Despite protests from environmental watchdog groups, a new oil and gas drilling operation has begun in Cook Inlet and is churning its way toward a potential $25 million boost from the state.
The Spartan Blake 151 jack-up drilling rig, operated by Escopeta Oil Co., arrived on site north of Nikiski on Aug. 10 after a long and controversial journey from the Gulf of Mexico to Alaska.
Steve Sutherlin, an Alaska-based spokesman for the company, said Monday the rig is currently in position over the well and crews are driving casing into place. The casing, 30 inches in diameter and an inch-and-a-half thick, is to prevent a shallow gas blowout. Once the casing is in place, a blowout preventer will be installed. That blowout preventer needs to be inspected and approved by the Alaska Oil and Gas Conservation Commission, he said.
Escopeta plans to spud the well by the end of the month, coming in just under a deadline set by the Legislature for drilling to begin in order for the company to take advantage of an incentive program passed late last year. Lawmakers offered to pay for as much as 100 percent -- up to $25 million for the first well -- of the cost of the first three wells for the first company to bring a jack-up rig to the area and begin work.
Company officials have said Escopeta expects to spend about $30 million to get the rig into place, between mobilization costs and other expenses to satisfy state requirements.
A couple weeks ago, two environmental organizations -- Trustees for Alaska and Cook Inletkeeper -- asked federal regulators to prevent Escopeta from bringing the rig into Cook Inlet because of concerns over the effects on beluga whales.
In April, the National Marine Fisheries Service designated more than 300 square miles of Cook Inlet as critical habitat for the iconic white whale, which has been listed as endangered since 2008. Conservationists are worried that oil and gas activities, especially noise produced by drilling rigs, will further harm the whales.
The U.S. Army Corps of Engineers responded by asking Escopeta for additional information and updating an environmental review of the proposed operation. Last week, NMFS concurred in the findings and the necessary permits were issued to the company.
Bob Shavelson of Cook Inletkeeper is concerned that the company and the regulators are rushing to meet the drilling deadline for the state incentives rather then thoughtfully reviewing the company's ability to respond to an oil spill, for instance, or whether the blowout preventer and other equipment are adequate.
"It doesn't feel like there's been reasonable agency oversight when it comes to beluga whales or the adequacy of spill response," he said. "It appears to us that the Army Corps rushed ahead and issued a permit without understanding the impacts to the beluga whale. And we've watched NMFS buckle to political pressure time and time again."
Shavelson and Brian Litmans, an attorney with Trustees for Alaska, said the groups will be reviewing the agency's action and deciding whether they need to step up their protests of the operation.
Sutherlin said Escopeta has taken extra steps to address the issue of the whales. Not only did it provide the extra engineering study the corps requested in order to secure the permit, but the company also has put in place other environmental programs aimed at watching out for the whales.
"We ended up going a bit further with beluga whale research than we thought," he said.
The company also has started a beluga observation program that includes participation from contractors. Oil rig workers, pilots and boat operators working for the company are recording sightings of belugas, their behavior and location among other details, to provide to NMFS.
Escopeta is working with another company to monitor noise around the rig during various phases of the drilling operation. And it plans to basically slow down or shut down operations if necessary to avoid harassing the whales, Sutherlin said.
The company plans to drill until Oct. 31, wrapping up in plenty of time before ice moves into Cook Inlet, he said.
The operation is seeking both oil and gas and Sutherlin said "we really expect to find a substantial amount of gas" that could be a good supply for the Anchorage market. He said new technologies in gas production make it possible to have gas in the market within 18 months of a discovery, although oil production still takes substantially longer to put in place.
Escopeta hopes to have more information this fall on what sort of prospects the leases hold.
Contact Patti Epler at patti(at)alaskadispatch.com.