For the first time in more than a decade, a jack-up rig is headed to Cook Inlet to drill for oil and gas.
The Spartan 151 drilling rig, under contract to Escopeta Oil, is expected to arrive in Kachemak Bay the week of May 29 and begin drilling in Upper Cook Inlet in late June.
The rig is coming from the Gulf of Mexico aboard a foreign-flagged ship named the Kang Sheng Kou. The rig's transportation has been a contentious issue because federal law generally prohibits shipping cargo from one U.S. port to another on foreign-flagged vessels.
Escopeta has been working hard to renew an earlier waiver of the law, known as the Jones Act, to relocate the Spartan 151. Although the Department of Homeland Security, in a letter from Secretary Janet Napolitano dated May 20, turned down a new waiver, it did not say what Escopeta executives feared most: that the Spartan 151 rig would be confiscated or refused entry into the Inlet.
In fact, Napolitano made a point of acknowledging the energy needs of Southcentral Alaska in her letter to Escopeta President Danny Davis.
She offered the services of Glen Vereb, director of U.S. Customs and Border Protection's Border Security and Trade Compliance division, to discuss "the facts and circumstances of the transportation of the rig that may be relevant to the mitigation of the Jones Act penalties that will likely result if your rig is offloaded in Cook Inlet."
A May 23 letter from Escopeta's Washington, D.C., attorney to Davis said members of the firm had met with Vereb, who confirmed that the ship could land and unload the rig in Cook Inlet without interference.
Vereb asked Escopeta for a letter explaining why the usual penalties should be reduced. He said the CBP does not intend to pursue any penalties against any of the other parties involved in transporting or unloading the rig.
Escopeta's initial open-ended Jones Act waiver was requested by former Alaska Sen. Ted Stevens and granted by the Bush administration on the basis that development of oil and gas prospects in Cook Inlet was necessary for national security. Napolitano said in her letter that "unlike in past instances," neither the department of energy nor defense now finds a waiver "necessary in the interest of self defense.
"Nevertheless, the Department of Homeland Security fully understands the energy needs of the Cook Inlet-Southcentral region and therefore wants to work with" Escopeta to mitigate any penalties against the company, the secretary said.
Davis credits Napolitano's decision to the efforts of the three members of Alaska's congressional delegation, who recently met with her and other federal officials to plead Escopeta's case and explain the need for increased oil and gas production in Southcentral. That effort was started several months ago by Sen. Mark Begich, D-Alaska.
When the Spartan 151 arrives, it will "take shelter" in Kachemak Bay, where it will be offloaded and towed to the OSK dock at Nikiski, north of Homer, its home for as long as four years, and possibly longer if Escopeta exercises its option to purchase the rig.
At the OSK dock, Escopeta will do some final work on the rig to prepare it for drilling, including the addition of a 15,000-pound blowout preventer, a major step up in the equipment used on the rig while in the Gulf of Mexico -- and the largest blowout preventer ever employed in Cook Inlet.
Once the work is complete, the rig has to be inspected by the Alaska Oil and Gas Conservation Commission before drilling can commence.
According to company spokesmen, Escopeta has "all but a couple of permits and authorizations in hand," and expects to begin drilling by June 30.
By KAY CASHMAN
Petroleum News