"I love the United States. I love our industry. If the government is going to start charging us to do business in the United States, then they need to start charging everybody," Davis said.
"There is a gas shortage in the Cook Inlet basin, even though the Department of Energy denied that fact with DHS," which needed DOE's concurrence to issue a waiver.
"I think ... (when) we drill down to 12,000-12,500 feet, we'll find all the gas they need (in Southcentral Alaska) for many years to come. There's 2-3 tcf of gas there. It's loaded with gas," Davis said.
The 83,394-acre Kitchen Lights unit is made up of four main oil and gas prospects: Corsair, which is being drilled first; Northern Lights, identified and then lost by Mark Landt and associates under various company names; and Kitchen and East Kitchen, which were identified by Escopeta under Davis.
By KAY CASHMAN
Petroleum News