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Endeavour's delay fattens wallets of workers, city

Posted: December 6, 2012 - 11:52am

Although Buccaneer Oil Alaska got from the city of Homer an extension to Dec. 8 to moor its jack-up rig, the Endeavour-Spirit of Independence, at the Deep Water Dock, it doesn't look likely state permits will be issued by Saturday to allow it to put legs down at the Cosmopolitan site off Anchor Point and begin oil and gas exploration.
Buccaneer's original intent had been to stay for just eight days after its arrival in August.
"The next thing you know, we're in October," said Homer Harbormaster Bryan Hawkins.
That delay has been good news for the port. Initially, the Endeavour paid about $900 in dockage fees, but because the 310-foot long triangular-shaped rig and associated activities essentially used the whole dock, the city renegotiated a fee at $1,995.88 a day, tax included. Two tugs also pay $455 a day for one and $273 a day for the other when at the Deep Water Dock, but regular harbor fees of $625 a month when in the inner harbor, Hawkins said.
The status for the Endeavour's permits includes:
* A public notice for comments on Buccaneer's Oil Discharge Prevention and Contingency Plan, or C-Plan, was published Nov. 26, with a comment deadline of 5 p.m. Dec. 28;
* A public notice for comments on Buccaneer's Lease Plan of Operations for the Cosmo site was issued on Wednesday, with a comment deadline of 5 p.m. Jan. 3. That notice notes that Buccaneer plans to drill two oil-and-gas exploratory wells, but may choose an option for a gas-only exploratory well at its Cosmo #1 site subject to approval by the Alaska Oil and Gas Conservation Commission.
* A tidelands permit to moor in state lands near Port Graham has been issued.
* A comment period ended Nov. 28 for another tidelands permit at the Cosmo site, with the Division of Mining, Land and Water reviewing it.
The Endeavour could move to Port Graham while waiting to work at the Cosmo site. Buccaneer has not said if it intends to move there soon or wait in Homer.
Buccaneer said that despite the delays, everything seems to be coming together now with the permitting.
"We are waiting on our approved spill plan so that we can test the oil prospect at Cosmopolitan," said Jay Morakis, a spokesperson for Buccaneer. "We are almost ready for our ABS (American Bureau of Shipping) and Coast Guard inspections, so things seem to be moving along nicely."
Morakis said the delays came because of unanticipated work needed for the Endeavour, including getting it ready for winter operations. Originally Buccaneer had planned to drill with the Endeavour at the Northwest Unit in upper Cook Inlet, but scrapped those plans when it couldn't get the rig up there before the winter ice season shut down drilling in the upper inlet.
Work on the rig also has had an economic benefit to Homer. Hawkins said the city hasn't done an economic analysis of that work, but noted that from 50 to 60 people have been working on the Endeavour, 17 percent of those local hire. The rest have been staying at Land's End Resort and the Best Western Bidarka Inn, Hawkins said. Homer Steel Fabricators, a local firm, has been doing welding work, and longshoremen, plumbers, electricians and roustabouts also have been employed.
On a visit last week to Kenai, Gov. Sean Parnell told the Peninsula Clarion that he wasn't aware of any state permitting holding up the rig.
"I have not heard that the state is standing in the way of moving that jack-up rig," Parnell said. "I understood that they have not met certain requirements along the way and I think that's right for the state to hold them accountable in those moments, but at the same time this is part of our investment, too. We want it done right and we want it done as soon as possible."
Since a storm on Sept. 16 forced the Endeavour to lower its 410-foot high legs into the mud layer of the bay, it has been legs-down by the Deep Water Dock -- a situation that some environmentalists said violated a Kachemak Bay Critical Habitat Area management plan prohibition against storing drilling rigs in Kachemak Bay. Cook Inletkeeper and other environmental groups raised that point in letters to the Alaska Department of Fish and Game.
Fish and Game Commissioner Cora Campbell said Buccaneer wouldn't be fined for putting its legs down.
"We don't have any plans to fine them for doing what they thought was the safest and best thing to do given the circumstances and the storm that they were in," Campbell told the Clarion last week. "We have asked, though, that as soon as they are able to meet requirements to move the rig that they remove the legs from the substrate and come into compliance. We have talked with the company and their plans for the rig and their timeline, but we don't anticipate damage to fish and habitat from them bringing the legs up and moving out of the harbor."
If Buccaneer extends its stay beyond Saturday, the city wouldn't have a problem with that, Hawkins said. With the M/V Tustumena state ferry out of service and only a few dockings this month by the M/V Kennicott at the Pioneer Dock, that dock is open for other vessels. Hawkins said the Endeavour could be moved to the inner face of the Deep Water Dock if needed.
The Endeavour has helped out the Port and Harbor enterprise fund, Hawkins said. The city had set a budget anticipating it would earn $63,000 in fees at the Deep Water Dock. Even before the Endeavour arrived, the dock earned about $82,000, and by the end of October, the Deep Water Dock had brought in $175,000, Hawkins said.
Michael Armstrong can be reached at michael.armstrong@homernews.com. Brian Smith of the Peninsula Clarion contributed to this story.

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